TO:Andrew P. Powers, City Manager
FROM:Jeanette D. Green, Human Resources Director
DATE:June 10, 2025
SUBJECT: City Insurance Renewals
RECOMMENDATION:
1. Authorize City Manager or designee to purchase insurance policies for excess liability, deadly weapon response, contractual liability insurance, aircraft (drone), excess workers' compensation, government crime, property, and earthquake, for the term of July 1, 2025, through June 30, 2026, in an amount not to exceed the expenditure authorization for the policies identified hereafter.
2. Authorize expenditure in an amount not to exceed $5,500 for FY 2025-26 from A/C #001-0520-612-6340 (General Fund, Insurance (Non-payroll), for renewal of government crime insurance.
3. Authorize expenditure in an amount not to exceed $960,000 for FY 2025-26 from A/C #711-0520-686-6312 (Liability Internal Service Fund) for payment of premiums for renewals of excess liability insurance, deadly weapon response insurance, contractual liability insurance and aircraft (drone) insurance.
4. Authorize expenditure in an amount not to exceed $135,000 for FY 2025-26 from A/C #712-0520-686-6321 (Workers Compensation Internal Service Fund) for renewal of excess workers’ compensation insurance.
5. Authorize expenditure in an amount not to exceed $2,050,000 for FY 2025-26 from the General Fund, Library Fund, ECTA Fund, Landscape Fund, Water Fund, Wastewater Fund, Transportation Fund, and Solid Waste Fund for property insurance and for Difference in Conditions (earthquake) insurance.
6. Find that this action is not a project as defined under the California Environmental Quality Act.
LEVINE ACT ITEM: Yes
City Insurance Renewals
June 10, 2025
FINANCIAL IMPACT:
No Additional Funding Requested: $3,150,500 is included in the Proposed FY 2025-26 General Fund Budget.
BACKGROUND:
The Human Resources Department is responsible for managing the risk of City operations. This includes the purchase of insurance policies to mitigate such risks.
Purchasing insurance helps protect the City from potential loss which could result from liability claims, automobile accidents, cyber-attacks, and/or workers’ compensation injuries. Staff identifies opportunities to mitigate potential risk and analyzes the coverage needed to minimize adverse impacts of potential exposure.
The City is currently self-insured for liability up to $2.0 million per occurrence. The City purchases excess liability coverage up to a $25.0 million aggregate limit. The City is also self-insured for workers' compensation, assuming responsibility for the first $0.5 million in claim expense per injury, per employee.
Since 2003, the City has utilized Alliant Insurance Services, Inc. (Alliant) (Irvine, CA) for the City’s insurance purchase needs. Alliant specializes in representing the needs of public agencies. Alliant provides the City with insurance brokerage services by assisting staff in marketing insurance needs and identifying the best insurance options available for the City. Additionally, they help to ensure all viable policy options are considered and perform typical brokerage services such as underwriting, marketing, and placing various lines of insurance.
DISCUSSION/ANALYSIS:
The City continues to face an increasingly complex array of risks and remains aggressive in pursuing a variety of insurance coverage to best meet the City’s needs. To assist in the analysis of policies available at the best cost and value for the City, Alliant markets and obtains proposals directly from carriers in the insurance market, as well as provides options for insurance purchases via joint purchase agreements and risk-sharing pools.
The City is in the process of receiving finalized written proposals for deadly weapon, contractual liability insurance, aircraft (drone), excess workers’ compensation, and government crime insurance, earthquake, property insurance and excess liability.
Insurance policies are proposed after Alliant completes the extensive marketing, vetting, and negotiation of bid proposals. However, to ensure the ability to make timely decisions to bind insurance coverage prior to the expiration of the existing City Insurance Renewals
June 10, 2025
policies, staff is seeking City Manager, or designee, authority to purchase insurance policies. Although insurance premiums were expected to rise significantly due to escalating climate disasters, major wildfires in California, and increased claims, the actual increases have been moderate, with only slight adjustments compared to last year. The following list of insurance policy renewals are proposed:
Excess Liability Insurance
Pending final, written proposals, staff is recommending continuing to purchase excess liability insurance through Public Risk Innovation, Solutions, and Management (PRISM). Alliant has provided premium cost estimates in an amount up to $935,000, an anticipated increase of approximately thirty-five percent for maintaining the City’s previous coverage. This would entail a coverage limit of $25.0 million and a self-insured retention (SIR) of $2.0 million. The City has experienced two claim filings in the past year that exceeded the prior $1.0 million SIR but would not have surpassed the current SIR threshold.
Excess Workers' Compensation Insurance
Excess workers' compensation coverage is currently provided by Arch Insurance Company, offering protection up to statutory limits for claims exceeding the City's self-insured retention of $500,000. The premium for this coverage is calculated based on the City's payroll and is subject to change accordingly. Arch has issued a one-year policy with a premium of $135,000. Alliant is in the process of finalizing a two-year policy with Arch that is expected to reduce premium costs over the next two fiscal years. Pending finalization of terms, staff requests contracting authority not to exceed $135,000 for the initial policy year.
"All Risk" Property Insurance
Pending final, written proposals, staff recommends continuing to purchase property insurance with the Alliant Property Insurance Program (APIP), which includes cyber and flood hazards. APIP is a municipal joint purchasing group that combines cities/agencies under one insurance program to provide a broad level of coverage with the benefit of premium discounts. It is recommended that the City maintain property insurance coverage through the APIP program with a standard deductible of $25,000 and a deductible of $10,000 for vehicles. Property insurance premiums are anticipated to decrease by about four percent due to a soft market, despite significant losses in the property insurance sector from natural disaster claims such as hurricanes, wildfires, and floods. Staff is requesting contracting authority not-to-exceed $1,500,000.
"Earthquake" Property Insurance
A "differences in conditions" policy covers earthquake damage to property. The insurance is placed with Arrowhead and is distributed amongst three carriers. It is recommended that the City maintain this separate policy for $50.0 million in City Insurance Renewals
June 10, 2025
earthquake coverage outside of the APIP program. The earthquake insurance premium is expected to decrease in line with the soft market projections for property insurance. Staff requests contracting authority not-to-exceed $550,000.
LEVINE ACT (California Government Code § 84308):
This item is subject to the Levine Act. City Councilmembers who have received a campaign contribution of more than $500 (aggregated) within the preceding 12 months from a party or their agent/representative, or a financially-interested participant involved in this proceeding may do either of the following: (1) disclose the contribution on the record and recuse themselves from this proceeding; or if applicable (2) return the portion of the contribution that exceeds $500 within 30 days from the time the official knew or should have known about the contribution, and participate in the proceeding.
All parties and their agents/representatives must disclose on the record of this proceeding any aggregated contribution of more than $500 made to any Councilmember within the preceding 12 months. Councilmembers are prohibited from accepting, soliciting, or directing a campaign contribution of more than $500 (aggregated) from a party, their agent/representative, or a financially-interested participant during a proceeding and for 12 months following the date a final decision is made. In addition, a party, their agent/representative, or a financially- interested participant is prohibited from contributing more than $500 (aggregated) to a Councilmember during a proceeding and for 12 months following the date a final decision is made.
COUNCIL GOAL COMPLIANCE:
Meets the following City Council goal:
C. Operate City government in a fiscally and managerially responsible and prudent manner to ensure that the City of Thousand Oaks remains one of California's most desirable places to live, work, visit, recreate, and raise a family.
PREPARED BY: Linda Quezada Assistant HR Analyst
HRD:180-30\lq\H:\COMMON\StaffReports\2025\06102025 Staff Report Insurance Renewals.docx