90-0215 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.
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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
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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