Date:
May 7, 2024
To:
Mayor and Council Members
From:
Rachel Molina, City Manager
By:
Casey Brooksher, Assistant City Manager
Amanda Rose, Human Resources Specialist
Subject:
Risk Financing Study Contract Amendment
RECOMMENDED ACTION
It is recommended that the City Council authorize the City Manager to approve an amendment of $22,500 to the existing contract with Albert Risk Management Consultants (Albert Risk), for a revised not-to-exceed contract amount of $62,000 and approve a one-year contract extension for Phase Two of the evaluation process.
BACKGROUND
Due to increasing premiums, and lack of administrative support, in July 2023, the City entered into an agreement with Albert Risk to explore risk pool (insurance) alternatives for its property, liability and workers compensation risks including ancillary coverages such as cyber, crime, and others. The following table shows the increase of premiums:
Coverage
FY 2021-22
FY 2022-23
FY 2023-24
FY 2024-25
General Liability
$ 758,108
$ 887,440
$ 1,216,600
$ 2,192,700
Property
$ 221,220
$ 366,717
$ 504,588
$ 639,500
Workers Compensation
$ 681,880
$ 836,487
$ 848,300
$ 938,812
Crime
$ 1,921
$ 1,942
$ 1,984
$ 2,840
Cyber
$ 13,241
$ 22,787
$ 37,571
$ 73,020
Employment Practices
$ 59,077
$ 35,877
$ 50,697
$ 86,500
Auto Physical Damage
$ 29,289
$ 11,399
$ 12,427
$ 16,000
Deadly Weapon
$ 687
$ 905
$ 920
$ 970
Total:
$ 1,765,423
$ 2,163,554
$ 2,673,087
$ 3,950,342
The goal of this study was to analyze the City’s current risk pool, Public Entity Risk Management Authority (PERMA), and assess its ability to meet the City’s insurance, risk management, and administrative needs. In addition, the consultant would analyze other carriers to allow the City to determine the best potential fit for the insurance needs. Albert Risk provided a report to the City on April 29, 2024, which determined that California Joint Powers Insurance Authority (CJPIA), Public Risk Innovation Solutions Management (PRISM), and California Intergovernmental Risk Authority (CIRA) may provide a better service to the City.
The following table details the statistics of the top ranked firms:
Basic JPA Elements
CJPIA
PRISM
CIRA
PERMA
Number of Members
117
354
53 31
Number of Cities (#)
92 136
44 21
Number of Cities (%)
79%
38%
83%
68%
City Population (Average)
32,928
103,647
22,000
59,363
Founded
1977
1979
2021*
1985
*Originally formed in 1986 as CA Municipal Insurance Authority
ISSUES/ANALYSIS
The report dated April 29, 2024 is considered Phase One of this process. As mentioned, Phase One determined if there are other potential providers that could offer improvements/enhancements to services currently offered by PERMA. During Phase One, cost is not considered as a review component; similar to the process of the profession service agreement (PSA). It is during Phase Two, that the top ranked firms are invited to submit insurance premium estimates which will be compared to the City’s current provider PERMA. It is during this phase that the City will have to provide key financial data, such as its annual comprehensive financial report (ACFR), budgets, and listing of all assets to be insured. Albert Risk will assist staff through this process to ensure that the City will ascertain the best financial quote for insurance services. Additionally, Albert Risk will assist with the negotiation of rates, should the City determine to transition from PERMA.
CITY GOAL SUPPORTED BY THIS ITEM
Financial Health – Maintain a balanced budget and adequate reserves.
Organizational Health – Foster a high performing organization that provides opportunities for professional growth.
FISCAL IMPACT
Sufficient funding for Phase Two of this review will be included in the Division’s programs in the proposed Fiscal Year 2024-2025 Budget.
ALTERNATIVE(S)
Provide staff other alternative(s)
ATTACHMENTS
City of Hesperia Risk Financing Options for Property, Liability, and Worker’s Compensation City of Hesperia STAFF REPORT City of Hesperia STAFF REPORT City of Hesperia
STAFF REPORT
City of Hesperia
STAFF REPORT