HomeMy WebLinkAbout1980-06-03; City Council; 6068-1; Self Insurance studyCITY OF CARLSBAD
AGENDA BILL NO. /, Q &(P'^^Lyu?L^o^dt? "^/ ^ Dept^Hd!/
DATE:
DEPARTMENT: Assistant City Manger Mgr.
Subject:
SELF INSURANCE STUDY
Statement of the Matter ;
In January 1980, the City Council approved expending $285.00 to join
with other San Diego County Cities to have a study made of self
insurance -for City liability. This proposal is attached for Council
perusal. •
Staff attended two meetings with representatives from other .County
cities where the plan was discussed.
The firm that made the proposal must now know whether enough cities
- -will participate to make the plan feasible.
Staffers -of ':the-opinlon that a great deal more study be done before
recommending that Carlsbad participate. However, staff does feel
that the Council should approve continuation of the study. •
In a separate Agenda Bill, staff is recommending renewal of the. Cities
existing insurance since the insurance expires July 1, 1980. ,7ln so
doing it would allow sufficient time for a final determination of
the self insurance-proposal.
Exhibit
' Design Study Liability Self Insurance Program
FISCAL IMPACT
None
RECOMMENDATION
That Council approve continuation of proposal and set July or
August: workshop to resolve final determination.
* Council Action:
6-3-80 Council approved continuation of the proposal and directed the matter be
set for workshop in July or August to resolve final determination.
May 7, 1980
Mr. Bill Baldwin
City of Carlsbad
1200 Elm Ave.
Carlsbad, CA.
Re: Comments on Municipality Liability Policy
Allianz
Allianz policy has a $25,000.00 deductible, which means that Allianz will
handle and pay all claims, and will bill the City for reimbursement under
the $25,000 deductible.
Self-Insured Program:
$100,000.00 SIR, which means, instead of $25,000 deductible, you have a
, $100,000.00 deductible. The City must set up a claims department at their
expense, which, I am sure, would run in excess of $50,000 per year.
Loss Fund:
If all cities under this proposal had a number of losses .under $100,000.00
your contribution to this fund would run into thousands of dollars per occurrence.
If a loss exceeded $100,000.00, then the excess carriers would pick up the
losses over $100,000.00, but the first $100,000.00 would be the City's expense.
The projected loss average for the Cities, as illustrated by Kindiler & Laucci
is absolutely ridiculous, in today's times. Bill, as far as I am concerned,
this is a hell of a gamble for the City take during these hard times.
Loss Prevention:
Allianz:
This handled by Allianz Insurance Co. at no cost to the City.
Risk Management:
The City must hire a Risk Manager, which, as both you and ^ know, would be
in excess of $30,000 or $40,000 per year.
Auto Coverage:
Auto coverage is not included in the Self-insured ^proposal.
Water Department:
* The water department is not included in the self-insured proposal either as
far as Mike Myers and I could determine.
KINBIER^IAUCGI
Page -2- ;
San Diegp County Cities
Design Study,
Liability Self-Insurance. Program
The: report contains a report of present insurance programs, .
proposed pooling and a comparison of -the programs.
We,.-have-, enjoyed working on this project and congratulate.you
a>ll for a forward looking risk management philosophy.
KINDLER &. LAUCCI
Lane B.. Sickles
'Vice President.
LBS:ws
Attachments
KINDLER # IAUCCI
San Diego .County Cities ,.
c/o Mr. Gene Asmus
Assistant. :City Manager
276 Fourth Avenue ••' .
>Chula 'Vista,; CA. 92010
Re: Design Study ' ': ' -
Liability Self-Insurance .Program
Gentlemen: . ' '. • . •
The following report details our study into the feasibility
of a Joint Liability Self.-Insurance Program.
The cities involved in this study are:
Carlsbad Imperial Beach
Chula Vista Lemon Grove
Coronado Oceanside
Del Mar ' National City
; . El Cajon Vista
Escondido
For development material we have taken the following steps:
1. Collection of risk characteristics
for each city.
. 2. Development from existing policy infor-
mation premium and coverage data. '..-
3. .Loss data. . ;
4.: Discussions wi-th underwriters ,to de-
velop excess insurance premium.
5. Contact with claims- administration
firms for costs of services.
KINDIER # lAUeCI
SAN DIEGO COUNTY CITIES
DESIGN STUDY
JOINT POWERS LIABILITY PROGRAM
- SELF-INSURANCE. POOL .
APRIL 1980.
Kindler & Laucci
Public, Entity Division
.'.•••:•' INDEX
.', --'•'.''"' ;^ ': . ' ' '• SECTION
•CURRENT RISK COSTS;..' ;. ... ...<....... 1-
Insurance Premiums.. ... . ........... 1
Deductible. . .... ...... .... ........ 2
Claims Administration......... ........... 2
Loss- Prevention.,.. . . . ... . . ......... ... 2:
'PROPOSED PROGRAM.;. . . ..... . ..... 3
.Retention Level.......... 3
Excess; Insurance, .... . . ; .-.'..,... 3 •
. Pool Insurance 4
Losse;s:............,....,........-.........,.....'..,.......,.. 4
- GENERAL ADMINISTRATION..... ... ...... .......... . ... . .... .,6
Reco.rd'keeping.... .... ............ .;*. .............. 7
Risfe.Management:....... .,.,. ......;. ..... ......... ..'-. .... 8
Claims; Administration. .,.,. ........ .......... .... .- 9
COST. 'ALLOCATIONS....... .",..., ...... , :...... 12
Excess Insurance................................... " 12
Administration. ...... ...... 13
Loss Control. ......... .....'. . . 13
Claims Administration. . . . . . ... ... . ......... . •.'.:.... 14
, LOSS': POOLING, ..,./. ....... , ....... .. 15
JOINT POWERS AUTHORITY.- . .22
IMPLEMENTATION. ...: , 24;
' '••'.. -'EXHIBITS. •'.'.'
Current: Purchased Insurance.
Joint Powers Authority Pool Costs •
Loss Data -
Joint. Powers Authority Document
CURRENT''RISK COSTS
To- present a soundang-board for a proposal, to pool costs,, we must,
first measure the costs of the current individual programs.
The total cost of risk:.is: • .
1,. Insurance premiums.
2. Losses-assumed under .retentions or deductibles.
3. Claims administration cost. " '. . .
. 4. ,Cost.:of loss prevention services.
INSURANCE PREMIUMS.. ' The present insurance: costs are
approximately $1,12:6,456.:00., These, costs; represent, programs
which range, from: first: dollar (no deductible) to $100,000 Self-
Re:talned Re-tentions. Total maximum limits of coverage range from
$2:,000,000 to $10,000,000- (see Exhibit #1.) .
