HomeMy WebLinkAboutFIN 13/99
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REPORT TO COUNCIL
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FROM:
Gillis A. Paterson
Director of Finance & Treasurer
DATE: June 22, 1999
Baba Gajadharsingh
Director of Human Resources
REPORT NUMBER: FIN 13-99
SUBJECT: Employee Group Benefit Insurance - 1999 Renewals
RECOMMENDA TION:
The Executive Committee recommcnd to COllncilthat:
I. The firm of William M. Mercer Limited be instructed to renew the Group Health & Dental
Plans for the Town of Pickering with the present carrier, Liberty Health, at a renewal
premium of $699,323.00, plus 8 percent Provincial Retail Sales Tax of approximately
$55,986.00, for the period January 1, 1999 to December 31, 1999. Other terms and
conditions to remain unchanged;
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2. The firm of William M. Mercer Limited be instructed to renew coverages with Maritime Life
for Group Life/Long Term Disability at a renewal premium of $324,845.00, plus 8 per cent
Provincial Retail Sales Tax of approximately $25,988.00 for the period April I, 1999 to
March 31, 2000 and UNUM Canada for Group Accidental Death and Disability at a renewal
premium of $8,800.00, plus 8 per cent Provincial Retail Sales Tax of approximately $704.00;
and
3. The appropriate staff of the Town of Pickering be given authority to give effect thereto.
ORIGIN:
Report No. TR07/98
AUTHORITY:
Council Approved Benefit Plans
FINANCIAL IMPLICATIONS:
A total renewal premium of $1,032,968.00 represents an increase of 3.3 percent, or $32,744.00
over the 1998 premium. The costs for this coverage are included in the 1999 Current Budgets of
each of the departments. The increase may also be absorbed within the respective Department's
budgets or through a provision made in the General Government appropriations.
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EXECUTIVE SUMMARY:
Each' year benefit plans approved by Council must be renewed through the carriers. The
Recommendations provide for the continuation of these plans.
Report to Council FIN13-99
Date: June 22, 1999
Subject: Employee Group Benefit Insurance - 1999 Renewals
Page 2
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BACKGROUND:
In 1995, staff of Human Resources, in conjunction with the Corporation's benefit consultant,
William M. Mercer Limited, sought proposals for the Corporation's empl<?yee benefit group
insurance program. At that time, costs were reduced by approximately $140,000.00 per annum,
with a guaranteed life and L.T.D.rates until December 31,1997.
William M. Mercer Limited has assisted the Town for a number of years in managing its
employee benefits coverage with stable providers that will provide the best service at a
competitive price. They have been working on our behalf over the last few months in preparing
for the 1999 renewal. The total premium of $1,032,968.00 represents an increase of
approximately $32,744.00 or 3.3% on an annualized, calendar year basis. This increase is based
solely on the increased cost of the services to the Town, resulting from an increase almost
entirely in group health and dental plan claims during 1998.
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As the Town went to market in later 1995, resulting in premium savings for the years 1996 and
1997, and continued negotiations by William. Mercer have resulted in further savings, it is
recommended that coverage be renewed with the existing providers. Mercer's nationwide data
base of the providers expense charges allows them to ensure that our costs are competitive.
Furthermore, recent consolidations in the insurance industry and potential Y2K problems,
confirm the desire to maintain relationships. It is not advisable to go to the market too often as it
can have the opposite of the desired effect, indicating to providers that we are not seeking a long
term relationship, thereby gradually eliminating the number of providers that can respond. The
Town's Supervisor of Human Resources Services continues to explore cost-effective measures
that will assist in reducing future increases in costs, including re-designing and rationalizing the
Town's benefits package, in conjunction with less intrusive actions such as:
· Educating employees regarding the cost of benefits and cost-savings measures they can assist
m;
. Claims management;
. Exploring a slightly more aggressive claims management policy with Liberty;
· Engage in positive emolment to ensure eligibility and status of dependents and co-ordination
of benefits (with spouse's provider), (implemented in 1998 and estimated to save 1.5% of
annual premiums)
The two departments are working together on these initiatives as Human Resources is
responsible for the provision and co-ordination of benefits for the Town and its employees and
the Finance Department is responsible for the financing of those benefits.
Maritime Life is the provider of our life and long term disability insurance benefits. Initial
discussions revealed an increase in the basic life rate of 5.5 percent or $5,066.00 annually and the
LTD rate by 0.4 percent or $920.00 annually. We are pleased to report that William M. Mercer
has negotiated a reduction of these rates such that the basic life will increase by 3 percent or
approximately $2,700.00 annually and there will be no change in the LID rate. These rates are
effective April 1, 1999.
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Liberty Health provides the health and dental benefits. Initially Liberty Health proposed an
increase of 7.6 percent or $51,000.00 on the health and dental benefits for 1999. However,
negotiations by William M. Mercer reduced this iI1cr~ase to 4.5 percent or approximately
$30,000 annually
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R'.eport to Council FIN 13-99
Date: June 22, 1999
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Subject: Employee Group Benefit Insurance - 1999 Renewals
Page 3
A IT ACHMENTS:
Not applicable
Gillis A. Paterson
Director of Finance & Treasurer
GAP:vw
Recommended for the consideration of
Pickering Town ouncil
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Baba Gajadh ; "'
Director of Human Resources
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