General Introduction to PARSAC |Back|
During the 1970’s, the availability of liability insurance through traditional commercial insurance markets for many public agencies, such as cities, counties, and school districts were severely limited. Because of adverse losses and the general public’s propensity to view public agencies as "deep pockets", insurers were reluctant to underwrite these exposures. In the mid-1980’s, conditions worsened and commercial liability insurance was virtually unavailable for public agencies. Consequently, many agencies either joined or formed Joint Powers Authorities (JPA) to provide for and self-fund their liability coverage. Throughout California, many variations of JPAs have been formed for the benefit of their members. A risk-sharing JPA is a government-regulated public entity formed by two or more public agencies for the purpose of pooling their assets to promote loss control and pay claims on behalf of its members.
Of California’s more than 478 incorporated cities, nearly 90% are members of a liability risk sharing JPA. Many public agencies today view JPAs as a viable alternative to commercial insurance because JPA’s generally provide broader coverage at lower cost than insurance companies. Cost savings are realized, in part, because a JPA’s rate is not profit driven. Rather, the members’ contributions (premiums) are allocated to pay losses and administrative expenses only. Funds under the management of the JPA earn investment income; those funds which are not expended are eventually returned to the membership. Because each JPA member is in effect an "owner" of the organization, participants are afforded tremendous flexibility and control over the management of their organization. For example, members may decide: what exposures to cover and which to exclude; who may participate in the JPA; the types of programs to offer; how much revenue (based on actuarial projections) to collect each year to fund losses; and the amount of funds to be returned each year.
The Public Agency Risk Sharing Authority of California (PARSAC) is a statewide risk sharing JPA originally formed in 1986 for the purpose of providing our members comprehensive general liability coverage. As the organization grew, we developed new programs to meet the needs of our members. Today, PARSAC offers a variety of self-funded and group-purchase programs, which include general liability, employment practices, workers’ compensation, property, special events, and fidelity bonds. Our current membership consists of 37 cities located throughout the state, and spans from the California/Oregon border to the county of San Bernardino. Membership includes northern and southern California cities such as: Calistoga, Grass Valley, Placentia, South Lake Tahoe, Rancho Cucamonga, Avalon and Truckee. PARSAC’s members have a combined workforce in excess of 5,000 employees with an annual payroll of approximately $150 million. All members participate in pro-active safety and loss control programs, with the common goals of reducing risks, minimizing losses, and controlling costs.
As stated in our Mission Statement, it is our objective " . . . to provide quality protection to members at reasonable cost by maintaining a financially stable risk sharing pool." Since the formation of PARSAC, we have been able to accomplish this goal through conservative financial management, proactive claims management, and the implementation of cost-effective loss prevention programs. Our excellent loss history, coupled with sound fiscal planning, has resulted in significant savings to our members. We have returned in excess of $15 million to the members. Historically, our contribution refunds have averaged thirty-four cents on every dollar of each member’s premium.