Fiscal Note
The proposed resolution authorizes an agreement with The Hartford, which provides life insurance and short-term disability insurance policies. The agreement also establishes a Premium Stabilization Reserve Fund. Under the agreement, there will be an annual process for rating the City’s experience and calculating the balance of the reserve fund. Any actions to withdraw surplus funds would require Common Council approval through a separate resolution.
This agreement codifies past practices to manage surpluses in the fund. For example, the 2023 adopted operating budget provided payments to permanent full- and part-time staff to address high levels in the fund. This action lowered the balance closer to recommended levels, while benefiting staff who pay premiums into the fund. A combination of high interest earnings and a low number of claims has resulted in increases to the fund balance. The agreement proposed in this resolution will continue to promote management of the fund balance to the benefit of the insured staff.
Title
Authorizing the Mayor and City Clerk to sign an Experience Rating Agreement with Hartford Life and Accident Insurance Company.
Body
WHEREAS, The City is the sponsor of an employee welfare benefit plan providing welfare benefits to, among others, its eligible employees through participating group Life Insurance and Short Term Disability insurance policies issued by Hartford Life and Accident Insurance Company (“The Hartford”); and
WHEREAS, The City and The Hartford have negotiated an “Experience Rating Agreement” which refers to an annual process by which The Hartford examines the experience of the City, as policyholder and establishes a Premium Stabilization Reserve (PSR) Fund, which may result in a surplus or deficit in funds; and
WHEREAS, under this agreement, a calculation will be made for each of the two policies, and if there is a positive current year balance, the surplus will be added to the current balance;
WHEREAS if a withdrawal is made from the surplus for any reason, a resolution will be introduced to authorize the use of the surplus to benefit persons insured under the life and short term disability insurance policies covered by the agreement, consistent with the City’s fiduciary and legal obligations; and
WHEREAS, there is no cost to the City to enter into this agreement;
WHEREAS, the term of the agreement will automatically continue for the lifetime of the insurance policies with The Hartford, or unless either party terminates it sooner.
NOW, THEREFORE, BE IT RESOLVED that the Mayor and City Clerk are authorized to sign an Experience Rating Agreement with Hartford Life and Accident Insurance Company as described above.