Inside the MML Fund

The recent past has been a series of good news stories for municipal purchasers of workers compensation insurance. Class rates per $100 of payroll are dramatically lower than at the start of the 1990s. Fraud of the system is more difficult to perpetrate as magistrates review more requests for benefits with a jaundiced eye. Competition among insurers has never been stronger, with currently more than 200 insurers writing coverage in the state.

In this hyper-competitive environment, the Michigan Municipal League Workers’ Compensation Fund continues to thrive. But current circumstances were not always so. Workers’ compensation insurance usually has been a difficult market for municipalities. Historically, very few insurers have considered writing the coverage at all, let alone specialize in municipal insurance and develop cost-effective rating or loss control programs.

An especially severe "anti-municipality" insurance cycle occurred in the mid-1970s. Michigan cities and villages looked to their association, the Michigan Municipal League, for possible answers to the lack of available and affordable coverage.

In 1976, then-League Executive Director Robert Fryer asked Labor Relations Manager Gene Berrodin to study the feasibility of a League-sponsored worker’s compensation program. Using a program that the Texas Municipal League had been administering for several years as a model, the MMLWCF began operations on May 1, 1977, with two members.

The Fund’s early years were marked by rapid membership growth. The Michigan Municipal League, along with its reinsurers and service providers, was exploring new territory with its self- insurance programs. Under reserving of claims and a system that was unduly harsh on employers resulted in unstable financial results through the Fund’s first several years. But as the League gained administrative experience, the Fund’s stability improved.

Now in its 30th year of service, the MMLWCF has more than 835 members, more than $119 million in assets, and surplus of more than $59 million. The Fund provides its members the lowest rates and best claims and loss control service in the state. What started as a response to the lack of available coverage has evolved into a state and national leader in public entity group self insurance.