1,
r
EQSSE-S ASSUMED' UNDER RETENTIONS OR DE-DUCT IBLES .. The cost of loss
under Self- Insured. Retentions can be measured for cities wi±h
claims administrators who record" all. losses. In cities which
have small deductible programs losses were not available as
claims: administration is. handled" by the insurance provider.
CLAIMS ADMINISTRATION COST'.. Separate contracts. with independent
claims administrators for coverage under Self-Insured Retentions
for the: cities of Chula, Vista, El Ca.jon,,, Eseondido and El Cajon
nalL C/)t^/)A^^cost approximately $4Q,OQO..OO per year . -V^r- w // Jr,,c ,. ££— y— i~— — ^ K ./ . ^ t-6-C CJ^^A/HX 40
: - Do• ;•', '. ., :• ;•.. • ;; : : / ;• - . -. -. •• . : . .. . . •
LOSS ' PREVENTION COSTS.. No separate contracts for -loss, prevention
were discovered'. Loss .prevention, services, if any, were-
delivered throug-h ther cost of purchased insurance,..
KINDLER^ IAUCGI
. PROPOSED PROGRAM:
This; section outlines the elements of the proposed program.
•RETENTION LEVEL •. , • ' ;.
The- insurance purchased by the Pool would be in various layers
starting at $100,000 per occurrence. The cities of El Cajon and
Oceanside currently have $100>000. Self-Insured Retention1s
Escondido and Chula Vista, have. $500,000 Self-Insured Retention' s.
Since; these cities have established programs and loss funds for
claim's, they would not contribute to the. loss fund with other '
cities.. These cities would, share in. the excess insurance, claims
administration and other benefits of the program.
EXCESS INSURANCE .. ' ...'•••-
The insurance provided by the Pool should be as broad as the
coverage- currently being carried by each participating city and in
many cases; broader. The excess insurance would be $10,000,000 over
a. $100,,000 or $500,,000 self-insured retention. Currently four
cities, have $10,.000,000 limits,, four have, $5,000, 000, two
$2,,000(;000 and one unknown. No cities maximum limit would be
reduced,.
BOOL: INSURANCE-
The loss pool, would be-; among; the cities not wishing to begin with
a .self insured, retention of $100,.000. For the; purposes of this
desig.n the pool participants' are Cities currently below the- . .
$100'i,OOQ. SIR level. Losses; after: a. $1,,000 deductible would be
paid from, the loss.fund which-is developed by contributions from
each; participating city. The- initial deposit is established at
1/2. of.: 1% of the estimated '79-'80 fiscal year operating budget.,
The deposit amount: is- generous based on past loss history. Should
••••....the losses exceed the deposited, amount,, an assessment would have
:-';. : "to. be; made. The loss fund can; be. for the purpose of. loss sharing, ffy
banking or a combination., This will be-discussed later.. .
LOSSES .'• ,: •..•'•-• -• ' . .
Losses, falling within the= pooled area will,,be the most: volatile
cost .portion. It is necessary to estimate expected losses so the
feasibility of a Self-Insurance Pool-can be determined at'a. proper
funding level..
A detailed breakdown of the loss data we were able to secure, is
contained in this report. To maintain a- conservative approach and
not 'overstate the estimated savings of a Self-Insurance Pool, we
KINDIEK & IAUCCI
reviewed the historical loss data for each city.. Each city's
losses werer averaged fb-r the past 3, 4 or 5 years, based on the'
best, data provided, (for example, we did not use current year
figures in computing, the average, if information was shallow and
would, pull down averages.) Paid losses, reserves and legal costs
were all used.
In -addition to, the reported loss history, the following charges
were added:
IBNR (Incurred But Not Reported Losses)'. Historical losses were
increased to add those possible: losses which may have occurred but
have; not been discovered or reported.. This factor was 10%.
TREND FACTOR. Our society is more claims conscious. From the
same exposure-we c;an expect more claims'to be filed in the future.
To compensate for. this, the historical, loss data, including the
increase for IBNR, was increased- 10%;. ',,'..
INFLATION.. A loss occurring in 1980 costs more, to settle than an
identical loss occurring in 1977 or 1978., This is due to
increases in medical, costs, increased costs to repair damaged
property, etc. to update losses to more, accurately reflect their
cost in. 1980. Historical loss data which was increased 10% for
5.
, IBNR, 10%: for, a trend factor, was increased again 20% for _ .
, . inflation., . • . - '-; -
.: GENERAL ADMINISTRATION • "'• •
Overall responsibility .for the- self-insurance pool (JPA), should
rest with a board of directors, composed of one member from each
participating:, city. This representative could be the manager',. ...
city finance director, or other individual within the city who is
currently handling the city's liability insurance program.
•;'0n—gp'i-ng. administration of the JPA could be'provided in several,
ways,: including:. . . . . •...'•
1.. Assignment of the function to a. current employee of one
of the cities,; with costs, being prorated among all
- participating cities. . . .. .
2, Delegating details to air insurance broker, •
3. . Rejtainlng the services of a risk management consultant..
4.. Hiring, a, single individual, as-an employee of the JPA, to .
• A _LO?n) "/tt J- S~/A* '"•*&*'.act._as. gisjcjianagement^ administrator. O5*S7" ^PP ' ^ .
It is recommended in the beginning: a. combination of these be used. . ,:
,. . !• Only Oeeanside has a full-time risk manager.. It is
• doubtful, that, this existing employee-would have
sufficient time to administer a program of this
magnitude:,, in addition to his current duties. Thus,
there does not appear to be: an existing employee
available to assume administrative responsibility.
2V While some: insurance brokers have the technical
capability to administer a self-insurance pool. As an
empl.oyee of an. outside firm. A; broker would ; possibly
not. be1 as responsive to participating cities as the
- members: desire..
3:. Use off a consultant on a retainer overcomes of the
• . objections above but there is still lack of direct
responsibility. If risk management would take more than
half an individual's time; (which it could), the cost-
would be greater using a consultant.
In; the beginning, the. Cities can mix- some self administration and
purchased, services to manage the pool. This-would be: - •
' 1... GENERAL RECORDKEEPING This could be contracted with the,
broker who would; .have a contract to purchase insurance
and. perform the following tasks for one flat fee.
a. -Insurance negotiation an- placement.
b. Allocation of costs among members.
.. c. Reporting loss data by city for paid' and reserves.
2. ACCOUNTING RECORDKEEPING This could be. contracted to
one of the ,cities and would involve.
a. Deposit collection from participating cities.
b. Payments for brokerage, excess insurance, claims
, administration and claims from loss fund.
c:. . Establish a financial recordkeeping system,
d. Selecting an independent audit firm.
