55E - RESO JOINT POWERS AUTHORITY

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Approve Joining ICRMA and Insurance Costs for FY 19/20 July 2, 2019 Page 2 e. Approve the City's participation in Independent Cities Risk Management Authority's Cyber Liability Insurance Program from July 1, 2019 to June 30, 2020 at an estimated premium not to exceed $22,000. f. Approve the City's participation in Independent Cities Risk Management Authority's Earth Movement & Flood and Difference in Coverage Program from July 1, 2019 to June 30, 2020 at an estimated premium not to exceed $310,000. g. Approve the City's participation in Independent Cities Risk Management Authority's Crime Insurance Program from July 1, 2019 to June 30, 2020 at an estimated premium not to exceed $15,000. h. Approve the City's participation in Independent Cities Risk Management Authority's Terrorism Insurance Program from July 1, 2019 to June 30, 2020 at an estimated premium not to exceed $12,000. i. Approve the City's obligation to pay the State of California Department of Industrial Relations (DIR) fee for the Workers' Compensation Program from July 1, 2019 to June 30, 2020 at an estimated cost not to exceed $300,000. DISCUSSION The City's insurance rates are increasing and our previous excess insurance pool, BICEP, is dissolving effective July 1, 2019, therefore, staff is recommending membership in another pool, which will mitigate the rising costs but change the structure of the insurance parameters. Staff is recommending that the City join Independent Cities Risk Management Authority (ICRMA), a joint powers authority comprised of California cities that joined together to protect each other, their officers, employees, and property against unavoidable losses through risk management support, pooling of losses, self-insurance, and purchased insurance. ICRMA was formed in 1980 in accordance with California Government Code Section 6500, et seq. ICRMA is governed by its members. The Governing Board consists of one representative from each member agency. The recommended proposal would result in the City being covered by more types of insurance, decreased premiums, and a change in the deductible/self-insured requirements. The primary differences between the BICEP program and the ICRMA program are the changes in Self -Insured Retention levels (SIR) / Member Retention Level (MRL). In past years, the City has been able to have SIRs of $1 million for workers' compensation and $1 million for general liability. Initially, during the discussions of the dissolution of BICEP, the City of Santa Ana was able to remain at a $1 million SIR, however, due to the extremely hard commercial insurance market and the loss runs of the City for the last 10 years, Excess Pools were requiring SIRs of $2M and $3M or Member Contributions upwards of $5 million annually. After negotiations and extensive underwriter review, the City was able to include drop down insurance purchases to reduce the SIR to the current proposal of $1.5 million for workers' compensation and $2 million for general liability that will apply to all claims during this policy year of 2019/2020. While the coverages are not identical and the SIRs have increased in light of an extremely difficult commercial insurance market, the City will be saving over $853,000 or 17.4% to make this change. 55E-2