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Public entity risk managers determined to find capacity even in California's tight market can make it happen.
In the case of Pomona, the city accomplished its goal through a self-funded retention program.
Julie Theirl, Pomona risk manager, said the city previously obtained difference-in-conditions quake coverage for its primary buildings, including city hall, fire stations and libraries.
For the 2005-2006 policy year, "We were purchasing about $40 million in earthquake DIC, but because of all the capacity issues with the hurricanes, we just couldn't get those kinds of limits last year, and many of my colleagues are currently bare for earthquake," Ms. Theirl said.
Unlike some other public entity risk mangers in the state, she was reluctant to rely on the Federal Emergency Management Agency, which would provide assistance if a quake struck and the area were declared a federal disaster area, she said.
"I think we all have probably lost a little faith in the system itself after seeing what happened with Katrina," she said. "I'm not a believer in putting my faith in another organization because it's going to be my city" that is affected.
She and her broker, Susan Blankenburg, vp, public entity practice for Marsh Inc. in San Francisco, worked with various insurers. "She actually came up with the brilliant plan to self-insure a layer," Ms. Theirl said.
As a result, Pomona took a self-insured retention of $2.5 million and bought another $20 million in insurance coverage from various insurers in five different layers to get a little more than half of the coverage the city secured previously.
The city paid $146,000 vs. $109,000 it paid the previous year, "but you also have to keep in mind I didn't get my $40 million" in coverage, although "at the end of the day, my city was insured," Ms. Theirl said.
Thanks to the savings Pomona obtained on its excess workers comp coverage, its total insurance cost was "a wash," said Ms. Theirl. However, "I don't think I would have gotten the rates I had unless we had that SIR," she said.
"I'm hoping this year coming up July 1, I can do away with the $2.5 million self-insured retention, but it's nice to know it's an option," she said.
Meanwhile, Santa Ana is considering the possibility of obtaining coverage by sharing limits with other public entities in California.
"We have not bought earthquake (coverage) the last couple of years," said Santa Ana Risk Manager Jeff Stevens. "Our city manager felt that the cost vs. coverage just wasn't there."
However, next year, Mr. Stevens said he is considering exploring a possible plan in which Santa Ana would share limits with public entities in Northern California or that are at least 100 miles away--both of which are unlikely to be hit by the same earthquake as his Southern California city.