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MINUTES OF THE SPECIAL MEETING
OF THE
BOARD OF TRUSTEES
THE JUNIOR COLLEGE DISTRICT OF
ST. LOUIS - ST. LOUIS COUNTY, MISSOURI
FRIDAY, MARCH 13, 1964-1:00 P.M.
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A special meeting of the Board of Trustees of The Junior College District
of St, Louis - St. LoUis County, Missouri wds held on Friday, March 13, 1964
fn the Embassy Room of the Chase-Park Plqza Hotel, in St. Louis, Missouri.
1. General Functions
?.2 Roll Call
The Board President, Mr. Gerald V. Williamson, called the meeting to order
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at VjOOp.m. The following members of the Board were present:
Mrs. Joseph C. Bastion
at
3/13/64
the
Hobson
this
meeting.
Also
M
Mr.
special
-r .ofMorris
F.
Gerald
Lester
present
Robert
the
Wm.
meeting.
Junior
C.
Glaser
V.
Powers,
were
McCalpin
Geil
Williamson
College
President
and
of Robert
Mr.
District.
Joseph
Guy
Powers
S.P.Ruff
and
Cosand,
inAssociates,
were
and
unable
Vice
was
to
President
also
be present
present
James
at W.
fell;
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1.3 Minutes
There were no Minutes to be read at this Special Meeting.
1.4 Welcome to Guests
The President of the Board, Mr. Williamson, welcomed the various
representatives from three insurance companies, who were present at the meeting.
L 6 Communications
There were no communications to be read to the Board.
2.
PERSONNEL
No report
3. CURRICULUM AND INSTRUCTION
No report
4. COLLEGE FACILITIES
No report
5.
BUSINESS AND FINANCE
5.1 Fringe Benefits Program
The President of the College, Dr. Cosand, recommended the acceptance
of bids on the employee Fringe Benefits program as follows:
5.1.1 Long-term disability and accidental death Continental Casualty Company
5.1.2 Life and Medical Insurance - Prudential Life Insurance Company
A general discussion followed.
3/13/o4
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Upon receiving the unanimous consent of the Board members who were in
attendance, the President of the Board, Mr. Williamson, invited the representatives
of the bidders, who were present, to address the Board.
The Board heard remarks from gentlemen representing these companies: Blue
Cross - Blue Shield Plan of St. Louis - General American Life Insurance Company The Prudential insurance Company of America.
The discussion continued on Point $i2»1 ••-. Long-term disability and accidental
death. Whereupon, on motion by Mr. McCalpin, seconded by Mrs. Bastion, and
adopted by the unanimous vote of all members of the Board of Trustees - Mr. Williamson
(Yes); Mr. McCalpin (Yes); Mrs. Bastian (Yes); and Mr. Glaser (Yes) - it was
RESOLVED, That a Fringe Benefits program be instituted for the
certificated and non-certificated employees of the District, as
said program is outlined in the bids and specifications attached to
these Minutes.
FURTHER RESOLVED, That the Board of Trustees accept the bid of
the Continental Casualty Company to furnish the District with the
long-term disability and accidental death portion of said Fringe
Benefits program, in the amounts and on the terms and conditions
of the bid proposal attached to these Minutes.
The discussion then continued on Point 5.2.2 - Life and Medical Insuranc .
Whereupon, on motion by Mrs. Bastian, seconded by Mr. McCalpin, and adopted
by the unanimous vote of all members of the Board of Trustees - Mr. Williamson
(Yes); Mr. McCalpin (Yes); Mrs. Bastian (Yes)? and Mr, Glaser (Yes) - it was
RESOLVED, That the bid of the Prudential Life Insurance Company,
to furnish the District with the life and medical insurance portion
of the Fringe Benefits program, be accepted on the terms and
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conditions, and with the specifications, of the bid proposal
attached to these Minutes.
