Gainesville City Council will be weighing its desire to cut costs with its appetite for financial risk this year.

The city is considering switching to a self-funded workers' compensation plan for its 700 employees that has the potential to save the city hundreds of thousands in costs — that is, if everything goes as hoped.

Steve Heinen, vice president of risk services at broker Insurance of America, delivered a pitch to the Gainesville City Council on Thursday to talk about the potential savings with self-funded workers' compensation insurance.

In a self-insured plan, the city would assume larger financial risk for its workers' compensation, but would also be in a position to take more control over the workers compensation process.

"As you take more risk, there is an opportunity for big savings," said Cindy Mallett, Gainesville's Human Resources and Risk Manager. "There's also additional risk."

Gainesville spent about $760,000 in 2011 and $840,000 in 2010 in workers' compensation costs.

The city is now insured through the Georgia Municipal Association, which provides workers' compensation insurance for cities across Georgia, including Oakwood and Flowery Branch.

Currently, Gainesville has a $50,000 deductible for each case of an on-the-job injury; if a case's cost reaches that cap, the insurance provider pays for the rest.

Under a self-insurance plan, the city could pay a lower premium (or up-front costs), but the cap for each case could be $400,000. Essentially, the city would be paying nearly all of the costs of workers' compensation charges. Thus, a few costly employee injuries could get expensive.

With more independence to be part of the workers' compensation process, Heinen said, the city could get most of its savings and reduce risk through "tighter claims controls."

In other words, if the city was taking on more risk for workers' compensation claims, the city and the workers' would have more incentive to reduce on-the-job accidents through better safety. There would be a greater effort to examine city policy to find areas to cut employee risk.

The city had 101 reported workers compensation cases in 2011 and 132 in 2010. Some of the cases, Mallett said, were reported but never amounted to costs to city.

"We're going to work hand-and-hand," Heinen said of the insurance broker. "We're not going to give you a manual and say, ‘Figure it out.'"

That philosophy and the cost savings peaked council members' interest.

"The idea that we can take over our own destiny is a big plus for the city of Gainesville," said Mayor Pro-Tem George Wangemann. "For that reason, I think we ought to seriously consider self insurance."

Heinen said that given the size of the city, self insurance makes sense.

Gainesville considered self-funded workers' compensation four years ago, but didn't make financial sense at the time. Gainesville actually had a self-funded workers' compensation plan until the late 1990s.

However, Mallett introduced the idea of exploring self-funding again when the council approved renewing its current workers compensation program in December.

City council was in agreement that the city should take a closer look at the concept.

There is no time line yet for when city council could make a decision, but Mallett said her staff would begin exploring quotes from providers to see if a switch makes sense.

There are 20 similarly-sized cities including Forsyth, Lawrenceville and Duluth that are paying significantly in premium costs thanks to going self-insured for workers' compensation, Heinen estimated in his presentation. "All of your peers have adopted it," he told the council.