Receive and file report through September 30, 2022 on County liability insurance programs. (No general fund impact) (Rinde)

As part of the Recommended Budget hearing on June 14, 2022, the Board requested an update and additional information on the County's liability insurance programs. This information contained in the report is to provide an overview of those programs and present costs. This report focuses on the general liability, worker's compensation and property insurances. It does not review specialized insurance coverages such as cybersecurity, medical malpractice, airport, or insurances associated with the administration of employee benefits including health, dental and life insurances. 

Background
The County joined the Yolo County Public Agency Risk Management Insurance Authority (YCPARMIA) at formation (1979) and YCPARMIA now includes approximately 32 public agencies in Yolo County. The County of Yolo is the largest and makes up between 48%-52% of payroll in a given year. YCPARMIA administers claims above member agencies deductible (typically $5,000) up to their Self-Insured Retention ($1 M on primary programs) and then contracts for excess coverage up to statutory limits or other appropriate thresholds, and administers claims on behalf of insurance pool members.

Cost
The County was concerned about substantial increases in insurance rates (especially excess insurance rates) over the last several years. In July 2021, the County sent a notice of its intent to withdraw from YCPARMIA and to use the time between July and December to study whether a better deal could be obtained. County staff looked at various options including a higher self insured retention (SIR) and obtaining insurance though another commonly used pool for Counties, PRISM.

After that lengthy process, it was determined that similar coverage through PRISM (with low deductibles) may not achieve savings; however, a higher SIR could achieve savings. The Board authorized the Interim County Administrator to negotiate with YCPARMIA and ultimately a 5% reduction to General Liability Coverage was obtained and a 10% reduction to Worker's Compensation coverage. These discounts were agreed to be examined on a periodic basis (minimum of every 5 years) to determine if they are actuarially sound to continue. After obtaining these discounts, the County withdrew its rescindable notice of withdrawal in March, 2022. 

The discounts are reflected in the cost trend table below. Unfortunately, insurance costs are still continuing to increase despite the discounts, but the County's increases in the last year were lower in percentage terms than that of other public agencies. A portion of the increase relates to the rate charged per county payroll; however, the remainder are increases in the costs associated with claims settlement and excess insurance coverages.

This item is to receive and file. County staff are not recommending any action at this time however will continue to closely monitor insurance costs in the future and work closely with YCPARMIA on risk management to attempt to reduce claims risk. 

The Department of Financial Services collaborated with the County Administrators' Office on this report.