3. RISK MANAGEMENT/LOSS CONTROL. Many self-insured cities -
'begin, by purchasing safety services without first
establishing a risk management .program to outline
resporisibiliby, goals and steps of the program. Risk
Identification,, and' Analysis Safety programs and Loss
Control Inspections would be a part of any program but
the program must be put together first-. The group should
•put together a safety comitee comprised of representa-
tives from each city. Working with a consultant they
would- develop a program. The JPA could
8.
then purchase needed services, to augment what the los's commitee
could, not find "in-house"., -.'.-•
CLAIMS ADMINISTRATION
Claims, administration: is a very important, part of the risk
management process,,: whose contribution toward cost'control and •- . '; . . ".;•,; '••'•' -;- .'.-••• •••• .-''•--.. .• . '• ',' - • %>**' •
efficient operation is essential.
.
v^\
Eublic liability is concerned with claims made by members of" the
.. -. • : '• V. - . .. .' -. . •''. " •'•"••• . .
public- against each city., Claims must be analyzed to determine
"",' '-. • " ' -.'-. •'-- - • ;-• . -. ••whether the city is liable,, and if so •,, for how much. Prompt
. ,-: ' : ' • ;••''-.:. •••••'' .'•'\) i? a>ttention to these- claims ,, fair treatment of those with merit "and
'' ' .'. •••.'.•' .' •' , •'. ; ; .;.•••'' • '- •'•
firm, opposition to those without basis will help control costs and
provide! greater equity to the public.
Eo,ur of: the cities participating in this study have- self-insurance
programs and contract for claims, administration services from an
outside:" firm., When a city is- under a fully insured or deductible
program,, the insurance: carrier has. absolute 'authority to pay any
clairni as. it sees fit. The city-does .not always know wha-.t
•.','' ' ' . •„ ' t
settlemerits are being made-,, which is not in the- city's best
'interest..,.. ' ' '' . • "' ."'.-''.'
9.
X
It is recommended that atf outside', claim administration service firm
bei retained to adjust the JEA's losses. It would' not Be necessary
for the. cities, currently self-insured to purchase claims adminis-
' tratioa -from- the. JPA Administrator,. however, it should be cost .. • • " ' • - •• . ' ><A*V
' " ' ' ' * ' ' * *•* *. • -'•
effective. This firm should be-: given authority to settle all claims * f"
'•' ' - ' -• - ' ..••'..•• >vv'V .'"•-under a certain amount (probably in the- $1,.000 to $2 ,000 .range) . . ,»<
Claims above- this amount would be approved: by the General Manager ,. .
legal, counsel for the JPA, the JPA board of directors or some
combinatipn. .of the: three. - • . . .
The claim administration firm would be selected using the following
process;:-.* • . .-•••.-:••'-. . • ' '.
1... Requests for proposals should be/sent to^ four or five
. liability claim administration firms. The proposals
would; require the firm to respond to questions such as
what adjusters would, be assigned to the account, case
and: experience backgrounds for these adjusters. They •-
should, also be asked to supply a copy of their -proposed • : .'
• service: contract and. their, computerized loss report.
2;. The written proposals should be reviewed and the. top
firms selected: for oral interviews.
10;
3.. Oral Interviews would be conducted with participants
including representatives from the, cities.
4. A claim, administration firm should be selected based on
the. written proposals and oral interviews.
Based, on our" evaluation of the loss history of participating cities
and, conversations with claim administration authorities, we
estimate the cost, of adjusting to conclusion all claims which occur
during the first year of operation at $46^,000. This is considered a
conservative, figure and actual costs-may be less.
The: claim, administration .firm, should provide a detailed monthly
loss report.. Most insurance company loss runs' do not provide loss
dat'a in a manner that is useful for'risk management purposes.
However, some independent claim administration firms provide very
good loss reports, which would be of benefit to the Pool. Useful
information these loss runs, would contain include:.
1., Date, location and time of loss..
2:,, Name of claimant
3.. Name of employee driver, if an automobile accident.
11.
14-.:• Description of accident:.,
, 5.. Amount of claim, including, indemnity and expense broken
down by paid and reserve-.
6,. A, summary of claims by:
a. City . . . . '
b.; Department
"- c. Cause•of loss . •
: . • : COST ALLOCATIONS
The; success, of~ any pooling program depends upon how equitably costs
are distributed among participants.
EXCESS INSURANCE' ' ' '•••'' - .
The first; s.tep taken by-an excess insurance underwriter in pricing
an account"is :to gather detailed hazard information and a loss
history.. Separate premium charges are. often determined for
different risks to which the city is" exposed and the individual
premium charges- summed to get the final premium. Then underwriters
frequently divide, the total premium by the insured's estimated
receipts or budget to develop-,a premium- rate.
The. budget method: is a, good way to make allocated charges for
several reasons, including: . "
12'
1. Budget information, is easy to obtain and. is more
difficult, to .manipulate than some- other underwriting
• factors'.. . '-•..'.; ' - . •
• 2...." As the entity grows ( and: risks increase) budget also
" inereases.j resulting in an increased premium.
We feel that prorating the cost of excess insurance among
participants.based on-budget, is equitable and is recommended
that this approach be- used.
GENERAL ADMINISTRATION. ' \ '. , .
The; costs of management (and attendant, purchased services) will
probably be spread., among participants roughly in proportion to
s-ize.; That is, 'the largest entities will require the .greatest
attention. Thus,, prorating general administrative costs on a
budget basis would provide: a reasonable distribution of this cost.
WSS CONTROL - ..;
To the- extent that, loss control services are provided by the pool
manager, they may be prorated on- a, budget basis. If outside loss
control services are required., they may be prorated either on a
budget basis- or charged directly to the using city. Reasons for
each, approach include: . '•'.
13.
KINDtER',& IAUGCI
1.. Prorating on- a. budget basis. To the extent that1 losses ' '
and. insurance, costs are pooled among participants, any
reduction in losses will accrue to the .benefit of the
entire group. Thus, all cities should participate in the
cost of loss reduction-efforts. • .
2,. -Gharge costs directly to using city. If a single city
engages in a particularly hazardous undertaking or over utilizes
'." the; services of outside loss control experts, it would be
". fair for "that city to pay the entire cost of outside loss.
control services., ,
The cost of outside loss control services will be relatively small., but
the group should discuss how they want the cost allocated. Throughout ,
the remainder of this report,, it is; assumed, this cost will be prorated
on a budget basis. ' •
'CLAIM ADMINISTRATION '
Claim administration firms charge for their services'in a variety of ways,
.including: .': •• .
.. 1. Percentage of incurred losses,
2:. Flat charge per claim,.
' - 3.. Flat annual fee, and :
4., Time- and expenses. • "..-.-• .
Method number one is generally undesirable from the self-insured's standpoint,,
as it' gives the claim administrator an incentive to overpay or overestimate
14.
reserves. Due to the,.difficulty and administrator would have
estimating the time necessary to adjust J.P.A. losses, it is
unlikely a reasonable1 quotation could be. obtained on a flat annual
fee basis. Thus,, "the claim administrator will probably be paid on
a. time and expense or flat charge per claim basis. Either method
will allow identification of the cost of adjusting each claim.
