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Home My WebLink About90-0215 Washington National MINIMUM PREMIUM AGREEMENT Deficit Recovery Limit Amendment Washington National Insurance Company (Washington National ) and City of Elgin (Contractholder) have entered into a Minimum Premium Agreement (Agreement) wherein deficits which exist at the beginning of a Contract Year are charged against surpluses from experience rated coverages and retrospective premiums as defined in the Agreement. Whereas the Contractholder wishes to limit the deficit recovered in any Contract Year. Whereas Washington National is willing to limit the deficit recovered in any Contract Year as long as the Contractholder abides by terms of the Agreement and this Amendment. NOW THEREFORE, it is agreed as follows: I. This Amendment is effective March 1 , 19 90 . II. This Amendment shall be applicable to only those Contract Years where an experience rating calculation was performed following the close of that Contract Year and such calculation indicates: 1. A deficit existed at the beginning of the Contract Year from a prior period(s), and 2. A Net Surplus Financial Position exists for that Contract Year. A Net Surplus Financial Position for a Contract Year will exist whenever the sum total of: 1. The financial position of any coverages jointly experience rated with the coverages under the Agreement, plus 2. The sum total of the monthly Claim Liability Limits for the Contract Year, less the sum total of the benefit payments under the Agreement for the Contract Year, plus the sum total of reimbursements by Washington National for the Contract Year, if any, less the sum total of the retrospective premium payments by the Contractholder for the Contract Year, if any, results in an amount greater than zero. A. If the Agreement was in effect during the period immediately prior to the Contract year in which recovery is made, then the amount of the Net Surplus Financial Position which Washington National shall use to recover the deficit which exists at the beginning of the Contract Year shall be limited to a maximum of s percent of the annual Claim Liability Limit for the Contract Year immediately prior to the Contract Year in which the deficit recovery is made. F16964 -2- B. If the Agreement was not in effect during the period immediately prior to the Contract Year in which recovery is made, then the amount of the Net Surplus Financial Position which Washington National shall use to recover the deficit which exists at the beginning of the Contract Year shall be limited to a maximum of 15 percent of the earned premiums during the 12 months immediately prior to the effective date of the Agreement of those coverages which are now included under the Agreement. C. Whether or not the Agreement was in effect during the period immediately prior to the Contract Year in which recovery is made, should the Net Surplus Financial Position not contain sufficient surplus money from those coverages jointly experience rated with the coverages under the Agreement to recover the maximum amount of deficit as per this Amendment, then the Contractholder agrees to pay such shortage from any retrospective premiums available according to the Agreement, III. All deficits not recovered shall be carried forward to subsequent Contract Years. IV. This Amendment terminates at the end of the Contract Year immediately prior to the Contract Year in which the Agreement terminates and the amount of deficit recovered in this final Contract Year shall be limited only by the terms of the Agreement. However, should the Contract Year in which the Agreement is terminated be less than 12 months, then Washington National can, if necessary to recover any deficits, recover any Net Surplus Financial Position from the Contract Year prior to the final Contract Year in addition to any Net Surplus Financial Position available from the final Contract Year according to the terms of the Agreement. This Amendment supercedes any terms of the Agreement which are inconsistent with this Amendment. CONTRACTHOLDFppwo WASHINGTON NATIO L INSURANCE COMPANY BY i. �� - By — S gnatu - Signat Tit 1111104 a Title /6/i IL) .TI 1. 2 it-5190 Signed at Date Signed at Date I APPENDIX I GROUP POLICY NO(S): 62945 INDIVIDUAL CLAIM POOLING: is included with a $ n/a Maximum Amount per covered person per contract year ana applies to n/a coverages(s) RESERVES ARE HELD BY: Washington National XContractholder POST TERMINATION LIABILITY LIMIT PROVISION: xapplies does not apply CLAIM LIABILITY LIMITS ARE TO BE CALCULATED: _cumulative annually cumulative monthly LIABILITY FOR CLAIMS INCURRED PRIOR TO THE EFFECTIVE DATE OF THIS MINIMUM PREMIUM AGREEMENT BUT PAID AFTER SHALL BE: the responsibility of the prior carrier _paid out of Contractholder's reserves currently held by Washington National _xhthe responsibility of the Contractholder and • s_included under this Agreement excluded under this Agreement MINIMUM PREMIUM POST TERMINATION* COVERED EMPLOYEE/DEPENDENT MONTHLY LIABILITY LIABILITY LIMIT UNITS BY COVERAGE LIMIT FACTORS FACTORS B-2 Employee & Dependent 270.04 862 .66 • C-3 Employee & Dependent 317.69 1, 014 .69 E-5 Employee & Dependent 259 .25 828.14 NOTE: *N/A MEANS THIS PROVISION IS NOT IN EFFECT COVERAGE(S) WHICH ARE TO BE JOINTLY EXPERIENCE RATED WITH THE MINIMUM PREMIUM AGREEMENT: Life COVERAGE(S) FOR WHICH CONTRACTHOLDER IS ASSUMING LIABILITY UNDER THE MINIMUM PREMIUM AGREEMENT: Medical (This Appendix must be signed and dated on the reverse. ) F16428 021486: 150+ APPENDIX I TO BE FROMpar 19_i ANDCTIVE REPLACES APPLNU CILSc I i WGT1YEIFO?PRIOR PER Sch 1 CONTRAC . ER WASHINGTON NATIONAL INSURANCE COMPANY _ BY I if .4.... _: . By igna r Signature itle Title '((--; �(' . e--I -/9D Signed at Date Signed at Uate Washington national INSURANCE COMPANY ROBERT L SCHMITKE Rekonai Group Manager E KENNETH SPARKS CLU.Senior Group Account Executve RODNEY J VANDER HYDEN. Group Account Executive RONALD L NUTTER.Assistant Group Manager Woodfield Corporate Center-Suite 830 • 150 N Maninga'e Road Schaumburg 'Nino s 60173 (708) 517-7170 FAX (708) 517-7176 January 31 , 1990 Mr. Olufemi Folarin Human Resources Director City of Elgin 150 Dexter Court Elgin, Illinois 60120 Dear Femi : The annual renewal date for Group Life, AD&D and Medical benefits is March 1. We are projecting paid claims for the policy year, 3/1/89 tá 3/1/90, of $1 ,128,900 which represents an increase of 9.4% over the prior year of $1 ,031 ,796. The increase in the paid claims will affect the funding factors, which determine the City's annual liability for medical claims. This factor increase is 8.8% for the policy year commencing March 1 , 1990. The increase in claims also affects the Minimum Premium premium rates, which show a slight increase of 6.8%. However, we are pleased to advise you that we are making a substantial reduction in the Group Life insurance rate effective with the renewal . The decrease would be to $.23 per month per thousand from the current $.36 per month per thousand. The bottom line is that the actual fixed cost including the increase in the Minimum Premium premium and the decrease in the Group Life insurance premium will produce a lower figure of $13,232.21 per month compared to the current monthly fixed cost of $13,409.93. We have provided you with a number of illustrations which demonstrate the effect of this funding over the past three years with current projections included. It is noted that for the past five months paid claims have averaged approximately $123,000 per month. The increase in the paid claims I Evanston,Illinois 00201 • A Washington National Corporation Financial Service Company