CITY COUNCIL MEETING DATE: 09/01/2026
AGENDA REPORT AGENDA HEADING: Regular Business
AGENDA TITLE:
Consider a report on the feasibility of developing a joint powers authority to provide landslide insurance coverage t individuals.
RECOMMENDED COUNCIL ACTION:
1) Receive and file this report on the feasibility of developing a joint powers insurance authority for landslide-related claims by individuals; and, 2) Direct staff to submit a letter to State Legislators and State Insurance Commissioner to consider creating a program similar to the California Earthquake Authority and the California FAIR Plan Program to consider providing individuals with basic landslide insurance.
FISCAL IMPACT: None
Amount Budgeted: N/A
Additional Appropriation: N/A
Account Number(s): N/A
ORIGINATED BY: Catherine Jun, Deputy City Manager CJ
REVIEWED BY: Same as below
APPROVED BY: Ara Mihranian, AICP, City Manager
ATTACHED SUPPORTING DOCUMENTS:
None
BACKGROUND:
On July 18, 2023, then-former Councilmember John Cruikshank and now Mayor Paul Seo requested staff to research the possibility of forming a joint powers authority (JPA) to provide individuals with insurance coverage for landslide-related claims and damages.
This request stemmed from concerns that landslide insurance coverage is not available to residents impacted by the acceleration of the Greater Portuguese Bend Landslide Complex.
1 At the residential level, most policies exclude damage resulting from non-earthquake related earth movement damage, including landslide, land subsidence, sinkhole, slope failure, or shifting soil. Given these challenges and the past City Council’s request, Staff has conducted research on whether a JPA or other form of insurance program may address this gap in providing landslide insurance to residents.
DISCUSSION:
JPA Overview
Under California Government Code §§ 6500-6536, JPAs are legally created entities that allow two or more public agencies to jointly exercise powers that they have in common.
This structure allows participating agencies to combine their resources, coordinate services, and achieve economies of scale that yield greater financial and operational benefits to the taxpayers they serve.
As mentioned above, JPAs can only administer powers that are common to the participating public agencies as outlined in their joint powers agreement. They cannot administer powers that they currently do not exercise or have authority for. Illustrative examples of JPAs include, but are not limited to:
- California Joint Powers Insurance Authority (CJPIA)
o Pools and manages the risks of its participating agencies, including liability, workers’ compensation, property coverage, claims administration, and risk management services. The City is currently a member.
- Rancho Palos Verdes Joint Powers Improvement Authority (IA) o A separate legal governmental entity created on September 4, 1990, in accordance with the provisions of a Reimbursement and Settlement Agreement entered into by the City, the then-Rancho Palos Verdes Redevelopment Agency (now the Successor Agency), and County of Los Angeles in connection with the Horan Lawsuit. The Settlement Agreement requires funds to be set aside and expended to maintain landslide abatement improvements installed by the former Redevelopment Agency. - Clean Power Alliance (CPA)
o Operates a Community Choice Aggregation program that contracts for and purchases electricity on behalf of residents and businesses as an alternative to SCE. Rolling Hills Estates and 37 other communities are members.
- Southern California Association of Governments (SCAG) o Provides regional planning and coordination services, particularly around the topics of housing, transportation, and sustainability. The City is a member.
2 Public Agency Insurance Claims
CJPIA is a prime example of how a JPA can be used to help participating agencies pool and manage risk through self-insurance and risk-sharing. These shared pools help pay for certain liability, workers’ compensation, and other covered losses that each agency would otherwise need to manage on its own. CJPIA also purchases commercial insurance for certain risks and programs, including property damage and added coverage over and above the amounts retained by the pools. (Additional information about the City’s coverage under CJPIA is available in the Additional Information section of this staff report.)
CJPIA operates as a self-insurance risk pool rather than as a traditional insurance company. Under California Government Code § 990.8, public agencies may enter into joint powers agreements to pool self-insured claims and losses, and that pooling is not considered insurance or subject to regulation under the California Insurance Code. In contrast, traditional insurers issue insurance policies and are subject to the California Insurance Code. This distinction limits how the JPA structure may be used and is relevant to the question of whether a similar JPA could provide coverage to private residents affected by landslides.
Resident Insurance Claims
Government Code § 990.8 does not authorize JPAs to provide residential insurance to private property owners. Furthermore, Insurance Code § 700 generally prohibits a person from transacting traditional insurance in California without being admitted for the applicable class of insurance.
Staff reviewed two insurance mechanisms that could possibly serve as alternate insurance models for private residents in response to land movement: the California Earthquake Authority (CEA) and the California FAIR Plan Association (FAIR Plan).
Neither model provides general insurance coverage for non-earthquake-induced landslides such as the Greater Portuguese Bend Landslide Complex. However, each one demonstrates different ways to address risks not covered by traditional insurance.
1. California Earthquake Authority
The CEA was formed after the 1994 Northridge earthquake that caused an estimated $20 billion in residential damage, of which only half was insured. By 1996, the State Legislature created the CEA to administer a basic earthquake policy that any insurer could sell. It should be noted that the CEA is not a JPA. It is a legislatively created not-for-profit public entity of the State that is publicly managed and privately funded and is authorized to offer basic residential earthquake insurance.
Today, residential property insurers may offer earthquake insurance themselves or arrange for coverage through another insurer. Insurers that participate in the CEA offer CEA earthquake policies to their customers. Most opt into CEA, which 3 provides nearly two-thirds of residential earthquake insurance policies sold in California. CEA also currently reports approximately $19 billion in claim-paying capacity.