LOSSES ' . : -.-. •.
Losses are the most, difficult cost element to distribute on an
equitable basis. If the loss allocation formula is not carefully
developed:, one city may pay an unfair share; of another city's
losses-. . ' .
There are two items to consider-. First, is the establishment of a
loss-paying fund. This' is the contribution of each, city not
individually self insured, to pay expected losses. We have .
established what we believe is a generous loss fund. If losses
incurred by the Pool are less than the established fund, the total
J.P.A. will be successful. Therefore,, we: do not propose any
assessments if losses- for all cities in the pool are within the
deposit amount;, Everyone will be ahead, and you have truly "shared •
risk." Future- loss fund deposits can be surcharged or credited by
established rating formulas for those cities whose losses-vary from
15.
KtNDLER ^lAOCGI
fund deposits. In- this method certain cities will pay a surcharge
while cities not using deposit amounts will receive a credit. This
would normally be after the .first three years of. operation.
The second portion is an assessment for losses if the amount
exceeds loss deposits. Each J.P.A. in California has adopted. .
different methods to handle this important and difficult item. We
would sugges-t three options.
Under- any formula cities who do not pool losses, but only participate
for excess insurance, loss control, etc. would not pay loss pool
assessments. An example of assessments follows:
' EXAMPLE; I • ' • ' ' • . ' . .
Percentage- of Budget . Each city has the ability to absorb a certain
amount of fluctuatior^aithin. its budget. Under this method, each
city is charged with all of their incurred pool losses until the
total exceeds an established percentage of budget for the year.
Losses which exceed the established percentage for an individual
city are prora-ted based on total budget among all
For- the Study we have assumed a loss fund deposit of 1/2 of 1%. of
.budget. Under the Percentage of Budget we will cap direct loss fund
assessments- at 1%. of budget..
16.
KINDDER^IAUGCI
The rationale for the Percentage of Budget method is as follows:
1. Each city has the capacity to absorb- a small amount
. • of: fluctuation, in its budget-
2. Each city should, pay as large a portion of its losses
as possible.
3. Good experience for a. city is more favorably recognized
when the general, loss picture is bad.
"EXAMPLE II .'"•...'• , • '
The second method, is share of loss assessment when losses exceed
the deposit amount. Each city is assessed based on how much of
the loss fund they used. Under this method two factors make
assessments as equitable as possible. Assessments, when com^-
pared to percentage of budget are penalties for heavy users yet.
small cities can keep- assessments within manageable amounts.
EXAMPLE III ••"'.•''••
A final option would be. to use the loss fund as a banking plan;
Using this, option each city makes a'lo&s fund contribution, to
pay losses in excess- of the deductible. If losses exceed: deposit
amounts the'city has the choice of borrowing the excess from the
Pool, to be paid back with interest over a period of time, (usually
• 5 years maximum), or paying out of current budget.. You would still
have to establish an assessment formula in case the loan demands on
the. Pool exceeded funds available. Any assessments would be. returned
to the members. . . .
17.
. SHARE OF LOSS- - EXAMPLE': . DOLLAR ASSESSMENT
: Joint Powers Loss Pool ' $2:87 ,000 ,
Total; tosses ' - .425 ,000
;; 'Excess $138>,,000
."CITY; A ; .'''.'.•• '•••'••
Initial Contribution $25,000
-Total losses- above deductible $57,000-
= 13,4% x $138V000 = $18,492
CITY B ... • ••_.'..
Initial . contribution $'50,0.00
•Total losses above deductible $30,000
"' 4^000' =' ;7.1% x: $08:,000' ; ' = 9,798^
CITY; c ' . ;- . •• •.••...
•Initial 'contribution $10,000 . :
Total, losses above deductible $20,000
'' = 4*7% x $138»000' - = 6'486
CITY D; , - . ...... .•••;.•' ••.. .
Initial contribution $10-,.0.00'
tb-tal losses .above deductible $1.0,000
2.41 x :$.138:,,000 . - 3,-312
18..
•KINDLER # IAUCCI
SHARE OF LOSS - EXAMPLE: PERCENT OF DEPOSIT
CITY A
Deposit
Loss
Assessment
CITY B
Deposit
Los:s
Assessment
CITY C
Deposit
Loss
Assessment
CITY D
Deposit
Los:s
Assessment
$25,
$57,
nt $18 ,
$ 5 0 ,
$30,
nt $ 9,
$10,
.- $ 20 ,
nt $ 6,
$.1.0 ,.
$10.,
nt $ 3,
000
000
4-92
000
000
.798
000
000 - =
486 = .
000
000 =
312
228.% deposit
74% deposit
60% deposit
19.5% deposit
200% deposit
65.9% deposit
.100% deposit
33. 1% deposit
19.
KINDLER^IAUCCI
PERCENTAGE OF BUDGET EXAMPLE
Joint Powers Loss Pool
Total Losses: -
Excess
$287,000'
425,000
. $138,000
Each city.is assessed for losses paid by the Pool subject to a
1%. of budget maximum. '
For. this example we-will assume that $100,000 of the excess loss
is recovered by direct assessments. The remaining $,3_8_,_000 is
collected on a prorata share of Pool budget.
CITY A ' . .
Initial. Contribution $25,000
Total Losses $57,000
Deposit
Direct Assessment
Prorata Assessment
Total Assessment
$25,000 (1/2%)
$25,.000 (1/2%)
. 3,306 .
$28,306
Total Pool Budget
: . City A
8:. 7% x $38,000-
$287,000
25,000
3,306
20.
KINDtER & IAUCCI
CITY B
Initial Contribution $50,,000
'Total Losses $30,000
Direct Assessment -0-
Prorata Assessment $-. 6,612
Total Assessment $ 6 ,.612
Percentage of Pool budget 287 ,.000 + 50,000 = 17.4%
17.4 X 38,.000 = $6 ,,612, • .
CITY' C.
Initial Contribution $10,000
Total Losses $20,000,
Dieposit . $10,000
Direct Assessment: $10,000
Prorata Assessment 1 ,,330
Total, Assessment $11,330
Percentage of Pool, budget 287,000 +- 10,000 = 3.5%
3;:5% X' 38-,,000 = "$1,,330.
CITY' D •
Initial Contribution $10,000
Total Losses $10,000
Direct Assessment ' -0—.
Prorata Assessment $ 1,330
. Total $.1,330
21.
KESPDIER^IAUCGI
J.0INT POWERS AUTHORITY
The. legal form- or organization recommended for this group is
a- joint- powers, authority, which would, be a separate legal
entity composed of all participating cities. The organization
and, operation of the j.oint powers authority would be stipulated
in a-joint' powers agreement. Major risk management features of
this 'joint powers agreement, are discussed in this chapter.
