Palo Alto finance committee reviews sharp insurance cost rise, recommends council amend FY26 general liability budget

The Finance Committee of the Palo Alto City Council on Oct. 21 reviewed the city’s risk-management and insurance program and recommended that the full council amend fiscal year 2026 appropriations for the General Liability Insurance Fund to close a roughly $1.5 million shortfall.

City staff told the committee the increase reflects a national hardening insurance market and rising claims; staff proposed drawing on fund balance and reallocating within the fund for FY26 and building higher premiums into FY27–FY28 forecasts.

Why it matters: The committee was shown that recent large claims across member cities, fewer insurers in the market and higher reinsurance costs have driven up excess liability premiums for all public agencies. Committee members pressed staff on how the city calculates reserve confidence levels, the size and duration of the budget impact, and operational steps that could reduce future claims. The committee unanimously approved a referral package to the council asking for further analysis and policy consideration.

David Rambert, Administrative Services Department, opened the presentation and said staff was responding to a referral and “bringing awareness to the recent steep increase in insurance costs.” Risk Manager Kelly Pujetti outlined how the city layers coverage: a $1 million self-insured retention, $9 million shared through the Authority for California Cities Excess Liability (ACCEL) pool, and $55 million in commercial excess — for a commonly cited total liability program limit of $65 million. Pujetti told the committee the city funds the General Liability Insurance Fund at an…