[click here to view a flowchart of the coverage layers for all programs offered by PARSAC]
Our Liability Program is our primary offering. The program provides $15 million per occurrence for general & automobile liability, public officials errors & omission, and employment practices liability coverage. PARSAC members self-fund the first $1 million of exposure, losses above $1 million to $3 million are covered through PARSAC’s participation in the California Affiliated Risk Management Authorities (CARMA) excess pool. Losses exceeding $3 million up to $10 million through reinsurance.
Within PARSAC’s $1 million retention, each member selects a self-insured retention of $5,000, $10,000, $25,000, $50,000, $100,000, $250,000 and $500,000. The pool shares all losses exceeding a member’s self-insured retention. One requirement for participation in this program is that all members have, in a reserve account, funds equal to three times their retention. For example, a member with $50,000 retention must establish a reserve account of at least $150,000. The reserve account is under the management of the member—PARSAC does not have access to these funds nor do we determine where the funds should be invested. A new member is given reasonable time to establish its reserve fund once it has become a member.
Members with self-insured retentions above $25,000 may select their own claims administrator within their retention. The program’s third party administrator manages all claims above a member’s retention. The PARSAC staff will work closely with the member and the third party administrator to ensure all claims are promptly and cost-effectively resolved.
The Liability Program is an experience-rated plan. The purpose of experience rating is to recognize that loss exposures for all members are not the same. Some factors that may cause exposures to vary among members include:
- The degree to which the member emphasizes risk management and the implementation of various risk control techniques to reduce the frequency and severity of losses.
- The level of service provided by the member. Does the member provide police and fire services? Does it operate a wastewater treatment facility; supply electrical power, or natural gas service?
- Where the member is located; the size of the member; the number of square miles, population, etc.
Since exposures differ, it is inequitable for each member to pay the same rate for coverage. Thus, each member’s contribution is adjusted by an "experience modification factor" so that PARSAC can collect funds equal to the exposure of the member. Members whose loss experience is higher than average will pay more than the average rate. On the other hand, members with low losses will pay less than the average rate. The purpose of experience rating is to afford recognition for good or bad loss experience and reward or assess members accordingly.
Historically, the pool’s loss experience has been very good. This is reflected in monies refunded to the membership over the past several years. As of June 30, 2005, we have returned over $18 million to members.
Workers' Compensation is a legal obligation to pay benefits to employees for injuries or illness that arise out of and in the course of employment. By law, all employers, with a few exceptions (i.e. self-employed, volunteers), must provide coverage to their employees. Employers may purchase workers’ compensation insurance through an insurance carrier or, alternatively, self-insure.
[Click here to view current members in this program]
In 1990, PARSAC formed its Workers’ Compensation Program for the specific purpose of offering our members an alternative means for covering this exposure. The goal of the program is to provide the membership with statutory coverage at the lowest possible cost, while maintaining the program’s financial integrity. Of PARSAC’s 37 members, 24 participate in this program.
The Workers’ Compensation Program is a risk sharing pool. Thus, members share their exposures within a $250,000 per occurrence retention. Losses in excess of the retention, to statutory limits, are covered through PARSAC’s participation in the Local Agency Workers’ Compensation Excess Pool (LAWCX), and the group-purchase of commercial excess insurance. Members have five self-insured retention (SIR) options, first dollar coverage, $25,000, $50,000, $100,000 and $150,000.
The program’s base rate funds losses within PARSAC’s retention and includes all classifications of employees (i.e., police, fire, maintenance, clerical, etc.). This is an experience-rated program; and therefore the member’s contribution is adjusted (from the base rate) to reflect loss exposure. Members with good loss experience will be charged less than the base rate. Conversely, those members with poor loss experience will pay a higher rate.
There are many benefits to participating in a risk sharing pool that may not be realized through the purchase of commercial insurance. They include:
- Greater control over claims;
- Premiums are more stable and less likely to fluctuate from year-to-year;
- Good loss years will develop equity for participating members;
- Members’ contributions accumulate interest; and
- Return of contributions for good claims experience
A prerequisite for joining the workers’ compensation program is that a member must participate in PARSAC’s Liability Program.
PARSAC participates in the Public Entity Property Insurance Program (PEPIP) along with other California public entities. PEPIP is a national property insurance program with several hundred members including cities, JPA’s such as PARSAC, and special districts.
PEPIP’s rates are extremely competitive. Rate reductions are realized because members are able to leverage their tremendous purchasing power to negotiate cost savings.
The PEPIP policy is specifically written for public entities. It is an all-risk, replacement cost policy offering much broader coverage than is available under standard property insurance policies. Coverage under PEPIP not commonly provided under standard insurance policies includes: tax interruption; municipal bond revenue interruption; service interruption from public and private utilities for gas, electric, water and telecommunication; and vehicle comprehensive and collision. PEPIP’s minimum deductible is $5,000 per occurrence.
PARSAC's Bond Program offers participating members $1 million per loss limits for the following coverage:
- Employee dishonesty & faithful performance of duty
- Forgery and alteration
- Theft, disappearance and destruction
- Robbery and safe burglary
- Computer fraud, including funds transfer coverage
- Money orders and counterfeit paper currency
PARSAC's Special Events Program addresses the risk management needs of PARSAC members relating to the general public’s short-term use of their facilities for events such as weddings, parades, block parties, dances, etc. This program provides a quick and easy risk transference mechanism, allowing members to specify minimum insurance requirements and offer inexpensive liability coverage to facility users who cannot obtain coverage on their own. Coverage includes:
- Liquor liability
- Vendors, exhibitors and concessionaires
- Athletic participants
- Volunteers
- Personal and advertising injury
- Fire damage and medical payments
Liability limits are $1,000,000 per occurrence, with optional excess limits up to $4,000,000.
PARSAC's Employee Benefits Program offers participating members competitive pricing for:
- Dental
- Vision
- Life/AD & D, and
- Long-term disability coverage
We have designed our Programs to meet our members' specific needs. One of the primary goals of our organization is to maintain good communications with all our members and encourage them to participate in the decision making process. We expect to expand and/or add new programs as they are requested. PARSAC is committed to being both accountable to our members and responsive to their changing needs as they grow.