PARTICIPATION. . . . . . • . ' • • . -
All cities participating in .the feasibility study can be accomm-
odated within the J.P.A. Should one or more cities decide
not, to participate, the total current cost of'liability risks for
the-remaining cities should be: in the $750,,OOX) to $1,000,000
range for successful implementation of a..self-insurance pool.
This study has included only cities in San Diego County, although
other cities could be: accommodated within: the pool. If other
cities" are Interested they; should join this group before quotations-
are obtained for excess insurance •coverage.. Once excess quotations
have been obtained,, new cities should be admitted only at the
beginning of each subsequent policy year. Underwriting standards
should, be developed and used as a guideline in accepting and
rejecting applications by new cities. . •
Participating cities should make at least a three^-year_jion^_
caneellable^commltmeirt to the pool,__to ensure the J..P,A. stability
during- its; initial years. Thereafter, any city could be allowed
to withdraw, but only at. a common anniversary date and with proper
notice; of withdrawal (a 6 month notice is .recommended). Withdrawing
cities would be required to-- pay their share of .all costs incurred
22,
KINDLERt* lAUCCI
during the- period of membership..
In all programs of this nature,, there may be participants that
do not. follow agreed program standards. Lack of cooperation
'may take several forms, such as: "
1. Failure to report claims.. :
2. Failure to discontinue certain unsafe practices.
3. Failure to pay premiums or assessments.
The joint powers agreement should state the basis for cancellation'
and the-procedures by which such cancellation may be effected.
JOINT; POWERS.: AGREEMENT AND BY-LAWS' •' ' - .
As stated in, the: introduction to this chapter1,
implementation of a joint liability pooling arrangement would
requrie a 'legal document clearly specifying the rights and
responsibilities of member' cities. 'This document, a joint
powers agreement, should contain all necessary ingredients for
creating and implementing a. joint powers authority. Aspects
of the program that may change several times should be .included '
within a set of by-laws- (e;g. meeting dates and cost -allocation
formula). '
Any document drafted by participating cities, should be. carefully
reviewed by their attorneys to refine legal terminology. In
addition,, each city manager should assess potential impact of the
agreement on that city's- financial structure.
While the-.joint powers agreement and by-laws should clearly define
the: rights and responsibilities of participating cities, flexibility
should be maintained so that the J.P.A. can quickly adjust to the
changing insurance,, legal and social environment and the varied
23,
KENDLER #IAUCCI
needs of member cities.
To- provide a basis upon which this group can draft a joint powers
agreement", a sample is included. . .
IMPLEMENTATION ' ' . •-. •' .' ' '
To implement the proposed: joint powers insurance authority, the
following plan of action should be followed: •
1. Obtain a preliminary commitment from participating cities, to .
proceed with implementation. • ' '
2',. Assign-a representative from each city to develop a joint,
powers agreement. " .
3:. Once ,an acceptable joint powers agreement has been drafted, '
obtain a. firm- commitment from participating cities to join
the self-insurance pool contingent upon the cost of excess
insurance and, other contract services being less than a
preestablished maximum.,
4.. Obtain excess insurance quotations. ' ,
5;. Select .a: claim administration firms.
6. ' Implement the self-insurance pool.
7. Establish a management, agreement.
Other' joint powers authorities with which we have worked have found
that substantial cost reductions and/or coverage improvements^ can, be
obtained, by pooling workers' compensation and property insurance .
24.,
KINDLER'.& IAUCCI
coverages. Some joint- powers authorities have also pooled employee
benefits. It is recommended that serious consideration be given
to studying the feasibility of pooling in these areas. Workers'
compensation particularly lends itself to this concept because of
the greater- predictability of losses and easier identification of
loss, exposures. • , • •
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SAN DIEGO LOSS FUND DEPOSITS
Annual Incurred •' Loss Fund
Loss Average . Deposit
CARLSBAD .$ 74.,734 $ 75,000
ij-SOfV®
CORONADO 11,442 25,000
DEL MAR 12,306 15,000
IMPERIAL BEACH 19,471 25,000
LEMON GROVE 40 •- 10.., 0.0.01
NATIONAL CITY . 57,621 60,00.0.
VISTA 10,000 (Est.) 25,000
$185,614 $235,000
t\l'< EVE EASE
CITY: CARLSBAD '•DATE: 3/5/8°
o
1
2
3
4
. 5
6
7
8
9
" 10
11
12
13
14
15
16
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19
20
21
22
23
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26
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CITY: CHULA .VISTfi DATE; 3/5/80
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9
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19
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KINDIER # IAUCCI
SAN DIEGO COUNTY CITIES
JOINT EXERCISE OF POWERS AGREEMENT
• ' - ' FOR
RISK MANAGEMENT AND RELATED INSURANCE COVERAGES
SAN DIEGOCOUNTY CITIES
JOINT EXERCISE OF. POWERS' 'AGREEMENT''.'
; • •'.'•'. -..•'• FOR .
RISK .MANAGEMENT AND. RELATED INSURANCE COVERAGES;
' -THIS AGREEMENT is dated 1980,
and entered into among certain of the cities within San Diego
County, hereinafter referred to as "CITIES." and comprised of the
following Cities: CARLSBAD, CHULA VISTA, CORONADO, DEL MAR,
EL. CAJON', ESCONDIDO,, IMPERIAL BEACH, LEMON GROVE, NATIONAL CITY,
OCEANSIDE AND VISTA., :
... '; ' . RECITALS; .. .
THIS: AGREEMENT is predicated on the following facts:
!'••-• • • ' " '1;, 'The entities, are public corporations organized and
•i . •". • - " ' • -. •i , . .... . • . . ' .
': operating under the laws of .the State of California:
2... The following state, laws, among others, authorize the
cities to enter into this agreement:
a. Labor Co.de section 3700 (b.) allowing a public entity
to fund its^ own: workers' compensation claims;
-.' b... Government Code section 990 permitting a city to
Insure itself against tort or inverse condemnation
, • ' ' liability;
c... Government Code section 990.4 permitting a city to
provide insurance and self-insurance in any desired
combination-;
d> Government Code section 990,8 permitting two or
. more cities: to enter into an agreement to jointly -
- "fund such expenditures-under the authority of.
Government Code sections 6500-6515;
ev Government Code: sections 6500-6515 permitting two
or more cities to jointly exercise under an agree-
ment any power which is. common to each of them;,
3-.-. Each of the; cities desires to-enter into an agreement
with, each of the others for the; purpose of purchasing
Risk Management services and of insuring against various,
risks jiOintly, rather- than individually. . . '
NOW-,, THEREFORE,, for-and in consideration of the mutual
benefits, covenants and agreements set forth herein, the parties
agree- as follows: •
SECTION 1... Authority and Purpose.
this; agreement is made under the authority of Government
Code sections'.650.0-6515 among the following cities: CARLSBAD,.
