Human Resources Department
www.santa-ana.org/HR
Item # 15
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
August 5, 2025
TOPIC: Renew Citywide Insurance Program and Policies Procured through Independent Cities Risk Management Authority and Arthur J. Gallagher
AGENDA TITLE
Approve Renewal of Citywide Insurance Program and Policies Through Independent Cities Risk Management Authority (ICRMA) and Arthur J. Gallagher, an Appropriation Adjustment of $1,345,359, Associated Insurance Premiums, Costs, Programs, and Regulatory Fees for Total Payments Not to Exceed $13,521,649 (Non-General Fund)
RECOMMENDED ACTION
1. Authorize the City Manager to approve payment of insurance premiums and associated programs to ICRMA in an amount not to exceed $9,501,254 for the protection of City assets from July 1, 2025 through June 30, 2026 including but not limited to:
a. Excess Liability Program
b. Excess Workers’ Compensation Program
c. Auto Physical Damage Program
d. Property and Equipment Program
e. Crime Program
f. Cyber Program
g. Associated Programs
2. Authorize the City Manager to approve payment of insurance premiums to Arthur J.
Gallagher, Broker, in an amount not to exceed $3,520,395 for ancillary coverages of City’s assets from July 1, 2025 to June 30, 2026 including but not limited to:
a. General Liability Buffer Program
b. Workers’ Compensation Buffer Program
c. Earth Movement & Flood and Difference in Coverage (DIC) Program d. Terrorism Insurance Program
e. Underground Storage Tank and Environmental Program
3. Authorize the City Manager to approve the City’s obligation to pay the State of California Department of Industrial Relations (DIR) estimated assessment in the amount not to exceed $500,000.
Renew Citywide Insurance Program and Policies Procured through Independent Cities Risk Management Authority and Arthur J. Gallagher
August 5, 2025
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4. Approve an Appropriation Adjustment of $1,345,359 in Liability and Property Insurance Revenue to utilize the fund balance through the Prior Year Carryforward revenue account (No. 08009002-50001) and appropriate spending of the original adopted budget in the same amount from the Liability & Property insurance account (No. 08009051-64010). (Requires five affirmative votes)
GOVERNMENT CODE §84308 APPLIES: No
DISCUSSION
Staff is recommending renewal with ICRMA, a joint powers authority formed in 1980 in accordance with California Government Code Section 6500. ICRMA’s purpose is to provide: 1) excess and re-insurance to protect member cities from extensive financial debt due to large claims, settlements, and judgments; 2) group insurance purchasing power that can offer broader coverage at a lower cost; 3) rate stability; and 4) protect individual member cities through pooling of losses and self-insurance. ICRMA also offers to its members actuarial services, appraisal services, loss control assessments and recommendations, safety trainings, claims audits, contract risk transfer consultation, and other services and resources. Currently comprised of 14 California cities, Santa Ana joined ICRMA in July 2019.
For this renewal period:
•The City’s Workers’ Compensation coverage experienced a decrease of approximately one-half percent (-0.5%).
•The City’s Liability and Property premiums increased approximately twelve percent (12%).
•The City’s Property & Equipment Program premium increased approximately one percent (1%).
•Overall, the City’s insurance coverages remain the same with the exception of an increase in earthquake insurance coverage from $25,000,000 to $40,000,000.
The increase to the cost of insurance is primarily due to the following ongoing reasons:
1. An insurance market with continually decreasing excess carriers willing to quote municipal government entities in California, especially those with Police departments;
2. High dollar jury awards of litigated matters against public entities;
3. High dollar settlements of litigated and non-litigated matters;
4. Rising cost of repairs and replacement of damaged vehicles, property, and equipment;
5. Increased number of claims filed against the City resulting from aging infrastructure including sidewalks and streets; and
