Salinas finance committee hears insurance briefing as premiums and retentions rise

Feb. 11, 2025 — The Salinas Finance Committee received a briefing on the city’s insurance program from Alliance Insurance Services on Feb. 11, with the presenter saying the city is largely self-insured and that the insurance market is currently "hard," pushing up retentions and premiums.

The briefing, given by Connor Bogie of Alliance Insurance Services, outlined three primary lines of coverage for municipal operations — liability, workers' compensation and property — and said liability is the most challenged line. "We are in what's called a hard insurance market cycle, where terms are difficult, insurance premiums are high," Bogie told the committee.

The presentation said Salinas finances the first layer of most claims through self-insured funds, typically the first $1 million on liability and workers' compensation claims, and purchases excess coverage above that level. For liability, Salinas belongs to a joint powers authority called Excel that Bogie described as a 13-member statewide pool. Salinas joined Excel in 2019 and contributes about 4% of the pool based on payroll, he said. Bogie described the pool as carrying a consistent $1 million retention for members and providing high per-occurrence and aggregate limits.

Assistant City Attorney Rhonda Combs, who introduced herself as the city’s liability risk manager, said the city’s liability placement for the current year is $2,400,000. "For the current year, your costs are $2,400,000 for the liability placement," Combs told the committee.

Bogie said workers' compensation is placed through a large statewide public-entity pool and that property coverage is purchased through the Alliant Property Insurance Program (APIP), which he said carries a large placement supported by Berkshire Hathaway and provides up to a $1 billion limit through that program. He said property and liability premiums are historically high and likely to remain elevated, noting factors that have driven the market: larger catastrophic property losses (wildfire, flooding), third-party litigation funding and "social inflation" that has raised claim severity.

Committee members asked about the city's claim history and catastrophic exposures. Bogie described Salinas as an "averagely performing city" within the liability pool and said claims experience affects assessments and returns from the pool over time. He said earthquake coverage exists but is expensive and that wind and flooding events have produced losses in the region; he said Salinas currently has wind coverage under its municipal property program.

Committee member Margaret asked for details on claims experience; Bogie declined to provide specifics in public but said Salinas has had claims consistent with actuarial expectations and that the pool assesses members after years with losses and returns funds in better years.

Members also asked about specialized lines: Bogie described aviation coverage as relating to the municipal airport and tenant operations and said pollution coverage responds to sudden accidental spills. A member of the public, Salinas resident Eloise Shim, asked whether the city’s insurance covers arson losses and whether such claims raise premiums. Her question was raised during public comment and was not resolved during the presentation.

The committee did not take formal action on the presentation; members received the report and reserved decision-making or follow-up, where appropriate, for staff and subsequent meetings.