Fountain Valley : City Hopes Group Will Solve Insurance Plight

City officials thought they had found the answer to their insurance problem, but they are now faced with getting only half the coverage they expected at twice the cost, Assistant City Manager Ray Kromer said.

The city has been accepted into a group insurance alliance of 50 Southern California cities, but it was discovered that only $500,000 in coverage can be obtained through the group, called the Southern California Joint Powers Insurance Authority (SCJPIA), Kromer said.

Left without enough coverage, the city must buy $5 million worth of coverage from its present broker, Cal-Surance of Torrance, for $212,000, he said. In 1985, the city bought $10 million worth of liability coverage for $108,000, he said. The city began shopping around for a new carrier when the company announced that it would be raising the city’s premiums.

But the city hopes it will be granted more coverage when SCJPIA negotiates its policy with Transcontinental Insurance Co. in July. Then the city could pay as little as $148,000 for $10 million of coverage through the insurance cooperative.

In the meantime, the city will pay about $40,000 to join the group, hoping it can drop its more expensive policy in the summer, Kromer said.