.CHULA VISTA, CORONADO,, DEL MAR, EL.CAJON, ESCONDIDO, IMPERIAL
BEACH,;LEMON GROVEr NATIONAL CITY, OCEANSIDE AND VISTA. The •
purpose of/this .agreement is to exercise jointly powers common
to each-city by (a) pooling on a. self-insurance basis various
risks and other insurance needs in. excess- of individually
selected maximum:; (b) jointly purchasing excess insurance
coverage over; the self-insured^maximum;; (c) creating and maintaining
a, central loss fund to pay the' cost of the self-insured portions
insured; .against;, (d) implementing a management program; and
(3) providing for including in the future additional public
entities which desire to become parties to the agreement.
SECTION:" 2,. Definitions. •
Unless the context otherwise requires:
(1) "Fund" means, the San Diego, County Cities Self-
, Insurance- Fund- created by this agreement.; :
(2.) "Board" is the; governing board, of. the Fund;
(3v) "Claim" means; a claim for which coverage is
';-".•- afforded: under the Fund' s» current insuring: clause -...
(4) "Covered losses'" are those losses resulting from
claims against cities which are in. excess: of the
: entity's deductible and are insured by the Fund;,
(5) "Insurance policy" is a policy of insurance either
purchased by, or, issued by> -.the- Authority covering
property or risks of.-the member cities;.
(6). '"Budget."': is- defined as the operating budget excluding
capital, improvements..
SECTION 3. Authority; Creations of; Obligations of.
Under section 6500 et» seg,., of the Government Code,
there is. created the Authority, a public entity,, separate and
apart from the parties to this agreement; The debts.,
liabilities-and obligations-of the Fund shall not be debts',
liabilities; and obligations of. the member cities.
SECTION-4.', Term of Agreement.'
This agreement becomes effective . ; -
and; continues until terminated as- hereinafter provided.
.SECTION 5. Period, of Enrollment.. -.
There shall be an interiin. period during which this
agreement will be: effective,, but during, which initial menrber
agencies may withdraw..
Initial members must, join: prior to • ' ' . .
By the- actual first year's
charges, (excess insurance premiums, self-insured retention
contributions;, and management and. operation costs) shall be
determined'and, provided to each city in writing..In addition,
the coverage provisions of the insurance contract must be
equal to or, exceed each city's current insurance program.
Within 30, days of receipt, of the information concerning the
first year's charges each city shall no;tify the- Fund in
writing whether it desires to remain a. member of the
Authority.. '.'.. . ,\
SECTION 6.. Management.. . - -
.The fund shall be governed by a board composed of one
member, from each city, each serving, in an individual .capacity
as-' a- member of. the board. The governing board of each city
shall appoint either its. chief administrative officer (e.g., .
city manager,) , or the: department-head or staff person
respphsbile for its risk, management function., An alternate:
may attend, participate in, and vote at any meeting of the
board at which the regular member from the alternate's city'is
a-bsent.i 'Each member serves at. the pleasure of the appointing
governing body. If a person serving as a. member ceases to be
responsible for the entity's risk management function, the
board: shall appoint as, the entity's board", member , the person
who succeeds to the performance of the risk management
function... Each member of the board, has one, vote. A board
member is not entitled to compensation.. However, the board may
authorize reimbursement for.- expenses incurred b:y a.'member in
connection wi.th his duties as board member.
SECTION .7. Board Meetings and Records. '. '
(,a;> Regular Meetings. The board shall hold at: least one
.regular meeting each. year. The board shall fix the date
upon, which and the hour and place, at which each regular
meeting is to be: held.
.(b) Ralph M.. Brown Act., Each meeting of the board, including
without limitation regular,. adjourned regular and special
meetings, shall be! called,, noticed., held and. conducted in.
accordance- with the Ralph M.. Brown Act. (Section 54950 et
-seq.; of the Government Code).
(c) Minutes. Minutes of regular, adjourned regular and
special meetings shall be- kept. As soon- as possible after
each meeting, a copy* of 'the, minutes shall be forwarded to
''.'•- each; member of the- board and to each city.
(d) By-laws and Regulations!.. The. board may adopt and amend by-
laws and regulations; which are not inconsistent either
with5 applicable laws or. with, this agreement. Each by-law
and regulation and amendment thereof shall be promptly
sent to each city after its adoption by the board.
KINDLER^IAOCCI
(e) Quorum. A majority of the members, of the board is a "
quorum for the transaction of business. However,, less
than- a quorum may adjpurn, from, time to time.
(f) Executive Committee. The board may establish an executive
* committee and delegate to its functions not otherwise
reserved to the entire board..
SECTION 8.. Officers.. • .
(a) The board shall elect .a president, vice-president and-
. secretary from among, its members at its first meeting.,
Thereafter at its first meeting in each succeeding
• calendar year, the- board, shall elect a president, vice-
president and secretary.. Each, of ficer shall assume the
duties- of his office upon election. If any officer ceases
to be a member, the resulting vacancy shall be filled at
the next meeting of the board held after vacancy occurs..
Inr the absence: or inability of the president to act,, the
• • • t
vice-president acts as president. The president shall
preside at and conduct all. meetings of the board.
(b) Except, as otherwise provided in this section, the board,
shall .appoint a treasurer who. .need not be a member of the
. board. The controller, shall be the finance director of a-
menvber entity.. He, has. the powers,, duties and . ; . • .
: ;' responsibilities specified in Government Code section
6505.5. ' , - - • •
,.(c':) The board shall contract wi.th a certified public.
... .: accountant to make an annual audit of the accounts and
records of the Fund.. The minimum requirements of the
. audit shall be those prescribed" by the State Controller .
for special districts under Government Code section 26909
"••'». ' " "-
and shall'conform to generally accepted auditing
. standards. , . • • •••„"
(d;) The board may create such other offices or positons and
may contract with consultants' and other professional
persons or firms as i.t considers necessary to carry out .
. • •- • ' • . i'
the: purposes, of this agreement.
SECTION 9 Powers., . ' .
The Fund is-authorized,, in its own name., to. do all acts
necessary for the exercise of those, powers referred to in recital 2
including,,, but. not. limited to , each of the. following :.
'•(!.). make and enter into contracts'
(2) incur debts,, liabilities and obligations but no debt, ,
liability or obligation of the Fund is a debt, liability
o.r O'blig.aitio.n of any entity which is a part of this
.• agreement;'
t3i. acquire-, hold or dispose of real and' personal property;
(4). receiv.e contributions and donations of property, funds,
' services and other forms of assistance from any source;
KINDIER^IAUGCI
(5") sue and be sued in its own name;
(6) empl.oy agents and employees; . . ;
(7) acquire, construct,, manage" and maintain buildings;
(8) lease real or personal property including that. of. .a
. member city.
These powers shall be exercised in the. manner provided .by law,
and, except as expressly set forth in this' agreement, subject only
to those restrictions upon the manner of exercising the powers
.which are imposed upon entities in the exercise of similar powers.