6. Increased number of claims filed against the City resulting from damage caused by City owned trees.
Renew Citywide Insurance Program and Policies Procured through Independent Cities Risk Management Authority and Arthur J. Gallagher
August 5, 2025
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WORKERS’ COMPENSATION
COVERAGES FY 2023/24 FY 2024/25 FY 2025/26
Excess Pool Workers’
Compensation Program $ 415,464 $ 459,770 $ 428,629 Excess Workers’ Compensation
Buffer $ 264,085 $ 300,027 $ 327,547 Sub-Total $ 679,549 $ 759,797 $ 756,176 Percent Change 13% 12% -0.5%
LIABILITY AND PROPERTY COVERAGES FY 2023/24 FY 2024/25 FY 2025/26 Excess Pool Liability Program $ 6,070,925 $ 6,927,723 $ 8,202,559 Auto Physical Damage Program $ 145,108 $ 185,294 $ 188,102 Property & Equipment Program $ 593,557 $ 534,757 $ 538,928 Crime Program $ 15,394 $ 17,563 $ 18,518 Cyber Program $ 100,445 $ 118,787 $ 119,518 Associated Programs $ 5,000
Excess Liability Buffer $ 1,743,398 $ 1,805,650 $ 1,676,675 DIC Earth Movement & Flood $ 1,283,147 $ 1,353,245 $ 1,492,474 Terrorism $ 13,723 $ 14,652 $ 14,460 Underground Storage Tanks-
Environmental $ 12,539 $ 15,314 $ 9,239 Sub-Total $ 9,978,236 $ 10,972,985 $ 12,265,473 Percent Change 21% 10% 12%
FY 2023/24 FY 2024/25 FY 2025/26
City Special Events Insurance $ 300,000 $ 350,000 $ 0* State of California DIR $ 500,000 $ 500,000 $ 500,000 Total $ 11,457,785 $ 12,582,782 $ 13,521,649 *City Special Events Insurance is still being researched to best meet the needs of the City and may be brought before Council at a later date.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
The recommended action includes appropriating $1.3 million from the General Liability Fund balance. The table below compares the most recent actuarial valuations of claims liabilities and the City’s target reserve policy with the estimated spendable fund balances for both the Workers’ Compensation and General Liability Funds. Current actuarial Renew Citywide Insurance Program and Policies Procured through Independent Cities Risk Management Authority and Arthur J. Gallagher
August 5, 2025
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estimates indicate that liabilities exceed available fund balances. However, the City’s target reserve levels—set at 80% of actuarially determined liabilities, as determined biennially—are $35.8 million for Workers’ Compensation and $14.9 million for General Liability. To address this target reserve shortfall, staff has gradually increased overhead charges during the annual budget process, with the goal of restoring fund balances to target levels over time.
Workers’ Compensation General Liability
Actuarial valuation as of June 30, 2026
(Present Value)
$44,757,982 $18,646,692
Target Reserve (80% of liability) $35,806,386 $14,917,354 Estimated ending fund balance as of June
30, 2026
$19,801,925 $13,170,324
Estimated Target Reserve Shortfall $(16,004,461) $(1,747,030) After appropriation adjustment, the following table summarizes the funds budgeted and available for estimated premium and administrative costs.
Fiscal
Year
Accounting Unit
– Account
Accounting Unit
Description Account Description Amount
2025-26 08209054-64010 Workers
Compensation
Workers Compensation,
Insurance Payment
$ 1,300,000
2025-26 08009051-64010
Liability &
Property
Insurance
Liability & Property
Insurance, Insurance
Payment
$ 10,876,290
APPROPRIATION ADJUSTMENT
2025-26 08009051-64010 Liability &
Property
Insurance
Liability & Property
Insurance, Insurance
Payment
$ 1,345,359
Total: $ 13,521,649
EXHIBIT(S)
1. Agreement with Arthur J. Gallagher Insurance Brokers of California, Inc. For Insurance Broker Services, Client Service Agreement
2. ICRMA Member Contribution Invoice - Santa Ana
Submitted By: Lori Schnaider, Executive Director of Human Resources Approved By: Alvaro Nuñez, City Manager