3/13/64
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6. STUDENT PERSONNEL SERVICES
No report
7. COMMUNITY RELATIONS
No report
8. NEW BUSINESS
No report
9. ADJOURNMENT
Board President Williamson asked if there were any further business to come
before the Board. There was not, and Mr, McCalpin mode a motion that the special
meeting be adjourned. Mr. Glaser seconded the motion/ and it was unanimously
approved at 2.08 p.m.
Respectful!/ submitted
Dolores B. Tygard, Secretary
Board of Trustees
The Junior College District of St, Louis St, Louts County, Missouri
3/13/64
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REPORT ON EMPLOYEE FRINGE BENEFITS PROGRAM'
Specifications, census data end invitations to bid were sent to s vera! insurance
companies on February 5 requesting proposals.
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We have received proposals from the following companies:
In re: Long Term Disability and Accidental Death insurance
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1,
2.
3*
4.
5.
6.
7.
Continental Casualty Insurance Company
Firemens Fund Insurance Company
General American Life
Insurance Company of North America
Aetna Life
Bankers Life
Teachers Insurance and Annuity Association
In re: Life and Medical Insurance
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
-
I.
Prudential
Northwestern National
General American Life
Aetna Life
Lincoln National
Connecticut General
Massachusetts Mutual
Great West Life
Bankers Life
Teachers Insurance and Annuity
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Long Term Disability and Accidental Death
We will report on the quotations on these coverages first and recommend a carrier
because they are simpler to deal with. They are not experience rated, so th
contractual provisions, service, rates and strength and stability of the carrier
are the only deciding factors. They have no relation to the other coverages as to
cost and should be written separately either with the same or different companies.
There is no price advantage In placing these coverages with the same company which
underwrites the Life and Medical Insurance.
A.
LONG TERM DISABILITY
Four companies met specifications precisely and these three companies write
most of this type of coverage.
Company
Continental Casualty
Firemens Fund
Rate per $100 Monthly Income
.40 cents
,56 cents
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I.N.A.
Bankers Life
.63 cents
1.27 cents
The following companies varied from specifications in some important respect:
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Aetna
.60 cents
(contains pre-existing conditions restriction)
Goneral American
1.38 cents
(mental disease restriction)
Teachers Insurance and Annuity
.61 cents
(6 month waiting period Instead of 3 month and restrictive definition of
total disability)
W&&
.fesft&rft on Employee Fringe Benefits Program - Page 2
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lower rates for this group. They have also offered to guarantee the rat for at
least 3 years.
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This rate f 48 cents per $100 of payroll is very favorabl , We conservetlv ly
est (mat d It In our previous memoranda at about 70 cents per $100. We expected
It t be near 60 cents and hoped for better under competitive bidding. However,
we did not expect It to go under 50 cents. If the JC0 pays one-half the cost, as
v#e had specified to the insurance companies, the rate would be 24 cents per $100
of monthly income for the employee and 24 cents for the JCD Instead of 35 cents
per $100.
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f.
If 100% participate In the plan, the cost to the JCD would be $2360 per year on the
pr sent group instead of about $3400 as originally estimated.
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8. ACCIDENTAL DEATH
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This coverage is to be paid for entirely by the employee. There will be
optional amounts for the employee and he may cover his wife and children.
There is no minimum number who must participate. This is an attractive
coverage for the employee but the premium volume Is low.
All of the companies quoted around .06 cents per $1,000 per month on th
employee.
Company
Continental Casualty
Rate per $1.000 per month
Employee
.0575 cents
Dependents .02 cents
Aetna
Employee
.056 cents
Dependents .042 cents
(would not accept Accidental Death without Long Term Disability)
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Ftremens Fund
Employee
Dependents
.06 cents
.06 cents
I.N.A,
Employee
Dependents
.06 cents
.06 cents
RECOMMENDATION
W r commend that this coverage be placed with the Continental also. The rates
nra as good or better than the other quotations and the administration would be
simpler In dealing with the same company underwriting the Long Term Disability
coverage.
