HomeMy WebLinkAboutAgenda Report - December 6, 1989 (60)COUNCIL
TO: THE CITY COUNCIL
FROM: THE CITY MANAC ERS OFFICE
COMMUNICATION
COUNCIL MFFFIM DATE
DECEMBER 6, 1989
SUBJECT: INCREASE SELF RETENTJON ON PUBLIC LIABILITY FUND
PREPARED BY: Assistant City Manager
RECOMMENDED ACTION: That the City Council authorize the City of Lodi to
assume a $500,000 self insured retention (deductible
or SIR) in the California Joint Powers Insurance
Authority (CJPIA) .
BACKGROUND INFORMATION The City presently has a $250,000 self insured
retention i n the CJPIA. Recently, bylaws were
changed to provide that losses would be distributed
according to payroll rather than according to loss
history.
W have available to us SIR's of $250,000, $500,000, and $1,000,000. Miny
;..members have dropped from the $250,000 SIR pool. I have been natified the
City of San Rafael is planning to leave that pool. If that is the case, the
City of Lodi's share of any loss from $250,000 to $500,000 would be 19.3%. If
there were a claim of $400,000 against any member, the City of Lodi would be
responsible for $28,950 of the claim. This amount would come from our premium
deposits.
Because this $250,000 is growing smaller, there is discussion to raise the
limit to $350,000. Under this plan, w would be responsible for 19.3% of all
claims over $350,000. To be in that pool would cost us $.30per $100 of
payroll, or apprdximately $36,000 to purchase a maximum of $121,050 of
protection if vie had one claim against us of $500,000.
Council should be aware of the downside. If vie had a number of paid claims
exceeding $250,000, NNe would be better off being at the $350,000 level rather
than the $500,000. E' the same token, the City of Lodi has never had a paid
claim in excess 0 $250,000, let alone $356,.000 or $500,000. The CJPIA has
only had two paid claims in excess of $250,000.
It seems prudent risk management to increase our SIR to $500,000, but continue
to budget for $250,000 and place the remainder in our Liability Reserve
account. Council is respectfully requested to approve the attached resolution
allowing the City to drop from the $250,000 SIR pool.
Respectfully submitted,
JERRY L. GLENN
Assistant City Manager
CCCJPIA/TXTA.OIV
RESOLUTION NO. 89-177
89-177
RES89177/TXTA.02J