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December 31, 1973
Mr. r v.i Andrews
City of Miami
P. G. Box 33078, Dinner Key
City Hall, Miami, Florida 33133
Dear Mr. Androwsi
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The anniversary of your Croup Benefits Contract with the Equitable
is February 1, 1976. In anticipation of the renewal of the contract,
we have analysed the financial results to determine the rate adjust•
went required beginning February 1, 1976.
Attached is a Summary of the nine zonths premium and claims experience
along with a projection of the financial results for the policy year
ending January 31, 1976. As y»u will note, the Health claims are much
higher than we anticipated.
In order to fund the expected ctai.ms, reserves, and retention for the
year beginning February 1, 1976, additional premium of $2,020,457 is
needed. This results in a total package increase of 64.93.
In analyzing the experience under your contract, it would seem appro-
priate to apply the increase to the Health coverages only in order to
equalise the premium to claims ratio. This would result in a con-
tinued Group Life and Accidental Death and Ditarerrbermeent rate. The
proportionate increase necessary for the Health coverages would be
92.43.
As previously requested by :•.r. Y.a snail Litvak, we have pursued the
possibility of Equitable acuainistering the Health portion of your
proc:ram on an Administrative Claims Service Contract basis. This
sy:,ti.•3 would provide the City the advantages of self-insurance while
still n:taininr basically the saga services Equitable presently
pro. ices. We are prepared to diiCuis the Administrative Claims
Service Contract with you and look forward to the t wetin9 proposed
for January 6, 1976.
!%jjre 7",• ••
74•fr /2..
r
y Month Paid ExpetienCa
Counlice
Life
Accidental Death
And Dismembertent
Health
Package
Coverace
Lifer
Accidental Death
and Dismemberment
Health
Total Package
$2,307,565
LaicZ 211i =L
$ 373,003
$ 447,500
" ` $1 ,:re4,677
$1,733,3?7
12 Months Projected Resel:s
Premium
b2ts,br?
$2,187 ,718
$3,113,185
Se of Paid Claims
to Pr�iv�
60.0
1.7.3
78.1
75.2
of Significant
'Significant incurred Claiaa
lncurr •ld to premium
$ 67O,535
••$
92,044
$2,966,545
$3,72i,144
*1. Significant incurred Claims represent Projected Paid Claims
plus reserves held for extended benefits and claims incurred,
but not yet considered paid.
8O.a
103.0
133.6
119.8
•*2. Significant Incurred Claims lower than Paid Claims on Accidental
Death and Dismemberment due to pooling.
•**3. Actual Paid Claims reduced by $92,043 to rezlect the effect of
Major Medical pooling on large claims.
r
Moir. Paul Elncircbws
City Manager
City of Miami
Miaai, Florida
• 2 • December 21, 1973
The Equitable is proud of th..3ir relationship with the City of 4iaai
end we look forward to worr:ing with you ixi developing a viable
solution for the future funding of your Group yrogtaa.
Sincerely,
C,20.57
J:s L. Mechlar.g
Uiv i?; . i (stoup Manager
JLMshg
Enclosure
cc* ?•ir. W. Bailey) Director of Finance
Mr. S. Lutes, Employee Insurance Comaittee
B. Harris, Chief Accountant
.. Mr. Joel V. Lanken, tabor Relations Officer
Mr. Marshall Litvak, Assistant to City Manager
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