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Plan 1
f
Plan 2
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Plan 3
Employee Only
Family:
Employee
Wife
Each Child
Amounft
10,000
Monthly Premium
.60
.82
10,000
5,000
500
Employee Only
Family;
Employee
Wife
Each Child
20,000
Employee Only
Family:
40,000
1.20
1.64
20,000
10,000
1,000
2.40
3,28
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Those coverages are quoted Individual?y for rate purposes; however, they are
experience rated over the years. By combining the premium for experience rating
purposes the Insurance companies will have a sufficient volume of premium to
anticipate that claims will not fluctuate widely relative to premium. The Life
Insurance claims on this group can be expected to average around 50% of premium
or less and Medical claims will average between 40% and 80%. It Is entirely
possible that no death claims will occur in a year or two. This will build res rves
to offset higher claims later or to offset higher Medical Care claims or be return d
as dividends.
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W have a young group, with reasonable preselection of healthy people. There Is a
$200 deductible which takes time to accumulate. There is a sharply Increasing
employment so that we will be collecting premium faster than the claims can catch
up. Therefore during the first few years we should expect favorable experl nee.
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This introduces another element Into the selection of the carrier—and a fairly
complicated element to pin down and evaluate. This element Is "retention" or "net
cost". It Is an illusive thing because it is related to assumptions as to claims
In the future and future costs. It is not guaranteed but is an indication of the
procedure a company will follow In allocating the funds that are available in
excess of the actual claims experienced. Company practices and policies vary
widely. We asked them to project for us the allocations they would make based on
JCD average employment for the first policy year, assuming a certain claim level,
then to make certain additional assumptions as to the future.
One purpose of this projection Is to have a general committment in advance as to
their methods and predictions so as to be in a strong position to negotiate the
best possible rate credits, dividends, rates, reserves, etc., as the actual claims
develop. Experience rating becomes a more significant factor as the group becomes
larger.
Net cost should be carefully considered when gross costs and other factors are
relatively close.
Some carriers quoted only the Group Life Insurance as this is the most attractive
coverage from their standpoint and they could make their most competitive offer.
This does not allow adequate experience rating as we would then have to get some
other company to handle the Medical Care separately. They increase their Medical
Care rates in this event. We have therefore eliminated their quotations from
consideration.
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Certain companies were eliminated from consideration for the following reasons:
1. Northwestern National Insurance Company
This company had the lowest initial rates but has inadequate local
facilities by comparison. They are very new In the group insurance
business. This would be their first group of any size in this area.
They did not meet specifications in several Important respects.
2. Great West Life of Canada
This Is a good company with good local service facilities and attractive
Group Life rates. They have no local claim office and they did not quote
on the Medical Care coverages. They are especially good on Group Life
and Annuities. They will receive further consideration on the Tax
Sheltered Annuities which Is one of their principal Interests.
This company did not meet specifications In many important respects as to
Group Life or Medical Care. They have no local claim facilities or local
service facilities. The proposal was over ten days late coming in end
cannot be compared with the others because they did not quote according
Life Rate
Per $1000
Medical
With Mat. +
$300 Surg.
Mo. Prem.
Medical
No Mat.
$200 Surg.
Mo. Prem.
EE
.47
4.70
4.54
Deps
.66
9.94
8.01
14.64
12.55
Company
Prudential
EE + Deps
Life and Medical
Gross 1st Yr. Annual Prem.
185 Employees
148 W/Dependents
EE Life i
2,510,000
Assume Empl
Empl
JCD Pays
I
Oep. Life
EE Life
Medical
Total
1,167.00
14,036.00
28.092.00
43,295.00
7,018.00
14.046.00
21,064.00
1,1
7,C
14.C
22,i
Dep. Life
EE Life
Medical
Total
1,101.00
12,952.00
32.052.00
46,105.00
6,476.00
16.026.00
22,102.00
1,1
6,4
16.C
23,i
Dep. Life
EE Life
Medical
Total
1,596.00
12,252.00
33.264.00
47,112.00
6,126.00
16.632.00
22,758.00
1,5
6,1
16.€
24,3
Met specifications essentially
General American
EE
.43
4.84
4.77
3eps
.62
12.00
10.13
16.84
14.90
EE + Deps
Met specifications essentially
Lincoln National
EE
.41
5.19
Deps
.77
12.24
EE + Deps
17.43
1. Plan pays $20 per day Room and Board plus $500 for services thereafter $200 deductible
$500 for room and board and services then 80% excess-no deductible.
