California City May Lose Its Insurance Coverage

A Southern California city has been told that it could lose its insurance if city officials and staff don’t start getting their act together soon.

That was the warning from the California Joint Powers Insurance Authority, an insurance pool for municipalities in the state.

The CJPIA has informed La Puente that it must meet certain conditions by the end of 2012 or it could lose its insurance. Among the conditions, the city of 40,000 must hire a permanent city manager, give notice of any harassment and retaliation complaints and send council members to etiquette classes to learn how to get along.

According to said Bob May, senior risk consultant for the CJPIA, the warning to La Puente is part the authority’s “healthy members program” criteria, which outlines what members of the authority should be doing to stay within risk management guidelines.

“To be a member of our pool you have to do certain things to maintain sound risk management practices and principles,” May said. “Their questionable governance on the city council, their lack of stabilization in the city manager position and lack of key management staff alerted us to things that are probably not consistent to sound governance for that particular city.”

According to the CJPIA, La Puente’s annual contribution for the 2011-2012 insurance period is $279,261 for liability and workers’ compensation, with liability being the lion’s share.

The CJPIA has roughly 122 members, mostly cities, special districts and other JPAs.

If La Puente doesn’t comply, it will have to either self-insure or go into the marketplace and buy insurance, May said, adding, “We’re just intervening early on because we see signs and symptoms of things that can go bad.”

Topics California