Bay Cities Joint Powers Insurance Authority will terminate the city's membership on June 30 because of excessive losses.
Sausalito’s insurance provider is dropping the city as a client after more than 30 years.
Bay Cities Joint Powers Insurance Authority — a risk-sharing pool consisting of 19 cities and towns, including the Central Marin Fire Department and the Central Marin Police Authority — will terminate Sausalito’s membership on June 30. The change is because of excessive losses, and the current market means the city’s insurance premiums will likely increase by millions.
City staff presented two insurance options at the City Council meeting on Tuesday: the state’s biggest risk pool authority, or private insurers. Insurance covers claims against the city regarding general liability, property, workers’ compensation and employers’ liability, auto claims, cyber liability and crime.
“I appreciate that staff are looking for the best bang for our buck in terms of premiums or coverage,” Mayor Ian Sobieski said.
The annual membership cost for coverage with the Bay Cities was about $1.2 million, and the city paid $611,245 for general liability coverage.
The exit from the insurance service comes less than a year after the city received notice that the insurance authority’s board was evaluating its membership.
In a letter to Public Risk Innovation, Solutions, and Management — a potential insurance option for the city — City Manager Chris Zapata attributed the city’s high-risk profile to factors such as turnover; claims from 2019 landslide damage; litigation over homelessness and camps; and a 2023 sexual abuse claim.
Most claims against the city do not result in liability of more than $500,000, according to Sergio Rudin, the city attorney. Rudin said the city received 252 claims over the past decade and had $13.1 million in liability for 36 general liability claims alone. The pool paid $11.2 million, and Sausalito paid the remainder.
The city has taken key steps to address its risk, like securing funds for a new risk manager position. It has also been reviewing the city’s municipal code, contracts and programs, and employee practices and procedures to lower risk and check for compliance with various laws. The city has also contracted a geologic hazard report to help with capital improvements.
“I’d really like to see us create some sort of subcommittee work that is focused on risk and resilience,” Councilmember Melissa Blaustein said.
Since November 2023, city officials have been searching for a new insurer, but the high risk has made it difficult, according to a staff report. Of five risk pools the city contacted, two rejected all coverage, one rejected general liability coverage and one never responded.
City staff have narrowed the search down to two options, Public Risk Innovation, Solutions, and Management or the private market. If it goes with the former, premium costs could increase by $1.6 million. The agency, the largest risk pool in California, requires approval from an executive committee, according to Rudin.
In the private market, rates could go up $2.3 million to $4.2 million depending on the level of coverage, according to the city’s broker, HUB International Insurance Services Inc. The premiums are high and coverage limits are lower, Rudin said.
Rudin said feedback from private insurers suggested these premiums would go down once the city’s five-year loss history no longer included the 2019 landslide.
“We need to make sure we’re covered, especially on the catastrophic side, our risk is too great not to be,” Councilmember Jill Hoffman said.
Rudin said the city will know more about its eligibility to join the Public Risk Innovation, Solutions, and Management by the end of the month.
