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CC - Adoption of a Resolution Providing Notice of the City of Culver City’s Intent to Withdraw from the Independent Cities Risk Management Authority.
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Contact Person/Dept: Serena Wright/ Human Resources Department
Phone Number: 310-253-5640
Fiscal Impact: Yes [X] No [] General Fund: Yes [] No [X]
Public Hearing: [] Action Item: [] Attachments: Yes [X] No []
Commission Action Required: Yes [] No [X] Date:
Commission Name:
Public Notification: (E-Mail) Meetings and Agendas - City Council (11/12/15)
Department Approval: Serena Wright, Human Resources Director (11/11/15)
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RECOMMENDATION:
Staff recommends that City Council adopt a resolution provided notice of the City of Culver City’s withdrawal from the Independent Cities Risk Management Authority (ICRMA).
BACKGROUND:
ICRMA is a risk pool which allows member cities to pool resources to purchase general liability, workers compensation, property, automobile physical damage, and other types of insurance coverage.
DISCUSSION:
The City has been a member of ICRMA for over 25 years, participating in the liability, workers compensation, auto physical damage, crime, and cyber insurance programs. The City joined ICRMA at a time when it was very difficult for cities to purchase stand-alone commercial insurance. Since that time, the insurance marketplace has stabilized and has become a welcoming place for public agencies.
Premium rates within ICRMA are established through a combination of payroll, losses, and an experience modification factor. In addition, rates also fluctuate based on the overall performance and financial standing of the pool. The last 3-years have presented a number of challenges to the pool due to substantial high-value claims. Over the last year, the City’s premiums have increased, overall, by approximately 13%, and it is anticipated that this upward trend will continue.
Culver City has established a good reputation over the years for its handling of risk management and other liability-related issues. Staff has begun exploring the option of securing stand-alone insurance coverage and has found that Culver City is attractive in the insurance marketplace and is well positioned to receive competitive rates. Such rates would provide significant savings within our insurance programs if the City were to transition to a stand-alone insurance program. For these reasons, staff is recommending the City withdrawal from ICRMA and pursue insurance coverage from stand-alone sources.
In order to withdraw from ICRMA and pursue stand-alone insurance in the commercial market, the City is required to provide notice, via a City Council Resolution, of its intention to leave the pool by December 1, 2015. The City would then have until January 15, 2016 to rescind its notice if necessary. The City’s current coverage with ICRMA would remain in effect through June 30, 2016, with new coverage being effective July 1, 2016.
FISCAL ANALYSIS:
The City Council Adopted Budget for Fiscal Year 2015/2016 includes sufficient appropriations for ICRMA provided insurance coverage for this fiscal year. Should the City Council take the recommended action this evening, the City is expected to realize significant savings in future fiscal years. Such savings is expected to be in the hundreds of thousands of dollars annually. Actual savings will be based upon insurance rates available at the time of coverage renewal (July 1, 2016).
ATTACHMENTS:
Proposed Resolution
RECOMMENDED MOTION(S):
That the City Council:
Adopt a resolution providing notice of the City’s intent to withdrawal from Independent Cities Risk Management Authority (ICRMA).