SECTION 10 Fiscal/Year. .
Ths fiscal year of the Fund .shall be established by the board.
SECTION 1.1. Fund's ^"Insurance Policies".
Pursuant to the payment of "premiums" by each city, to the Fund,
the Fund, shall issue to each city an "insurance policy" or
"policies" ,. indicating the risk coverage provided to the city by the
Fund- Each policy begins as to each city o.n such date as it is set
forth in the policy and shall expire at the end of the fiscal year
. of .the Fund-.. ..
The board may,-from time to time, negotiate with each city and,
make- changes, covering additional or lesser, risks, as .may appear
appropriate. However, it .may not make a change.-in the risk coverage
without the consent of: each city affected if the change would
directly result in a-greater contribution to be made by a city or
would decrease the amo.unt of risk coverage. This restriction on
KINDIER# IAUCGI
change, does not apply where the: contribution is increased due to a
cause other than a change in. the risk coverage. If .the board,
desires to make a change- which would increase the contribution of a
city,, the board shall make the change available to each city at a
calculated premium cost.. ' . . ;
SECTION 1.2.. Establishment, and Administration of Funds.
(a) The Fund shall establish the following funds:
.(!)' av central loss fund;
(2) an operating fund;
The: Fund may establish .such, other funds as the board considers
necessary.
. (b) The. central loss fund shall be used only for the purpose
of paying the covered losses for which the Fund is. self-
insured, and of establishing a reserve:to cover probable
' future payments for claims and suits not settled.
: (c) The operating fund is for the purpose of paying excess
insurance premiums, brokers' fees, adjusting fees,
consultant and legal fees, employee salaries.,, and such
other:'operating expenses as the'board directs,
(d) All Fund funds shall be deposited, in one or more of the.
following (1) the treasury of that entity from which the
treasurer of the- Fund is'selected, (2) a bank selected by
the' board, (3) the 'treasury of the State of California.
•„•••• The' treasurer shall invest and reinvest the. funds -in
KESTDtER^IADCCI
' \\ • ' : - • t .
compliance with. State laws and- in the "-same manner as if'
they were city funds.. All interest received on invested
funds shall be-credited to the respective fund from which
the investment'was made.
(e). The treasurer shall withdraw funds only in accordance with
: the procedures established by the board. „ *
SECTION 13. Settlement of Claims. " , ' V-
The board will designate settlement limits within the
discretion of the chief executive officer of the Fund. All
settlements in excess of the settlement authority of that employee
will requite approval of the board subject to applicable limitations
of each city's municipal code or other directives.
SECTION 1:4., Budget'..' ;'
.The; fund shall adopt an annual budget not later than the first
day of its fiscal year. . ;
SECTION 15. Charges to Cities. ' ' '
- rv*,. ' • ' " "",•-'.
,The board shall calculate annually and approve the amount of
the premium payments for risk coverage required by member cities.
The board, shall make calculations and shall distribute the bills at
least. 30 days .before the end of the fiscal, year preceding the year
for" which the- charges apply. The bill for risk coverage is due and
payable upon receipt. Each bill, shall contain a grace period of 30
days for payment., Each risk coverage, shall be calculated- in a
reasonable- and prudent manner and shall.be based upon recognized
KINDIER^IADCCI
insurance practices, including such items as insurable" value, loss
history,, exposure, and risk management program..
SECTION 16. Risk Coverage. Charges and Deductibles. .
The.-risk coverage charge referred to in this section is in
payment: for the insurance policy issued by the Fund to each city for
coverage specified in, the policy.. The board may, but is not .
required to,, use. standard form policies utilized in the market for
comprehensive^ general liability, public entity liability involving
errors and! admissions coverage property damage and any addi'tional
coverage provided, by the; J..P.A.. Each: city by the act of paying the
risk coverage: charge- accepts the coverage provided by the policy..
For each policy provided,, the Fund is .responsible, .-for the risks
covered' by the policy o.ver and above: the deductible.. Each city may
designate the; deductible; for each policy, but in no case may the
deductible be: less than.. - • . : for- each insured -loss.
The .deductible may vary from one city to another and the Fund shall
take the amount of deductible into consideration in calculating the
amount charged to each city fbr risk covered.
The Fund shall share, each subrogation recovery with the city,
in. proportion that the deductible bears to the. loss incurred after
first deducting,,,the cost of the subrogation. The 'term "loss"
includ.es the-deductible,, claim's paid., legal costs and other costs -
related to the: handling and satisfaction of the claim. Each
subrogation action shall be-brought on behalf of both the city and
the Fund,.,
KINDLER ^LAOCCI
SEGTION 17. Accounts and Records. '
The controller shall establish and maintain the funds and.
accounts in accordance with acceptable acco.unting practices and
shall maintain such other records as the board 'requires. Books and
records of the Fund in the hands of the controller shall be open to
inspection at all reasonable times by representatives of the cities.
Within 120 days after the close of each fiscal year , the controller
shall give a complete written report of. all financial activities for
that fiscal year to each city. The board shall contract with a
certified public accountant to make an annual audit of the accounts
and records of the Fund.. In each case, the minimum requirements of
the audit shall be those prescribed by .the' State Controller for
special districts- under Government Code section 26909 and shall
conform to generally accepted auditing standards.. When an audit is
made by a certified public accountant, the Fund shall have a copy of
the: audit, report filed as a public record with, each city. The audit
report shall be filed within 120 days of the end of the fiscal year
under examination. The- Fund shall bear the costs of the audit,,
including any amounts; paid to a certified public accountant. These
costs, are. a charge, against, the operating fund! of the Fund.,
SECTION 18.. Responsibility for Moneys.
. The .treasurer of the Fund, shall have the custody of and
disburse Fund funds as provided by accounting procedures .developed
in accordance with this agreement and as. nearly as possible in.
accordance with general accepted accounting principles.
SECTION 19. Bond Requirement'.,
- A. bond, in the amount set by the Executive Committee-, but. not
.less than ' shall be required to disburse funds .of
the Authority,: such bond to be paid, for. by the- Authority.
SECTION 20. Loss Records. ,
The- Fund, shall maintain- or have maintained accurate loss
records for all risks insured, against and all claims paid and
for such other matters as it requires or directs to be
maintained. . . '
SECTION 21. Fund Functions and. Responsibilities,
The. Fund shall perform the following functions- in . '
discharging Its responsibilities under this agreement:
(1) assist city in developing its-risk, management
statements; . . ...
(2) participate in the city's risk management advisory
committees;; .
, (3) provide loss prevention, safety and security ,
advice;,. ' ' . , ' . ' .
(4) provide:claims management services for non-insured
risks/and, for high deductibles; T '.
