That the City Council authorize the City Manager to renew the City’s excess Workers’ Compensation reinsurance policy with Safety National Casualty with a policy limit of $50 million and a Self-Insured Retention (SIR), or deductible, of $1 million per claim for all employees at an annual premium cost of $230,050 for the period of March 20, 2023, through March 20, 2024.

The City’s current excess Workers’ Compensation policy will expire on March 20, 2023.  In an effort to secure the lowest cost renewal option, staff directed the City’s broker, Schrimmer Insurance, to solicit bids from reinsurers. Schrimmer contacted four carriers, of which only one submitted a price proposal and one carrier declined to quote due to the number of open claims.

Current market conditions across the nation have made it challenging to find insurance carriers who are willing to quote workers’ compensation policies for cities, especially due to the risk of exposure from public safety operations. For this reason, Schrimmer Insurance was only able to secure one pricing proposal, which is from the City's current carrier, Safety National Casualty. They indicated that the cost of insuring police personnel continues to be a significant factor in obtaining quotes and has significantly impacted workers’ compensation insurance premiums.

A summary of the City’s current coverage and quote for the excess Workers’ Compensation reinsurance is listed below:

Safety National Casualty’s proposal (Quote 1) has an excellent rating and superior financial strength, and its proposal includes a $1 million Self Insurance Retention (SIR), or deductible, for all employees (including police), and an aggregate policy limit of $50 million, at an annual premium of $230,050. This proposal represents a premium increase of 8.3%, or $17,768 compared to the City’s current annual premium of $212,282.

Staff recommends renewing the City’s excess Workers’ Compensation reinsurance with Safety National Casualty.  This will provide coverage for all City employees with a $1 million SIR and an annual premium of $230,050. 

Sufficient funds for workers’ compensation insurance premiums have been included in the adopted Fiscal Year 2022-2023 risk management budget.  Staff recommends acceptance of the pricing proposed by Safety National Casualty with a $1 million SIR at an annual premium cost of $230,050.

General Plan Goal ED 9 Fiscal Strength-Stability

This recommended action achieves the following element of the City of La Habra's FY2022-23 Goals and Objectives:
Goal 2, Objective A - Management of Public Revenues and Fiscal Assets