Human Resources Department
www.santa-ana.org/HR
Item # 16
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
July 21, 2026
TOPIC: Renew Joint Powers Authority Agreement with Independent Cities Risk Management Authority (ICRMA), Broker Agreement with Arthur J. Gallagher Risk Management Services, LLC, and the Citywide Insurance Program and Policies
AGENDA TITLE
Agreements with Independent Cities Risk Management Authority (ICRMA) and Arthur J.
Gallagher Risk Management Services, LLC, Appropriation Adjustment of $695,820, and Associated Insurance Premiums, Costs, Programs, and Regulatory Fees for Total Estimated Payments of $14,837,440 (Non-General Fund)
RECOMMENDED ACTION
1. Authorize the City Manager to execute the Agreement between the City of Santa Ana (“City”) and Arthur J. Gallagher Risk Management Services, LLC, broker of record from September 1, 2026 to August 31, 2029, for insurance brokerage services (Agreement Nos. A-2026-XXX and A-2026-XXX).
2. Authorize the City Manager to approve payment of insurance premiums and associated programs to ICRMA in an amount not to exceed $10,659,925 for the protection of City assets from July 1, 2026 through June 30, 2027 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
3. Authorize the City Manager to approve payment of insurance premiums to Arthur J.
Gallagher, Broker, in an amount not to exceed $3,677,515 for ancillary coverages of City’s assets from July 1, 2026 to June 30, 2027 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
f. General Liability and Excess Liability Program
Renew Joint Powers Authority Agreement with Independent Cities Risk Management Authority (ICRMA), Broker Agreement with Arthur J. Gallagher Risk Management Services, LLC, and the Citywide Insurance Program and Policies July 21, 2026
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2 4. Authorize the City Manager to approve the City’s obligation to pay the State of California DIR estimated assessment in an amount not to exceed $500,000.
5. Approve an Appropriation Adjustment of $585,164 in the General Liability internal service fund (account No. 08009051-64010) using fund balance. (Requires five affirmative votes)
6. Approve an Appropriation Adjustment of $110,656 in the Workers Compensation internal service fund (account No. 08209054-64010) using fund balance. (Requires five affirmative votes)
GOVERNMENT CODE §84308 APPLIES: Yes
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.
Santa Ana joined ICRMA in July 2019, after our previous risk pool dissolved. At that time, ICRMA was comprised of 23 California cities. Currently, there are ten (10) member cities, seven (7) of which have given notice that they intend to leave at the end of the 26-27 Fiscal Year. The ICRMA members are exploring possible structural changes that will keep the pool viable for the members and achieve its purpose. One such option may be joining a larger risk pool. There is also the possibility that ICRMA will dissolve in the next few years. City of Santa Ana staff is researching options to safeguard the City’s assets as well as working with the ICRMA members for a structure in the best interest of the City. Staff will provide an update next year with a recommendation for Council to ensure the City continues to be insured appropriately.
For this renewal period:
The City’s Workers’ Compensation premiums experienced an increase of approximately twenty-five percent (25%).
The City’s Liability and Property premiums increased approximately nine percent (9%).
Renew Joint Powers Authority Agreement with Independent Cities Risk Management Authority (ICRMA), Broker Agreement with Arthur J. Gallagher Risk Management Services, LLC, and the Citywide Insurance Program and Policies July 21, 2026
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2 The City’s Property & Equipment Program premium increased approximately fifty- nine percent (59%).
Overall, the City’s insurance coverages remain the same with the exception of an increase in Property and Equipment Breakdown Program insurance by an additional $150,000,000 Excess for property coverage.
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.
