Minnesota cities have relied upon the League of Minnesota Cities Insurance Trust (LMCIT) for their property, liability, workers’ compensation, and employee benefits needs. We are a member-driven organization that exists solely to meet the risk management and insurance needs of Minnesota cities.
LMCIT is a cooperative joint-powers organization formed by Minnesota cities in 1980—one of the first municipal self-insurance pools in the country. Cities contribute premiums into a jointly owned fund rather than paying premiums to buy insurance from an insurance company. The money in the fund is then used to pay members’ claims, losses, and expenses.
LMCIT's property/casualty program has about 1,200 members, and the workers' compensation program has about 1,000 members.
Each year, LMCIT collects more than $100 million in premiums in its property/casualty and workers’ compensation programs combined.
LMCIT also sponsors life, disability, and long-term care programs for members.
The private insurance market runs in cycles. Sometimes insurance is relatively cheap and easy to get. At other times, as in the late 1970s and again in the mid- and late-1980s, insurance became very expensive and hard to obtain.
In a “hard” cycle, if insurance companies view cities as undesirable or unpredictable risks, cities may not be able to find insurance at all. This happened during the late 1980s to cities throughout the country. Because LMCIT exists, Minnesota cities know they have a stable source of insurance coverage, regardless of private insurance industry cycles.
Cities have some unique needs that private industry’s insurance doesn’t address very well.
LMCIT’s coverages are specifically designed for cities. As new needs or problems develop, LMCIT modifies coverage or develops new programs to meet those needs, such as workers’ compensation coverage for benefits mandated by the state for peace officers suffering from post-traumatic stress syndrome.
In some ways, LMCIT functions much like an insurance company. Cities pay a premium to LMCIT and LMCIT pays claims and losses on the city’s behalf. However, there are very important differences between LMCIT and an insurance company.
LMCIT's purpose is to meet cities’ coverage and risk management needs, not to make a profit by selling insurance. And in the property/casualty and workers’ compensation programs, if LMCIT’s income from premiums and investments is more than what is needed for losses and expenses, the extra funds go back to the member cities. Since 1987, LMCIT has returned $320 million in dividends to cities.
To ensure that LMCIT is able to meet its responsibility to pay cities’ claims, LMCIT’s Trustees work to ensure the organization is strong and financially stable. A conservative approach to rates and reserves, a solid reinsurance program with some of the strongest reinsurers in the world, and regular actuarial reviews all help ensure that LMCIT will remain sound. In fact, by conventional insurance industry measures, LMCIT is stronger financially than most insurance companies.