02 - Laserfiche WebLink

BACKGROUND Since 1988, the City has been a member of a joint powers authority called the Bay Cities Joint Powers Insurance Authority (Bay Cities). Members of Bay Cities (of which there are 17) "pool" resources to provide coverage for various losses above a member's self retained limit. By pooling resources, there is a larger payroll base that spreads the risk of claims and allows, for example, Bay Cities to purchase excess coverage at a more favorable rate than if individual members attempted to purchase such coverage on their own. Bay Cities offers a variety of programs such as liability, employment practices, property damage and workers' compensation. As to the workers compensation program, most Bay Cities members who participate "pool" losses above the member's self retained limit. In turn, Bay Cities itself is a member of a separate joint powers authority, the Local Agency Workers Compensation Excess Joint Powers Authority (LAWCX), and member entities who have workers compensation claims that exceed the pool coverage (and that limit varies between $150,000 and $1,000,000) have coverage by and through LAWCX. LAWCX was formed on July 1, 1992, as a state -wide joint powers authority to self- insure and pool excess workers' compensation losses. LAWCX was established for California self- insured workers' compensation joint powers authorities, individual agencies and special districts. LAWCX is governed by a Board of Directors with a representative from each member entity. Each member may cast weighted votes allocated by LAWCX based on the total payroll of that agency. LAWCX provides for the establishment, operation, and maintenance of excess workers' compensation coverage for its member agencies. LAWCX also offers actuarial and claims management services. For many years, the City purchased excess workers compensation through private insurance. When the cost of that insurance increased significantly, the City decided to join the Bay Cities workers compensation program in order for the City to be able to obtain excess workers compensation coverage (through LAWCX) at a more favorable rate. At that time, however, the third party administrator (TPA) for workers compensation claims utilized by Bay Cities was not the same as the TPA that the City has utilized for many years (Innovative Claims Solutions [ICS]) and the City —if it participated fully in the Bay Cities workers compensation program -stood to lose the personalized service and excellent results that ICS had provided. Accordingly, even though the City participated in the Bay Cities workers compensation program —and hence paid a pro rata share of the administrative costs —the City, by reason of its separate contract with ICS and certain programs that the City itself has developed, has not gotten all the administrative services and programs that other members have received. Recently ICS became the TPA for Bay Cities. In light of that change, City staff did a thorough review of the services the City would receive and the costs that the City would incur if it elected not to renew its separate contract with ICS and, instead, utilized all the services through Bay Cities for which it has been paying. Alternatively, City staff investigated whether it might be more fiscally prudent no longer to participate in the Bay Page 2 of 3