HomeMy WebLinkAboutAgenda Report - April 4, 1990 (38)CU-UNCIL COMMUNICATION
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TO: THt CITY COUNCIL COUNCIL MEETING DATE
FROM: THE CITY MANAGER'S OFFICE APRIL 4, 1990
SUBJECT: STATUS REPORT OF THE CITY'S LIABILITY SELF INSURANCE PROGRAM
PREPARED BY: Assistant City Manager
RECOMMENDED ACTION: None required. Information only.
BACKGROUND INFORMATION: In late 1985, after two years of escalating premiums
for liability insurance, we found we could not`buy
liability insurance at any price. In February 1986
the we joined the California Joint Powers Insurance
Authority.
We did not pay premiums as such - the plan called for a program of sharing
losses. We would be responsible for the greatest portion of any loss we had but
the pooled money would allow us to initially pay any claims due. After five
years we would receive a return of our unused deposit or would be required to
put more money into the pool, if we had had experience.
The program has been successful beyond our dreams. The City of Lodi had no
claims against the pool in program year 1986-87. The Board of Directors has
determined it is prudent to return a portion of our rebate now rather than July
1992.
We will receive a check of $78,000 plus before the Council meeting of April 4.
The CJPIA now has in excess of $35,000,000 in the bank. Since its inception we
have paid out less than $750,000 in claims. There are some claims pending, but
as of this date that is all that has come out of the pool.
The interest on deposits provides funds to administer the pool, pay claims as
they come due and further increase reserves.
On July 1, 1990 the program will be much like a commercial insurance company in
that we will pay premiums, but will receive no rebate if we have a good year.
By the same token, if we have a bad year we will not have to put additional
funds into the pool. This will greatly reduce our premiums.
In December 1989 the Council authorized us to assume a self insurance retention
of $500,000 rather than $250,000.
C UNC787