Sausalito joins insurance risk-sharing pool

Sausalito has secured a new insurance provider after losing coverage because of its high-risk profile.

The City Council voted unanimously at its meeting on Tuesday to join Public Risk Innovation, Solutions, and Management. The move, which comes after the city’s previous insurer canceled its membership, will cost an extra $1 million.

“We are delighted that the risk mitigation steps being implemented by our staff resulted in an insurance quote much cheaper than what we feared,” Mayor Ian Sobieski said.

While the city’s previous insurer provided about $34.5 million in potential coverage, the new program provides $25 million. 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 insurer dropped the city because of its 10-year loss history.

Public Risk Innovation, Solutions, and Management, or PRISM, is a risk-sharing pool with membership throughout the state. Its members include 95% of counties and 70% of cities, as well as educational organizations, special districts, housing authorities and fire districts.

The city applied to five insurance risk-sharing pools since November, but two rejected all coverage, one rejected general liability coverage and one never responded. PRISM or the private market, where costs could go up by $4 million, were the only options. With PRISM, the city will pay $1.3 million in premiums.

The annual membership cost for coverage with Bay Cities was about $1.2 million, and the city paid $611,245 for general liability coverage. The insurer also covered property claims, workers’ compensation and employers’ liability claims, auto claims, cyber liability and crime.

While insurance costs will be significantly higher for the next few years, they might decrease if the city’s loss record improves. City staff said there should be more options once more than five years have passed since certain events — such as two landslides in 2019 — that are contributing negatively to the city’s risk assessment.

City Attorney Sergio Rudin said the premiums could also go down next year once city staff present the new insurance group with a list of things it has done to reduce its risk and a work plan.

“I think, additionally, one of the issues that the city is being really proactive on is funding infrastructure improvement and I think again I think we’re going to need to be looking at prioritizing our infrastructural projects based on the likelihood of claims,” Rudin said. “Focusing on areas where there’s high utilization by the public and ensuring those areas are addressed first in terms of public improvements, accessibility and any sort of dangerous conditions or deficiencies.”

City Manager Chris Zapata referenced a study the city commissioned on hillsides, which had recommendations on land-use regulations that could reduce the city’s risk, as well as consolidation of the sewer enterprise. The City Council, in its unanimous decision to approve the budget for fiscal year 2024-25, approved a risk management position on its staff.

“We owe our city manager and staff kudos for their hard work. That continues with planning and investments that will lower Sausalito’s risk profile and insurance costs over future years,” Sobieski said.