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 $1,346,650.37 for Program Year 2025/2026
REPORT IN BRIEF
Considers approving the renewal of the City’s policy through Alliant Property Insurance Programs (APIP) at 11.82% premium increase, amounting to $1,346,650.37 for program year 2025/2026.
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, 2025, through June 30, 2026; 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 2025-26 Proposed 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. The PEPIP program changed its name to Alliant Property Insurance Programs (APIP) after having merged with two other large Alliant Insurance purchasing pools. APIP now insures approximately 10,000 members with a total insurance value of $500 billion. The advantage of being a member of a purchasing group is that we can capitalize on lower premium rates based on the volume and value (per hundred dollars) of insured property.
After multiple years in a hard market cycle, the property market has significantly improved in 2025. The City of Merced was indicated as a loss leader in the APIP program with a loss ratio exceeding the program threshold of 75%. This was due to two structure fires within a five year period, the Stephan Leonard building and the Merced Sun Star building. Early in the process, APIP prepared the City for up to a 25% rate increase at the current $25,000 deductible. Fortunately, the final figures came in significantly lower at 11.82% overall premium increase.
The City experienced an increase in account rate (per hundred dollars) of 9.02% in the amount of $1,346,650.37 for all premiums (based on today’s total insured values of $448,510,653 which increased 2.57%), the total account rate of $0.3002494 for program year 2025/2026. Last year the rate was $0.2754142.
The City experienced an increase in Property annual premium of 11.94% in the amount of $1,325,174.48. There was also an increase in Pollution Liability annual premium of 5.83% in the amount of $4,720.49, with an increase in Cyber Liability annual premium of 4.88% in the amount of $16,755.40.
The City maintained a per occurrence; all Perils, Coverages of $500,000,000. Also maintained an all-risk deductible of $25,000. The Vehicle physical damage deductible is $25,000, except $50,000 for police vehicles under $250,000, $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
Actual cost for property insurance came in below the estimated increase for Fiscal Year 2025-26 budget. The proposed budget estimated property insurance at a 25% increase, actual increase is 11.82%. Funding is available within the proposed Fiscal Year 2025-2026 Budget.
ATTACHMENTS
1. City of Merced APIP Proposal 2025/2026