Stop loss insurance is purchased to protect self-funded health plans against adverse claims experiences.  Competitive hospital and physician contracts makes the use of stop loss protection infrequent; however, the plan must be protected from large individual claims to protect the self-funded health plan from significant losses.

The City has had three (3) catastrophic claims over the last four (4) years.

Renewal of this insurance was accomplished with the assistance and advice of the City’s health insurance broker/consultant – L/P Insurance Services.

Thirteen (13) companies were sent offers to bid, with eleven (11) choosing not to bid or offer quotes. Gerber Life Insurance Company is recommended because they provided the most competitive renewal option.

Gerber Life provided a very competitive quote with an increase of 7.31% over last year's cost.  This is an expected increase based on industry trends and rising healthcare and pharmacy costs.  Our current provider Companion Life was not as competitive in their renewal, offering an increase of 9.75% over last year's cost.

By choosing Gerber Life Insurance, we will be under the anticipated twenty percent (20%) increase the City budgeted for this renewal.

1.  The Council may choose to approve the proposed purchase with Gerber Life Insurance Company as outlined by staff and authorize the Contracts & Risk Manager to execute the policy documents.

2.  The Council may choose to direct the City Manager to extend the coverage offered by Companion Life, at additional cost.

3.  The Council may direct the City Manager to provide alternatives to staff to address the issue of large claims exposures.

I move to approve the purchase of stop loss insurance with Gerber Life Insurance Company for the City’s self-funded group health plan program for Fiscal Year 19 in the amount of $448,922 and authorize the Contracts and Risk Manager to execute policy documents.