When I saw the report on KSTP.com that a “computer glitch” at the City’s general liability insurance carrier – the League of Minnesota Cities Insurance Trust (LMCIT) – meant that the City of Eden Prairie owed the insurance trust an additional $207,241 in workers compensation insurance premium, I’ll have to admit that I was a wee bit upset. “How does this happen?”, I thought to myself. Is someone not minding the store at LMCIT, or worse yet, here at the City of Eden Prairie? I needed to know, so I asked around. Here’s what I know now.
You see the City of Eden Prairie buys its workers comp insurance with a “retro-rating” feature. This feature provides us a discount on current rates, but subjects us to some risk from older claims. The LMCIT employs a third-party administrator called Berkley Risk Administrator’s Company (BRAC) to run their workers compensation insurance program. The computer glitch actually occurred on BRAC’s computers.
The computer glitch involved the failure of the computerized claim processing system to recognize and properly assign current work comp insurance costs paid out to individuals whose injuries occurred in past years. This meant that not all of the work comp costs from old claims were being properly assigned to our account. We did not know these costs were being incurred because that’s not part of the reporting process that we see. In the end, Berkley figured this out and is now asking us to pay the claims that we are liable to pay under our insurance contract.
That’s really it in a nutshell. If you’re interested in more details about what happened and why, click on this link: LMICT Explains Error.
The bottom line is that the extra premium we’re going to have to pay LMCIT is premium that we were going to have to pay to them anyway. Instead of paying for our past claims when the costs were incurred, we’re paying for them a few years later.
The glitch is fixed. We’re working out a payment plan with LMCIT. It’ll work.
