SIOUX CITY -- As the city's workers' compensation expenses continue to rise, officials are analyzing whether a switch in insurance coverage may help them save taxpayer dollars in the long term.
The City Council on Monday will discuss whether to pursue a change from its current policy to "first-dollar" coverage, which would mean a higher premium but would cover every dollar of the city's future claims.
The city is currently self-insured up to $500,000 per claim, meaning the city is responsible for paying up to that amount for each workers' compensation claim before its insurer, Safety National, will pay costs above that. Safety National receives $115,000 per year for the coverage.
On Monday, staff will present the council with data on a proposal from the Iowa Municipalities Workers' Compensation Association (IMWCA) and ask for direction on how to move forward. The proposal would cover the cost of all claims, in return for an annual premium of more than $970,000.
City risk manager Don Trometer said at this point, it's hard to say for certain how much the city would or would not save with a switch to this coverage.
"The problem you have is the costs are escalating so much, and everybody has good years and bad years," he said. "It depends on the number of claims and the severity of claims."
Earlier this year, the city had asked four local insurance agents to search the market for various forms of workers' compensation insurance coverage. IMWCA was the only bidder interested in first-dollar coverage.
Founded in 1981, the IMWCA is a risk-sharing pool that partners with cities, counties and other local government entities around the state for workers' compensation coverage. Its staff are employees of the Iowa League of Cities.
Sioux City's workers' compensation costs have been steadily increasing over the past few years. They were among the main reasons cited for an increase in spending in the current fiscal year's budget.
During the fiscal 2019 budgeting process earlier this year, staff said they expected workers' compensation expenses to nearly double this fiscal year -- from $1.6 million to more than $3 million.
Between July 1, 2012, and July 1, 2017, Sioux City paid 223 lost time claims, with payments totaling more than $3.9 million, according to city documents. The number of claims and costs have shown a general upward trend each year during that time period.
The city factors workers' compensation expenses into each city department's budget and pays them using a variety of funding sources. Sioux City Police and Sioux City Fire Rescue are not included because they are funded separately.
Trometer said if the council decides to switch to the IMWCA's first-dollar coverage and has a few years with lower claims, that would help lower the initial insurance premium, which could benefit the city in the long term.
"We won't get any money back, but the premium would be reduced the following year," he said. "What your hope is, is in the third year out the premium is reduced to an amount that is equal or close to your losses."
The coverage would include other services such as safety consultations, access to a human resources specialist and company nurse, and the filling out of filings and reports for the Iowa Industrial Commission and Occupational Safety and Health Administration.
In the event of a switchover, the coverage would only apply to new claims, meaning the city would still have to pay all existing claims that occurred prior to the change in coverage.
As workers' compensations costs rise, the city has also increased its emphasis on safety. Last year it restored a previously cut safety officer position whose responsibility is working to ensure safety practices are being followed consistently.
18th Street viaduct
In other action, the council will vote Monday on an application for a $15 million federal Department of Transportation grant to support the proposed 18th Street viaduct project, which would cross from Floyd Boulevard to Steuben Street, spanning railroad tracks in the area.
The council had deferred a vote on the application last week after one of the project's opponents was not notified the council would be taking up its vote. During the meeting, Mayor Bob Scott and Councilman Alex Watters both voiced concerns about the project as it currently stands.
Monday is the final council meeting before Wednesday's grant application deadline.