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C~ OF SAN BERNAR~O - REQuQsT FOR COUNCIL AalON
From:
Jack Strickler, 7th Ward
Council
Subject: Resolution Urging the State of
California to Audit the Revenues
of the Liability Insurance Industr:
and Enact Regulations.
Dept:
Date:
August 12, 1985
Synopsis of Previous Council action:
Has had numerous briefings by the Director of Emergency Services &
Risk Management, City Administrator, and City Attorney, regarding the
status of the Liability Insurance Market pertaining to Public Entities.
Recommended motion:
Adopt Resolution.
Contact person:
Jack Strickler
~ .,h:" ~-
Signptllfi
Jack StrlCI< er
5068
-
Phone:
Supporting data attached: Yes
FUNDING REQUIREMENTS: Amount:
NjA
Ward: NjA
Source: N j A
Finance: N j A
Council Notes:
75-0262
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CITY OF SAN BERNARDINO
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- REQUEST FOR COUNCIL ACTION
STAFF REPORT
Beginning in 1978, the State of California has recognized the legal
theory of "deep pockets," which has caused a severe financial burden
on all public agencies by causing said agencies and their insurance
carriers to bear a disproportinate amount of judgments awarded in
certain tort actions.
Drastic increases in insurance premiums for public agencies of 150%
to 2000% have been caused by this theory. Although the City of San
Bernardino has had no claims to date in which the insurance carrier
has paid any monies, the excess liability insurance premium was
increased from approximately $47,000. in 1984-85, to approximately
$401,000. in 1985-86. In addition to the premium cost increase, the
Self-Insured Retention, (Deductable) was increased from $100,000. to
$250,000.
The vast majority of public agencies have had excess liability in-
surance cancelled, or, at the least, have experienced less coverage
for a much higher premium. Currently, reports indicate that many
public agencies are without insurance, or have been able to secure
much less than was desired.
This Resolution would urge the State of California to audit revenues
of the liability insurance industry which insure public entities, to
determine whether arbitrary and excessive insurance premiums are being
imposed. Further, it would urge the State of California to enact
appropriate regulations to curb any abuses relating to the insurance
plight of public entities, in order to guarantee adequate liability
insurance for all public entities at a reasonable cost.
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1
RESOLUTION NO.
2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO URGING THE STATE OF CALIFORNIA TO AUDIT THE REVENUES
3 OF THE LIABILITY INSURANCE INDUSTRY AND ENACT REGULATIONS TO CURB
ABUSES RELATING TO THE LIABILITY INSURANCE PLIGHT OF PUBLIC
4 ENTITIES.
5 WHEREAS, the doctrine of "joint and several liability" as
6 now followed by the Supreme Court of the State of California, has
7 caused public entities and their insurance carriers to bear a
8 disproportionate amount of the judgments awarded in certain tort
9 liability cases; and
10 WHEREAS, this doctrine has 'influenced the filing of claims
11 against governmental jurisdictions by individuals who feel that
12 such agencies with "deep pockets" of public monies have the funds
13 to pay the costs of such lawsuits; and
14 WHEREAS, these factors may not be the sole cause of
15 California municipalities and other public entities experiencing
16 drastic increases in the premiums charged for liability
17 insurance; and
18 WHEREAS, a number of cities within California have been
19 unable to secure liability insurance in the present market; and
20 WHEREAS, the City of San Bernardino has experienced a 900%
21 increase in its liability insurance premium in the current fiscal
22 year, and was forced to increase its self-insured retention by two
23 and one-half times; and
24 WHEREAS, these conditions have placed on the City of San
25 Bernardino and on other cities an unfair financial burdeD; and
26 WHEREAS, the liability insurance industry regulated by
27 the State of California should be required to provide adequate
28 liability insurance coverage for all public entities of California
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1 at reasonable rates.
2 NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON
3 COUNCIL OF THE CITY OF SAN BERNARDINO that the Mayor and Common
4 Council urge the State of California to audit the revenues of the
5 liability insurance industry insuring public entitites to determin
6 whether arbitrary and excessive insurance premiums are being
7 imposed and, further, to enact appropriate regulations to curb
8 any abuses relating to the liability insurance plight of public
9 entites in order to guarantee adequate liability insurance
10 coverage for all public entities.
11 I HEREBY CERTIFY that the foregoing resolution was duly
12 adopted by the Mayor and Common Council of the City of San
13 Bernardino at a meeting thereof, held
14 on the day of , 1985, by the following
15 vote, to wit:
16 AYES: Counc il Members
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NAYS:
ABSENT:
City Clerk
The foregoing resolution is hereby approved this
, 1985.
day of
Mayor of the City of San Bernardino
26 Approved as to form:
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