An insurance conflict was settled by the Pryor City Council Tuesday.
The city is in the process of renewing health, vision, dental and life insurance for city employees. It is a process Pryor’s Agent of Record, Kurt Shultz, could only describe as “incredibly grueling.”
Mayor Jimmy Tramel said the discussion all started at the Municipal Utility Board meeting Monday.
“Our new agent gave us a quote of a 23 percent increase and we presented this to MUB,” said Tramel. “At the MUB meeting, I found out the city had the opportunity for a guaranteed 18 percent so I called Shultz but he knew nothing about it.”
The guaranteed 18 percent was on the condition that the city did not shop around for other insurance providers. No one could provide any information about that offer. Councilman Travis Noland got involved.
“Travis called the broker and asked if he ever gave the opportunity for the 18 percent to Pryor, and the broker told him no,” said Tramel.
Mayor Tramel got in touch with another insurance agent, Gary Broom.
“I told him we were never given this opportunity. He told me the offer was off the table, but I asked him to reconsider,” said Tramel. “I told him that even if he couldn’t get us the 18 percent I would be happy with one or two percent. I know we both need to make some money.”
Broom said he would go back to his underwriters to see what deal he could offer.
“Broom called me back to say that because we have been with them since 2003 and we have been so understanding in this process, they would give us the full 18 percent,” said Tramel.
If the city had ended up with the original 23 percent increase, it would have raised the city’s yearly premium from $982,000 to well over $1 million a year. Many people were concerned that taking this deal would result in higher rates next year.
“It’s possible it could cost us more next year. But we’ve got several large claims right now, It’s possible our loss ratio will change next year. We can budget for it next year,” said Tramel. “The Affordable Care Act goes into effect next year and we don’t know how that will change things. I think this was a good move for us.”
Other insurance companies were asked to bring a bid to the table prior to this council meeting. Shultz said the low number of bids was because other companies either couldn’t match the existing premiums, or declined to present a bid because of existing malignancies.
“Global Health was a contender,” Shultz said. “They offered 10 percent higher than our current rates the first year, a 10 percent increase the second year, and no more than 10 percent increase for the third year. The deductibles would also change.”
The downside, according to Shultz, was Global does not allow employees to go to St. John’s or St. Francis Hospitals. Tramel said this was not a viable option because the city has six or seven employees with serious illnessws, at least one being terminal, that are using these hospitals.
“This would create a hardship for them and I just can’t do that to them,” said Tramel.
Councilman Drew Stot asked if the increase in premiums was a good enough reason not to use Global.
“It sounds like a small change, but it’s a $485 a month difference. That’s an extra $5,000 a year,” said Noland. “We need to help our city employees live within their means. That’s what we’re here for.”
The city has two years remaining in their agreement with Sumetra Life Insurance. The council approved the suggestion to offer voluntary life and dental insurance, at the employees cost. The council made a motion to approve, but an objection arose.
“Where does this money come from?” said Stot
“We budgeted for 5 percent. We’ve delayed hiring a firefighter and a policeman until the first of the year, which has saved us money. We will look at overtime, or whatever we need, to find the money,” said Tramel. “We have to save $29,000 in order to do this. If I can’t come up with that, we have bigger problems. I’ll do what I have to to find it.”
“I just want a concrete solution to where the money is coming from, not that we’ll slide it on a credit card,” said Stot.
“Our employees are the best asset we’ve got. We’ve got to help them out,” said Tramel, “We can handle it, trust me, trust the budget committee.”
When it came to a vote, the council voted yes, with the exception of Stot.