TO:
Honorable Mayor and Members of the City Council
THROUGH:
Talyn Mirzakhanian, City Manager
FROM:
Lisa Jenkins, Human Resources Director
Briza Morales, Risk Manager
SUBJECT:Title
Consideration of a Resolution Approving a Five-Year Agreement with AdminSure, Inc. for Third-Party Administration Services in Support of the Self-Insured Workers’ Compensation Program for an Amount Not-To-Exceed $1,412,021 (Budgeted) (Human Resources Director Jenkins).
ADOPT RESOLUTION NO. 26-0063
Body
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RECOMMENDATION:
Staff recommends that the City Council adopt Resolution No.26-0063 approving a five-year agreement with AdminSure, Inc. (AdminSure) for third-party administration of workers’ compensation claims and ancillary medical management services in the amount not-to-exceed $1,412,021.
FISCAL IMPLICATIONS:
Sufficient funding for this agreement is budgeted in the Fiscal Year (FY) 2026-2027 Risk Management Workers’ Compensation program within the Insurance Reserve Fund. Funds for FY 2027-2028 through FY 2030-2031 will be budgeted accordingly.
Fiscal Year Amount
2026 - 2027 $ 265,956
2027 - 2028 $ 273,936
2028 - 2029 $ 282,156
2029 - 2030 $ 290,628
2030 - 2031 $ 299,345
5-year Total $1,412,021
BACKGROUND:
The City has been permissibly self-insured for workers’ compensation since May 1, 1974. Historically, the City has maintained a self-insured retention (SIR) level and purchased excess workers’ compensation coverage through risk-sharing pools. Since 2002, the City has maintained a SIR level of $750,000 for workers’ compensation claims. From 1983 through 2017, the City purchased excess workers’ compensation coverage through the Independent Cities Risk Management Authority (ICRMA). Since 2017, the City has purchased excess workers’ compensation coverage through the Public Risk Innovation, Solutions, and Management (PRISM) pool, formerly known as the California State Association of Counties-Excess Insurance Authority (CSAC-EIA).
DISCUSSION:
As a self-insured public entity, the City relies heavily on a third-party administrator (TPA) to manage its workers’ compensation claims effectively and efficiently. The TPA’s assigned claims adjusters work closely with risk management and injured workers throughout the claims process. The TPA is responsible for coordinating any necessary medical treatment, issuing applicable benefit notices, paying temporary disability when appropriate, setting financial reserves for the claim, and continuously monitoring the claim. The TPA is also responsible for complying with all laws and reporting requirements for self-insured workers’ compensation programs. Additionally, the TPA is responsible for complying with PRISM’s underwriting and claims administration standards, including guidelines for handling, reporting, and auditing.
AdminSure has been the incumbent TPA for workers’ compensation claims for over twenty-five years. The City last issued a request for proposal (RFP) for workers’ compensation claims administration services in 2015. After the evaluation and selection process, the City elected to remain with AdminSure. The City’s current agreement with AdminSure expires on June 30, 2026. When evaluating whether to issue an RFP, staff considered several factors, including the impact of transitioning TPAs, current satisfaction with AdminSure's services, and overall contract costs.
AdminSure has provided services to public entities across California since 1982 and currently serves 102 public entities, including counties, fire districts, and cities. AdminSure is the current TPA for the neighboring cities of Redondo Beach, Hermosa Beach, and Hawthorne. AdminSure has demonstrated a long-term commitment to delivering quality, compliant service to public entities statewide.
The primary claims adjuster assigned to the City’s account has handled the City’s claims for several years. The claims adjuster is knowledgeable and responsive to both injured workers and risk management staff and has a thorough knowledge of the City’s more complex claims. The claims adjuster stays abreast of claim trends, both in the City and across the public sector, and makes recommendations on areas where the City can focus its loss-prevention efforts.
Over the past years, AdminSure and Risk Management have worked closely to streamline the claims process and improve follow-up and communication with injured workers. This ongoing communication throughout the claims process supports injured workers’ care and makes the process smoother for all parties.
To ensure competitive pricing, staff surveyed the current (FY 2026) TPA cost from various cities and yielded the results in the chart below. It is challenging to directly compare workers’ compensation TPA costs with other agencies because costs are influenced by a variety of factors beyond the number of claims filed per year, such as claim type (e.g., medical-only, indemnity, future medical), complexity of claim and types of services the agency provides (e.g. police, fire, types of public works services). However, staff researched and reviewed fee and cost data from other entities to provide a general comparison.
|
Agency |
TPA Name |
WC Annual Fee |
Average # of Open WC Claims |
Average WC Fee per Claim |
|
Redondo Beach |
AdminSure |
285,600.00 |
159 |
1,796.23 |
|
Laguna Beach |
AdminSure |
166,116.00 |
92 |
1,805.61 |
|
Hawthorne |
AdminSure |
165,420.00 |
90 |
1,838.00 |
|
Manhattan Beach |
AdminSure |
258,876.00 |
138 |
1,875.91 |
|
Newport Beach |
AdminSure |
430,000.00 |
223 |
1,928.25 |
|
Hermosa Beach |
AdminSure |
74,364.00 |
38 |
1,956.95 |
The comparison shows that the pricing of the workers’ compensation services for the City of Manhattan Beach is in a comparable range to other jurisdictions on a per claim basis. In addition to ensuring competitive pricing, staff also considered the significant time required to transition to a new TPA, the challenges a new adjuster would face in gaining the same depth of knowledge about the City’s claims while maintaining the level of communication that has been successfully established, and the potential impact on staff and employees with workers compensation claims. By not needing to devote staff time and resources to managing such a transition, staff is able to focus time and resources on process improvement, injury and illness prevention, wellness, and safety training.
The proposed five-year agreement includes a 3% annual increase. These modest increases reflect the TPA’s commitment to continuing as the City’s workers’ compensation administrator. Having a competent TPA provider that is committed to program improvement and also develops a familiarity with the City’s work environment and claims issues creates a stable and effective program.
Pursuant to the Manhattan Beach Municipal Code (MBMC) Section 2.36.130, contracts for the services of specially trained and professional individuals are exempt from the bidding process. However, if the contract amount reaches or exceeds $75,000, it must receive approval from the City Council. Accordingly, staff recommends that the City Council adopt the resolution approving the agreement with AdminSure, Inc.
ENVIRONMENTAL REVIEW:
The activity subject to this action is not a “project” as defined in Section 15378 of the California Environmental Quality Act (CEQA) guidelines. Therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA.
LEGAL REVIEW:
The City Attorney has approved the agreement as to form.
ATTACHMENTS:
1. Resolution No. 26-0063
2. Agreement - AdminSure, Inc.