WORKERS’ COMPENSATION
COVERAGES
FY 2025/26
Premiums
FY 2026/27
Premiums
Excess Pool Workers’
Compensation Program $ 428,629 $ 549,918 Excess Workers’ Compensation
Buffer $ 327,547 $ 392,538
Sub-Total $ 756,176 $ 942,456
Percent Change 25%
LIABILITY AND PROPERTY COVERAGES FY 2025/26
Premiums
FY 2026/27
Premiums
Excess Pool Liability Program $ 8,202,559 $ 8,924,590 Auto Physical Damage Program $ 188,102 $ 195,771 Property & Equipment Program $ 538,928 $ 858,233 Crime Program $ 18,518 $ 15,215 Cyber Program $ 119,518 $ 111,198 Associated Programs $ 5,000 $ 5,000 Excess Liability Buffer $ 1,676,675 $ 1,793,707 Renew Joint Powers Authority Agreement with Independent Cities Risk Management Authority (ICRMA), Broker Agreement with Arthur J. Gallagher Risk Management Services, LLC, and the Citywide Insurance Program and Policies July 21, 2026
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2 General Liability and Excess Liability
Program for Dyer 18 $ 6,216 $ 6,838 DIC Earth Movement & Flood $ 1,492,474 $ 1,460,233 Terrorism $ 14,460 $ 14,920 Underground Storage Tanks-
Environmental $ 9,239 $ 9,739 Sub-Total $ 12,271,689 $ 13,394,984 Percent Change 9%
FY 2025/26 FY 2026/27
State of California DIR $ 500,000 $ 500,000 Total $ 13,527,865 $ $14,837,440
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. Recent actuarial valuations have increased from previous years and indicate that liabilities exceed available fund balances.
The City’s target reserve levels—set at 80% of actuarially determined liabilities, as determined biennially—are $41.8 million for Workers’ Compensation and $22.9 million for General Liability. The increase in the actuarial liabilities is due to a number of factors: our self-insured amounts have changed over time and the recent valuations reflect our current levels. The valuations also reflect recent claims, judgements, and settlements. The Workers Compensation valuation includes employee increases exceeding previous actuarial estimates.
Workers’ Compensation General Liability
Actuarial valuation as of June 30, 2027
(Present Value)
$52,232,833 $28,622,806
Target Reserve (80% of liability) $41,786,266 $22,898,245 Estimated ending fund balance as of
June 30, 2027
$15,954,612 $11,987,670
Estimated Target Reserve Shortfall $(25,831,654) $(10,910,575) To address this target reserve shortfall, staff will continue to gradually increase overhead charges during the annual budget process, with the goal of restoring fund balances to target levels over time.
As one-time monies become available due to expenditure savings or revenues that exceed estimates, staff may propose contributions to these funds to close the shortfall between balances and reserve target levels.
Renew Joint Powers Authority Agreement with Independent Cities Risk Management Authority (ICRMA), Broker Agreement with Arthur J. Gallagher Risk Management Services, LLC, and the Citywide Insurance Program and Policies July 21, 2026
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2 ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
The recommended action includes appropriating $585,164 from the General Liability and $110,656 from the Workers’ Compensation fund balances.
If City Council approves the appropriation adjustment, the following table summarizes the funds budgeted and available for estimated base premium and administrative costs.
Fiscal
Year
Accounting Unit
– Account
Accounting Unit
Description Account Description Amount
2026-27 08209054-64010 Workers
Compensation
Workers Compensation,
Insurance Payment
$ 1,331,800
2026-27 08009051-64010
Liability &
Property
Insurance
Liability & Property
Insurance, Insurance
Payment
$ 12,809,820
PROPOSED APPROPRIATION ADJUSTMENTS
2026-27 08209054-64010 Workers
Compensation
Workers Compensation,
Insurance Payment
$ 585,164
2026-27 08009051-64010 Liability &
Property
Insurance
Liability & Property
Insurance, Insurance
Payment
$ 110,656
Total: $ 14,837,440
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
3. Arthur J. Gallagher Ancillary Insurance Coverage Invoices Submitted By: Lori Schnaider, Executive Director of Human Resources Approved By: Alvaro Nuñez, City Manager