Rocklin's liability insurance on the rise

Workers’ comp premium down
By: Jon Brines, Placer Herald correspondent
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Comparing municipal insurance costs

Liability/2014 change
Rocklin: $430,160/+4%
Cupertino: $266,006/+21%
Roseville: $429,658/+1%
Folsom: $830,382/+13%

Worker’s Compensation/2014 change
Rocklin: $629,192/-11%
Cupertino: $75,022/+14%
Roseville: $555,181/+11%
Folsom: $1,715,576/+3%

Sources: Rocklin/Folsom/Cupertino/Roseville


Population: 59,030
Full-time employees: 226
Police and fire departments: Yes
2014 change in liability insurance: +4
Workers’ compensation: -11%

Population: 73,384
Full-time employees: 360
Police and fire departments: Yes
2014 change in liability insurance: +13%
Workers’ compensation: +3%

Population: 60,009
Full-time employees: 160
Police and fire departments: No
2014 change in liability insurance: +21%
Workers’ compensation: +14%

Population: 124,519
Full-time employees: 990
Police and fire departments: Yes
2014 change in liability insurance: +1%
Workers’ compensation: +11%

Sources: Rocklin/Folsom/Cupertino/Roseville/US Census Bureau

City Attorney Russell Hildebrand told the City Council Rocklin is taking a conservative approach when it comes to yearly premium costs for liability insurance and workers’ compensation.

“We’re in very good shape on that,” Hildebrand told the council at last summer’s budget hearing. Rocklin’s liability insurance has increased 4 percent this year to $430,160, while its premium for workers’ compensation has decreased by 11 percent to $629,192 for the year.

Since 1979, Rocklin has been a member of a risk pool shared by 18 other California cities called the Northern California Cities Self Insurance Fund to pool money and pay out claims. Hildebrand sits on the board.

“They look at the money each year and they refund it back to you when they apply that refund back to our premium,” Hildebrand explained. “We’re only taking a very conservative 35 percent of our money back. Our premiums are going to be the same or a little bit lower, but we are increasing our reserves, so to speak, for the city’s share of the pool.”

City Manager Rick Horst said any money saved will go back into the city’s reserves.

John Stevens, a senior vice president for Keenan, which manages more joint powers authorities than any other in California, said JPAs work be-cause they remove the profit motive of an insurance company.

“All of the members are joint but separately liable,” Stephens said. “It’s all for one and one for all. If there is surplus money, it goes back to the members, which is terrific, but if losses are worse than they’ve collected, then it’s assessable and they will have to go back to the members and ask for more money.”

Rocklin is covered for general liability (casualty ance), property, auto, liability, equipment breakdown, employee benefits liability, law enforcement liability, public officials liability, tax interruption, crime and an excess liability umbrella.

“Our shared layer on the liability side is a little bit in trouble because we’ve had some big claims over the last two years,” Hildebrand told the council “So we’re having to kick some money back into that.”

The city has seen about a dozen liability claimants every year, on average, for the last three years, according to city records.

Neighboring Roseville, with a higher population and 990 employees, has only seen a 1 percent change in its liability premium this year with 147 claimants a year (three-year average). Roseville is self-insured as a member of California Joint Powers Risk Management Authority and will pay a liability premium of $429,658 and workers’ compensation $555,181, up 11 percent over the previous year. Cupertino has a similar population to Rocklin, has 160 employees and runs 20 claimants a year (three-year average). Premiums are established through insurer ABAG Risk Management & Insurance Services and come out to $266,006, or 21 percent, for fiscal year 2014 for liability and $75,022, or 14 percent, for workers’ compensation. One reason for the lower amount is the lack of risk associated with the fact that Cupertino does not have a city police or fire department relying on the county for coverage in that area.

Folsom is part of the same risk pool JPA as Rocklin and maintains a police and fire department, has 24,000 more residents and 140 more full-time employees and runs 80 claimants (two-year average). Folsom will pay $938,097, a 13 percent increase, for liability insurance coverage for fiscal year 2014 and $1.7 million, a 3 percent increase, for workers’ compensation.

Folsom City Attorney Bruce Cline blames increasing medical costs, as well as adverse losses throughout the membership of the 360 city employees, for its workers’ comp hikes.

Stephens said there are risks with self-funded JPA programs

“There are JPAs that are going through assessments right now because of adverse claim developments,” Stephens said. “It’s not that the funding was inappropriate, it was just riskier. You don’t want to be extremely aggressive and not forecasting what the true costs of claims should be. That’s the risks that you take in any self-funded program.”

Rocklin Vice Mayor Scott Yuill, who’s been on the City Council since 2006 and sells insurance products to the general public through his Rocklin business, said that without re-searching every claim, he believes Rocklin is in good shape.

“While no claims would be ideal, only 12 claims per year in a city of 59,000 seems quite reasonable and most likely low,” Yuill said. “The city of Rocklin has demonstrated a solid risk-management course.”

Yuill did not want the city’s reported 11 percent decrease in workers’ compensation to be overshadowed. Workers’ compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee’s right to sue the city for the tort of negligence.

“Workers’ compensation claims are low compared to the claim experience of other cities, indicating that overall good risk management is taking place,” Yuill said.

Public Affairs and Economic Growth Manager Karen Garner said training has a lot to do with it.

“On the workers’ compensation side, it reflects an effort by all city employees to be well-trained in safety and to work safely,” she said.

Stephens said getting workers’ compensation down bucks the trend and is a positive thing for the city.

“If you look at medical trends in the industry, medical costs are up. People have a higher life expectancy and pharmaceutical costs are on the rise. That creates an adverse trend from a cost standpoint.”