(5) provide claims recovery and subrogation services to
investigate., pursue and collect for damages caused
. by .the acts of: others; " " ,
KONDLER^IAIPCGI
negotiate and. purchase excess, insurance policies;
(7) establish actuarial services to distribute costs and
generate-, revenues- equitably;
(8') provide loss= analysis control by use of statistical
analysis,, data processing, record and file, keeping
services-.. The purpose: of this- information is: to -
identify high exposure operations and to evaluate
, proper levels* of self-retention and deductibles;
•,(95)-' : conduct risk management audits; to review the.
. . participation of each, city in the. program;
(10) select legal counsel.;
(1L) perform other functions as required by.the board for
the; purpose of accomplishing goals of this-
;. agreement. •', .."•' .. • • •':..•-•
SECTION 22., City Responsibilities., . ,
Each"city has the following-, responsibilities:
(1) appoint, its representative and alternate to the Fund
board; ';.'.•
(20, .maintain an active risk management committee to work
with, risk manager: of; the Fund; . .-.'.'
. (3) designate, a. risk.manager charged wi.th/implementation.
'•'.-.'' -of the- city1 s risk management program .and safety
practices, with the city; :
(4) report to the: Fund- during the development stages the
addition of new programs or the significant
reduction or expansion of existing, programs;
(5) cooperate fully with the: Fund in determining the
cause of losses and the settlement of losses;
(6) comply with risk management requirements as
established by the. Fund pursuant to this agreement;
(7) require .that the city be named as an additional
primary insured without.offset against the city's
existing insurance coverage and require a
contractual liability endorsement with respect to
all operations on city property, including but not
limited: to (a)-construction contracts for work to be
performed for a city; (b) .public utility
under ground ing activity; (c) street, encroachments;
(d) use permits for-.certa'dn activities on public
property;
(8) require workers' compensation coverage or other
approved insurance from, all applicants for building
permits and perform other mandatory duties;
(9-) require 90 days' written notice of cancellation or
material change of any insurance policy provided, for
the? benefit of a. city;
(10) upon withdrawal, from- the Fund each city shall remain
responsible- for any losses and any other 'costs which
it: has incurred while .a member of the Fund and for
'any;losses as specified herein..
SECTION 23.. Fund Formation.:
Upon signing this agreement.,, the representatives of the
cities serving as members of the board shall meet to:
(a) elect, a. president,, vice— pres-iden-t and secretary to
serve, for the balance1 of" the- fiscal year; . :
(b) appoint a temporary treasurer to receive and disburse
.the initial, funds as- set forth hereinabove.. 'ri
••SECTION' 2:4.. Policy Cancellation. . . - . '
By a- two-thirds vote of the board for noncompliance with
this agreement.,, or: as may be amended, the Fund may refus'e to
issue a policy or may cancel any policy issued by it. effective
,as, of1 the: close of the fiscal year.. In the event thai the
loss- history of an individual city significantly exceeds the
/ ' * • 'loss history of the other participating, cities., or in the
event the •••participating city faiTs> to adopt and effectively
implement a. risk management program,, the- board by two-thirds
vote-, may elect to cancel the- policy of an individual city and
terminate its participation in the: Fund effective as- of the
close' of the fiscal year. The ;board: will provide at least 9.0
days' notice, to a city of" its intention to terminate, that
city' s. participation and will provide an adequate opportunity
to res.pond. , •
SECTION 25. Membership Term; Withdrawal.
. A? party to this agreement shall remain a member agency • "
for 3 years; thereafter the member agency may withdraw by:
KINDLER # IAUCCI
(a) giving written notice to the board, on or before the" next
succeeding January 1st, of: the intent to withdraw as of
12:01 A.M.- on the next July 1st, and (b) fully performing Its
obligations as a member agency. .
On the July 1st specified, in the notice .pursuant to
above, and upon fully: performing its obligations as a member
agency, whichever is> later, t.he .member agency shall cease to
be a party to this agreement.
SECTION 26 Disposition of Assets Upon Withdrawal of a Member
Entity.. ' " ' . : . •
The withdrawal of any city from this agreement shall not
terminate the same and no city by withdrawing shall be
entitled to payment or return of any premium,, consideration or
property paid, or donated, by the city to the Fund, or to any ,
distribution of assets. The withdrawal of any city shall not
terminate its^ responsibility to contribute-its share of
premiums or funds to any fund, or insurance program created by
the Fund until other unpaid liabilities,: covering the period
the: city was a signatory hereto have been fully resolved and a
determination of the final amount, of payments, d.ue by the city
or credits to the city for the period of its membership has
been made: by the board. . ,
SECTION 2.7. Termination; Disposition'of Assets.
This agreement .may be terminated upon, the consent of all
the- parties:. Upon;.complete termination of this agreement by
all cities and the settlement of. all liabilities and claims,,
including, incurred but not. reported claims, all property of
the Fund shall be divided among the; cities in a ratio equal to
thai of" the total amounts pal'd by the; cities to the Fund for
the five: fiscal years preceding the year in which the
agreement is terminated. ' ,
SECTION; 28., Reserves...
* Separate reserves shall be maintained in the retention
fund- for each type of:coverage. If, in the opinion of the.
board, excess reserves exist in the retention fund, no rebate
of; .those reserves may be made to the participating cities.
Reduction, of reserves may only be accomplished through
.reduction of future premiums;.
SECTION 29. Notices^ . .-
... Notices to cities under this agreement shall be sufficient
if. delivered to the designated member of the Board.. Notices to
the Fund shall be; sufficient if delivered to the office of the
designated official of the Fund.,.
SECTION 30. Prohibition Against Assignment.. . •
: No? city may sign any .right, claim or interest it may have
under this agreement;, and. no creditor,, assignee or third party
beneficiary of any city shall have any right.,, claim or title to
any part, share, interest,, fund,, premium or asset of the Fund.
SECTION 31 Additional Parties..
• - ' ' .' ' "
With, the, approval of the board, any other .city may become a
party to this agreement, upon execution of. an agreement between it.
and the Fund;.. The- terms, of the agreement shall be identical to
• ' v . ' . '
the- terms of this agreement.. Each additional city shall
forthwith .pay to the Fund its current payment as determined by
the board., Thereafter, the additional city shall be considered a
party to this agreement to the same extent as all of the original
parties: for all purposes., ..•'_•
SECTION 32. Amendment. " .
This agreement may b'e amended by resolution of .t;he governing
boards of, two-thirds of: the- then participating cities.
IN WITNESS WHEREOF, the: parties hereto have executed .this
Joint Exercise of Powers Agreement as of the day.and year first
above written.. ; . ,
CITY OF' CARLSBAD CITY OF GHULA VISTA
'By:
CITY OF. CORONADO CITY OF DEL MAR
By,:By:_
CITY OF EL. CAJON CITY OF ESCONDIDO
By:
CITY: OF IMPERIAL BEACH CITY OF, LEMON GROVE
NATIONAL' CITY OCEANS IDE.
By:
VISTA,
By:-