That the City Council authorize the City Manager to place the City’s primary earthquake policy with Landmark American Insurance Company at a policy limit of $5 million and assign excess coverage of $89.76 million to General Security Insurance, Palomar Excess and Surplus Insurance, Trisura Specialty Insurance, and Transverse Specialty Insurance for the term from April 19, 2026, through June 30, 2027.

The City’s current earthquake insurance policy, which expires on April 19, 2026, provides building, structure, and contents coverage for City-owned buildings. While typically a one-year term, Human Resources successfully secured an extension to align future renewals with the end of each fiscal year. To secure the most competitive renewal rates, staff directed Schrimmer Insurance, the City’s broker, to solicit competitive bids.  Schrimmer Insurance contacted 13 carriers and secured pricing proposals from five, including the City’s current carriers. Seven carriers declined to submit quotes due to the age of the City’s buildings. One carrier declined due to Reservoirs.

Current market conditions across the nation have made it challenging to find insurance carriers who are willing to quote earthquake insurance policies as a result of losses due to increasing destructive weather events, rising inflation, climate changes, as well as the current weather-related events in California. As a result of these events, insurance carriers are spreading their risk among all their policyholders in the form of higher premiums in order to pay for these claims. For this reason, Schrimmer Insurance was only able to secure five pricing proposals.

The most cost-effective proposal for the City's consideration is a combination bid from five of the City’s current carriers. This bid (Quote 1) from Landmark American Insurance (primary insurer) and excess layer with General Security Insurance, Palomar Excess and Surplus Insurance, Trisura Specialty Insurance Company, and Transverse Specialty Insurance for a total aggregate policy limit of $93.68 million for a total premium of $421,803. The total premium for the extended term of April 19, 2026, to June 30, 2027 (14+ month term) is $49,977 more than the $371,826 quoted for the standard 12-month renewal, but results in an overall lower per month premium cost.

Staff evaluated the costs and elements of all proposals and recommends renewing the City’s earthquake insurance policy with Landmark American (Quote #1) for a policy limit of $5 million at a 10 percent deductible and with General Security Insurance, Palomar Excess and Surplus Insurance, Trisura Specialty Insurance Company, and Transverse Specialty Insurance for excess coverage of $88.68 million policy limit at a 10 percent deductible, with a total premium cost of $421,803.
 
Landmark American Insurance, General Security Insurance, Palomar Excess and Surplus Insurance, Trisura Specialty Insurance Company, and Transverse Specialty Insurance Company all have insurance ratings by A.M. Best of A++, A+, or A- which indicates an excellent financial strength rating, and all demonstrate a high level of financial capitalization.

The City’s Earthquake insurance premium history for the last 10 years is listed below:

Sufficient funds for the earthquake insurance premium have been included in the adopted Fiscal Year 2025-2026 Risk Management Budget. Staff recommends acceptance of the proposals of Landmark American ($5 million) and General Security Insurance, Palomar Excess and Surplus Insurance, Trisura Specialty Insurance and Transverse Specialty Insurance Company ($88.68 million) to include a 10 percent deductible at a premium cost of $421,803 for a term from April 19, 2026, through June 30, 2027.

General Plan Goal LU 17.1 Adequate Community-Supporting Uses

This recommended action achieves the following element of the City of La Habra's FY2025-26 Goals and Objectives: Goal 2, Objective A - Management of Public Revenues and Fiscal Assets.