Coverage is available to individuals who are homeowners, condo owners, mobile homeowners, and renters. Depending on the policy, insurance can cover earthquake damage to the home, as well as personal property and loss-of-use living expenses. Deductibles, limits, and available options vary by policy. It may also cover damage resulting from an earthquake-induced landslide, but it does not cover damage from the City’s known Greater Portuguese Bend Landslide Complex or other landslides caused by groundwater, rainwater, or other non-earthquake reasons.
At this time, CEA cannot simply add non-earthquake landslide coverage under its current authority. Insurance Code § 10089.6 limits CEA’s authority to basic residential earthquake insurance and states that “The authority shall have no authority to transact any other type of insurance business”. Expanding that authority to provide non-earthquake landslide insurance or creating a separate mechanism for landslide insurance would likely require State legislation.
2. FAIR Plan
The FAIR Plan was established by State legislation in 1968 in response to difficulties obtaining property insurance in certain higher-risk areas. Today, the FAIR Plan serves as California's insurer of last resort and provides basic property insurance to property owners who cannot obtain coverage through the traditional insurance market.
To qualify for FAIR Plan coverage, an applicant generally must have interest in the property and make an effort to obtain coverage through the traditional insurance market. Its basic fire policy is a named-peril policy and is not the same as a traditional homeowners policy. Basic dwelling coverage includes fire and lightning, internal explosion, and smoke.
The FAIR Plan does not currently provide landslide coverage. However, Insurance Code § 10091 allows the FAIR Plan to include "other insurance coverages" that may be added with the approval of the Insurance Commissioner. It is not clear if that language allows adding coverage for non-earthquake induced landslide damage and would need further evaluation with the California Department of Insurance and legal counsel with no guarantees it will be permitted.
Other Considerations
There are several other issues that would need to be considered if a landslide insurance program were pursued.
4 California's insurance market continues to face challenges, particularly in geographic areas with higher wildfire and other natural disaster risks. Some insurance companies have reduced the number of policies they write in California or completely stopped writing new policies in certain areas. Requiring insurance companies to also take on landslide risk could have unintended consequences for the entire insurance market, including potentially affecting premiums or insurance availability for residents outside landslide areas.
The availability of landslide insurance also raises a question about whether it could encourage property owners to continue living in active landslide areas. The City may want to consider how an insurance program would work together with existing regulations intended to limit new construction in such areas.
It is also unclear whether properties in a known landslide area would qualify for coverage, similar to how pre-existing conditions are excluded from other types of insurance ranging from medical to homeowners’ insurance.
If the City Council wishes to further explore possible landslide insurance mechanisms for private residents, they may direct Staff to submit a letter to State legislators and the Insurance Commissioner to advocate for a landslide insurance program like CEA or the Fair Plan.
ADDITIONAL INFORMATION:
As it relates specifically to the City’s own insurance coverage, the City participates in two separate CJPIA programs: the Liability Program that provides coverage for certain claims against the City and the Property Program that provides coverage for certain City property or infrastructure damage.
The Property Program provides “all risk” coverage for direct physical loss or damage to City property, with some exclusions including damage resulting from non-seismic landslides. It generally provides a $50 million per-occurrence limit shared among all participating agencies, with a deductible of $20,000 per member per occurrence. The City’s property is currently insured according to a schedule of covered property submitted by the City to CJPIA, which directly determines our annual contribution amounts.
CJPIA’s Liability Program provides specialized liability coverage for third-party claims, including those arising from landslides such as the Greater Portuguese Bend Landslide Complex. From 1997 to 2024, the total incurred cost of land movement claims was approximately $70 million or 9.1% of all City claims covered. While claims may be infrequent (152 out of nearly 43,000), they can be costly and place a strain on the overall risk pool.
Prior to July 1, 2025, land movement claims under CJPIA’s Liability Program were not subject to a separate sublimit or deductible. However, in an effort to protect the pool while still providing some form of land movement coverage for members that need it, CJPIA newly established a member deductible of $125,000 and limited land movement coverage 5 to $10 million per member per year with a $30 million aggregate pool-wide limit - for any claims, effective July 1, 2025. At the time, CJPIA staff identified an estimated 19 members as having high land movement risk, including Rancho Palos Verdes.
Should the City wish to explore an additional risk-sharing pool to specifically provide additional coverage for landslide claims and/or property damage, it could potentially explore the feasibility of a separate JPA with other landslide-affected cities. The City began organizing a landslide coalition earlier this year, which could consider exploring that option with the participating cities. However, the marketplace for landslide and earthmovement liability and property damage coverage is significantly more limited than traditional coverage, per CJPIA staff. Furthermore, a smaller JPA may not have the purchasing power to obtain adequate insurance at a relatively affordable cost, and the start-up costs associated with establishing a JPA would require significant time and investment, the extent of which is unknown at this time.
CONCLUSION:
The City Council is being asked to receive and file this report and direct staff to submit a letter to State Legislators and the State Insurance Commissioner to consider creating a program similar to the CEA and the FAIR Plan Program to provide individuals with basic landslide insurance.
ALTERNATIVES:
In addition to Staff’s Recommendations, the following alternative actions are available for the City Council’s consideration:
1) Do not receive and file this report and request additional information. 2) Do not direct staff to submit a letter to State Legislators and/or the State Insurance Commissioner regarding a program to provide individuals with basic landslide insurance; or
3) Take other action as deemed appropriate.
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