2. Children not covered from birth if sick - only after ten days.
3. Psychiatric visits in hospital restricted as well as out of hospital.
4. Successive confinements restricted unless two weeks return to work.
5. Physical examinations required on Life amounts over $40,000.
Page 4
Life Rate
Per $1000
Medical
With Mat. -I$300 Surg.
Mo. Prem.
Medical
No Mat.
$200 Surg.
Mo. Prem.,
.49
5.78
5.52
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Company
Mass Mutual
EE
Oeps
.
EE + Oeps
1.
2.
3.
Aetna Life
EE
Oeps,
Oep. Life
1,296.00
.73
12.17
9.18
EE Life
14,760.00
Medical
33.852.00
18.05
14.70
Total
49,908.00
$10,000 per illness maximum but no automatic reinstatement.
N o limit o n s e m i - p r i v a t e room. $ 2 0 limit o n p r i v a t e room.
Successive confinements: new benefits after 6 months on dependents; 1
.49
5.45
5.28
.75
13.16
10.87
18.64
16.15
EE + Oeps
EE
.49
6.17
Deps
.65
12.49
EE + Oeps
18.66
1. Normal del Ivery maternity
Caesarean
Miscarriage
Pago 5
Oep. Life
EE Life
Medical
Total
1,332.00
14,760.00
35.122.00
51,214.00
EE Life a
2,510,000
Assume Empl
Empl
JCD Pays
P
7,380.00
16.976.00
24,356.00
1,2
7,3
16.9
25,6
day return to wo
7,380.00
17.561.00
24,941.00
1,3
7,3
17.5
26,2
1. The $500 full pay in hospital claim area is available only once per year rather than on
confinement.
2. The room and board maximum Is the hospital's average semi-private rooa plus $4.
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Connecticut General
Life and Modicai
Gross 1st Yr. Annual Prem.
185 Employees
148 W/Oependents
6.41
17.70
$100.00
$200.00
$ 50.00
Dep. Life
EE Life
Medical
Total
1,296.00
14,760.00
35.880.00
51,936.00
7,380.00
17.990.00
25,370.00
1,2
7,3
17,9
26,6
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We recommend that the Life end Medical coverage be placed with the Prudential
Insurance Company of America. This is the largest writer of Croup Insurance
coverages in the country today* They have offices tn every state and good local
service and facilities* This company insures many of the major corporations locally
and nationally as well as many schools and universities.
Th ir rate U significantly lower than the next lowest bid on gross cost. This
rat Is guaranteed for one year, which Is the maximum period for which any of the
Llf and Medical rates were guaranteed.
Wh n Judged on an experience rating basis their net cost projection is more attractive than the next best offer.
If the history of Medical Care coverages repeats itself we can expect rising costs.
Hopefully we will have good claim experience while providing an adequate and attractive benefit program. The plan is designed to avoid abuse and overuse but to
provide important financial help in an emergency.
If the rate quoted by the Prudential proves inadequate for the Medical Care
coverage, then the good claim experience which is expected on the Life insurance
will be available as a reserve to stabilize the combined premium. This reserve,
if and when it develops, can either be left with the insurance company at Inter st,
against claim fluctuation or taken by the JCD and held against a subsequent rat
Increase. This is the advantage of combining those coverages for experience
purposes. It produces a lower Medical Care rate and greater stability.
If a sufficient reserve develops then perhpas benefits can be increased. On the
oth r hand, if experience in the future is adverse and the insurance carrier
increases the premium we will check the market for competitive bids again. Should
the requested rate increase exceed the cost inherent in a change then we would
r commend you consider a change. Generally speaking it is best to select a good
company which gives you favorable rates, fair experience rating and good servic then stay with them. Of course, it Is only sound business to check claim experience,
reserves, retention and rates each year to make certain you are getting the best
cost results consistent with good service.