Title
Resolution Increasing the City's General Liability Self-Insured Retention Level from $500,000 to $750,000 through the California Joint Powers Risk Management Authority with a potential cost savings of $50,000 in Fiscal Year 2022-2023
Staffreport
SUMMARY AND RECOMMENDATION
Staff recommends that the City Council approve an increase to the City's General Liability Self-Insured Retention (SIR) level from $500,000 to $750,000 through and in accordance with the City's agreement with the California Joint Powers Risk Management Authority (CJPRMA), and that the City Council adopt a resolution to approve this change as required by the CJPRMA.
BACKGROUND
The City currently maintains a $500,000 per occurrence SIR and participates in the CJPRMA pool above the $500,000 limit. The CJPRMA agreement provides that member entities may determine, on a year-to-year basis, their own self-insured retention levels. The City's SIR was established and remained at $1,000,000 from December 1, 1986 to June 30, 2012.
In March of 2012, the City Council approved a decrease from that $1,000,000 SIR to $500,000. The $500,000 SIR limit will no longer be available to CJPRMA member agencies due to:
1. The price increases observed in the national insurance market.
2. The impacts of wild fires and subsequent losses suffered in California communities over the last five years.
3. The inflationary pressures experienced in settlement payments for California governmental entities.
Put simply, California local governments-not just the City of San Leandro-have experienced an increase in the settlement costs associated with resolving tort claims.
The City's actuary, AON, evaluated the self-insured retention level and the possibility of increasing the SIR to $750,000. Based on 10 years of loss history, the City had three losses exceeding $500,000 and one exceeding $750,000. The increase to the SIR limit would keep insurance premium rates consistent with those rates the City pays currentl...
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