Report Prepared by: Maggie Lemos, Risk Analyst
Title
SUBJECT: Approval of Property, Boiler and Machinery Insurance Renewal Through Alliant Property Insurance Program in the Amount of $1,308,544.63 for Program Year 2026/2027
REPORT IN BRIEF
Considers approving the renewal of the City’s policy through Alliant Property Insurance Programs (APIP) at -2.83% premium decrease, amounting to $1,308,544.63 for program year 2026/2027.
RECOMMENDATION
City Council - Adopt a motion:
A. Ratifying the renewal of the property and boiler and machinery insurance through the Alliant Property Insurance Programs (APIP), administered by Alliant Insurance Services for the period of July 1, 2026, through June 30, 2027; and,
B. Authorizing the City Manager to execute the necessary documents.
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Refer to staff for further study; or,
3. Take no action.
AUTHORITY
Charter of the City of Merced, Article XI, Fiscal Administration.
CITY COUNCIL PRIORITIES
As provided for in the 2026-27 Adopted Budget.
DISCUSSION
The City of Merced joined the Public Entity Property Insurance Program (PEPIP), a group purchasing program, as authorized by the City Council in 1993. Following its merger with two other Alliant insurance purchasing pools, PEPIP was renamed to Alliant Property Insurance Programs (APIP). APIP now insures approximately 10,000 members with a total insurance value of $500 billion. Participation in APIP allows the City to benefit from the purchasing power of a large pool and access competitive pricing and broader coverage terms.
After several years of challenging market conditions, the property market has continued to soften in 2026, creating opportunities for improved pricing and coverage terms. As part of the renewal process, Alliant marketed the City's coverage to the broader insurance market and used the resulting market feedback as leverage in negotiations with APIP.
Despite improved market conditions, the City's loss experience continues to be an underwriting concern. The City remains on the APIP loss leader list, with a 5-year loss ratio of 142%, driven primarily by two structure fires within a five-year period, at the Stephan Leonard building and the Merced Sun Star building. Because of this loss history, APIP prepared the City for up to a 25% rate increase or an increased deductible of $100,000.
Ultimately, the softened market and the marketing strategy provided leverage to secure better renewal terms from APIP. The total account rate decreased 4.95%, the total annual cost decreased 2.83%, and the City retained its existing $25,000 all-risk deductible. Although the renewal outcome is favorable, continued loss control and risk mitigation remain important because the City's loss experience continues to affect underwriting.
For 2026/2027, the City's total insurable value (TIV) increased 2.23%, from $448,510,653 to $458,504,317. TIV includes the replacement cost of covered buildings and vehicles, City property and contents, and business interruption exposures. The property annual cost is $1,285,352.86, a 3.01% decrease from the prior year. Cyber liability coverage is $18,366.04, a 9.61% increase, and pollution liability coverage is $4,825.73, a 2.23% increase. The total annual renewal cost, inclusive of all listed coverage premiums and applicable taxes and fees, is $1,308,544.63, a 2.83% decrease from the prior year's $1,346,650.37.
The City maintained an all-risk deductible of $25,000. The Vehicle physical damage deductible is $25,000 for all vehicles with a replacement cost value (RCV) under $250,000, except $50,000 for police vehicles, $100,000 for all vehicles with RCV of $250,000 to $750,000, $250,000 for all vehicles with RCV more than $750,000.
IMPACT ON CITY RESOURCES
The adopted 2026-27 budget assumed property insurance at a 10% increase. The renewal instead reflects a total cost decrease of -2.83%. Funding is available within the adopted Fiscal Year 2026-2027 Budget.
ATTACHMENTS
1. City of Merced APIP Proposal 2026/2027