City Council
Report
City Council Meeting: May 13, 2025
Agenda Item: 4.E
1 of 5
To: Mayor and City Council
From: Oscar Santiago, Director, Finance Department, Risk Management Subject: Approval of Second Modification to Agreement with Alliant Insurance Services, Inc. for Property Insurance Brokerage Services Recommended Action
Staff recommends that the City Council
1. Adopt a finding of no significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
2. Authorize the City Manager to negotiate and execute a second modification to agreement # 10433 in the amount of $525,605 with Alliant Insurance Services, Inc. for Property Insurance Brokerage Services for the Finance Department. This will result in a thirteen years amended agreement with a new total amount not to exceed $1,217,605, with future year funding contingent on Council budget approval.
Summary
The City requires professional property insurance brokerage services to protect its facilities and vehicles, valued at over $1.5 billion, against risks such as fire, floods, and earthquakes. Since the mid-1990s, Alliant Insurance Services, Inc. (Alliant) has served as the City's property insurance broker. This long-standing relationship exists primarily because Alliant provides exclusive access to the Alliant Property Insurance Program (APIP). The program was developed specifically to meet the extensive needs of America’s municipalities, hospitals, and nonprofit organizations. APIP has become the gold standard for municipal property insurance, with most California cities and counties participating in the program.
2 of 5
APIP offers several distinct advantages over traditional property insurance available in the market. It provides $1 billion in all-risk property coverage at competitive pricing that cannot be matched through standard market channels. It includes wave wash coverage for the Santa Monica Pier, which is a critical protection not available through other insurance products. It also features specialized coverages absent from traditional policies, such as tax revenue interruption and trained animal coverage (e.g., police dogs, patrol horses, etc.).
Given APIP's comprehensive coverage limits and specialized protections unavailable outside the program, maintaining the City's coverage through APIP is essential. Since APIP is exclusively available through Alliant Insurance Services, Inc., staff recommends that the City Council approve a five-year amendment to the agreement with Alliant in the amount of $525,605 under the exception to the competitive process set out in Santa Monica Municipal Code Section 2.24.250 (b).
Discussion
The Risk Management Division of the Finance Department is responsible for ensuring the City has sufficient insurance in place to cover all liability, workers’ compensation, and property losses. To secure comprehensive property insurance at competitive rates, staff relies on professional insurance brokerage services. Importantly, only professional brokers can obtain the crucial earthquake coverage needed for City buildings.
For more than three decades, Alliant has served as the City's property insurance broker under a flat fee arrangement. This is a notably advantageous model in an industry where brokers typically earn commissions of 10 to 15% on premiums. At the minimum commission rate of 10%, the City would have paid $489,934 in brokerage costs for property insurance in FY 2024-25, compared to $89,000 under the capped fee arrangement. Moreover, Alliant's fees have remained remarkably stable despite a period of high inflation. From 2017 to 2024, their fee increased by $8,000, representing
9.9% growth during the period when the Consumer Price Index rose by 27.5%. Staff 3 of 5
have negotiated a fee adjustment to $99,000 for FY 2025-26, with 3% annual increases thereafter.
The City has repeatedly selected Alliant as its property broker through multiple request for proposal processes due to one critical distinction: Alliant’s exclusive access to the APIP. This proprietary program makes Alliant the only vendor capable of securing the comprehensive property insurance coverage the City requires.
APIP provides an unmatched $1 billion in coverage limits at a cost impossible to replicate elsewhere. The program offers superior protection compared to traditional property insurance in several key areas. It includes complimentary builders' risk insurance for projects up to $25 million and provides errors and omissions coverage for buildings accidentally omitted from property schedules. Additionally, APIP delivers exclusive coverages unavailable in the standard commercial insurance market, including municipal bond protection, tax revenue interruption insurance, and trained animal coverage. Perhaps most vital is the wave wash coverage, which is essential for the Santa Monica Pier given future climate change impacts and cannot be obtained elsewhere in the commercial market.
On May 10, 2022, Council approved the first modification of the agreement with Alliant for property insurance brokerage services. With the current agreement set to expire on June 30, 2025, staff is requesting a second modification to continue the agreement for another five years. Alliant is the only qualified vendor to provide these services due to its proprietary APIP program, which offers property insurance coverage unavailable from any other provider.
Environmental Review
This agreement modification is exempt from CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines. The agreement is covered by the common sense exemption which states that CEQA does not apply, “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.” The agreement modification will provide for brokerage services that 4 of 5
would not have a physical effect on the environment, and as such, is exempt from CEQA.
Past Council Actions
Meeting Date Description
02/28/17 (Attachment A) Authorize agreement with Alliant Insurance Services, Inc. following RFP process.
05/10/22 (Attachment B) Authorize the first modification of the agreement with Alliant Insurance Services Inc.
Financial Impacts and Budget Actions
Staff seeks authority to approve available funding from the Self Insurance, Risk Management - Administration Fund to increase the amount of the agreement with Alliant Insurance Service, Inc. for property insurance brokerage services.
Contract Modification Request
Agreement
#
Current
Authorized
Amount
FY 2024-25
Modified
Request
Amount
Future
Years
Request
Amount
Dept Account #
Total
Revised
Contract
Amount
10433 $692,000 $525,605 $0 75300001.534540 $1,217,605
Future year funding is contingent on Council budget approval. 5 of 5
Prepared By: Oles Gordeev, Risk Manager
Approved Forwarded to Council
Attachments:
A. Attachment A 2.28.2017 Staff Report
B. Attachment B 5.10.2022 Staff Report
C. 6.28.22 First Modification of Agreement with Alliant D. 5.5.17 Professional Services Agreement with Alliant
E. Oaks Initiative Form
F. Levine Act Disclosure Form