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Redondo Beach council directs staff to reduce earthquake coverage and study liability retention amid midyear budget review
Summary
During a broader midyear review the council directed staff to pursue a reduction (or elimination) of city earthquake coverage to lower premiums and asked staff to analyze raising the city’s liability self‑insured retention (SIR) for potential premium savings; staff and the city treasurer will return with quantitative risk analysis.
As part of a wide midyear budget review presented March 31, the Redondo Beach City Council directed staff to pursue options that would substantially reduce the city’s earthquake insurance premium burden and to analyze raising the general‑liability self‑insured retention (SIR) to capture premium savings.
Staff presentation: Finance Director Stephanie Meyer told the council the city currently pays roughly $1.7 million annually for property insurance, of which about $1 million is earthquake coverage. The city’s current portfolio lists roughly $234 million in insured structures, but staff noted the earthquake program’s payout mechanics and sharing arrangements with other public agencies mean the city’s actual recoverable payout in a single event would be limited and uncertain.
Staff options and council direction: Staff outlined a menu of choices — reduce the set of properties covered, lower the policy limit, or eliminate earthquake coverage entirely — and estimated potential premium savings between approximately $0.5 million (partial reduction) and $1.0 million (elimination). The council voted to direct staff to pursue a plan to reduce or remove earthquake coverage and to return with a more detailed risk analysis; it also asked staff to evaluate increasing the SIR (now $500,000) to $750,000–$1,000,000 and to quantify expected premium savings versus retained risk.
Caveats and follow‑up: Council members and the city treasurer emphasized this is a calculated risk‑management choice. City Treasurer Eugene Solomon and Human Resources/Insurance staff warned decisions must be grounded in loss‑history and actuarial analysis. Staff committed to return promptly with a quantified risk assessment and to keep critical public‑safety facilities in mind while recommending changes.
Attributions: Staff presentation by Finance Director Stephanie Meyer and City Manager Mark Winer; insurance and risk comments from Human Resources and the City Treasurer (transcript March 31). Council took direction that staff should prepare a quantitative risk/cost analysis and return with proposed options to implement prior to next premium cycle.
