That the City Council authorize the City Manager to renew the City’s excess Workers’ Compensation reinsurance policy with Midwest Employers Casualty Company and a Self-Insured Retention (SIR), or deductible, of $1 million per claim for all employees at an annual premium cost of $254,916 for the period of March 20, 2026, through June 30, 2027.

The City’s prior excess Workers’ Compensation policy expired on March 20, 2026. On March 16, 2026, the City Council approved a one-year renewal for excess Workers' Compensation.  Staff now requests an amendment to extend this term by an additional approximate 3 months (totaling a 15-month term) to June 30, 2027. The extended policy term will align the policy renewal period with the City's fiscal year-end each year. Moreover, the extension locks in current premiums through July 1, 2027, safeguarding the City from potential rate volatility for those additional three months. 

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 proposal from our current carrier, Midwest Employers Casualty Company. They indicated that the cost of insuring police personnel continues to be a significant factor in obtaining quotes. The quote for a 12-month premium was $181,814 based on FY 25-26 payroll figures. However, after receiving projected FY 26-27 payroll figures which had a higher valuation, the premium was adjusted to $198,750. 
                                                                                                                                              
Midwest Employers Casualty Company has an excellent rating and financial strength, and its proposal includes a $1 million Self Insurance Retention (SIR), or deductible, for all employees (including police), and no policy limit at an updated fifteen-month premium of $254,916. This proposal represents a premium increase of $56,166 for the extended 15-month term above the $198,750 for the 12-month term. 

Staff recommends renewing the City’s excess Workers’ Compensation reinsurance with Midwest Employers Casualty Company.  This will provide coverage for all City employees with a $1 million SIR and a premium of $254,916 for fifteen-months, with no cap on the policy limits. 

The City’s excess Workers’ Compensation insurance premium history for the last ten years is listed below. These are 12-month policies:

This recommended action achieves the following goal of the La Habra General Plan: 
General Plan Goal LU 17.1 Adequate Community Supporting Uses.

This recommended action achieves the following element of the City of La Habra's  FY 2025/2026  Goals and Objectives: Goal 2-Management of Public Revenues and Fiscal Assets/Objective A