Insurance Rebate a Boon to Anaheim Budget

The city has received a rebate of almost $1 million on its liability insurance premium, which officials say will be used to offset budget cuts in all city departments.

The $982,000 rebate came from the Authority for California Cities Excess Liability Program, a 6-year-old insurance cooperative composed of 12 medium-size California cities of which Anaheim is a member. The cities pool their resources to provide each member with insurance coverage on losses of more than $1 million.

Tom Vance, the city’s risk manager, said the money that was rebated was the $746,000 Anaheim deposited with the cooperative when the city joined, plus interest. The cooperative, which has a net value of about $27 million, returned the money after five years because no city filed a claim based on an accident that occurred in 1986. Anaheim is the only Orange County city in the organization.

In 1986, the last year the city purchased similar liability insurance from a private carrier, its annual premium was $1.1 million and the company’s quote for the next year was almost $2 million, Vance said.

“The last year we purchased private insurance, we paid our premium, we had no claims and that was the last we saw of our money,” Vance said. “With this insurance pool, all of the cities have protection, but if none of us has any losses, we get our money back.”

Vance said the rebate will be spread throughout city departments.

“It will buy everything from paper clips to asphalt to salaries to supplies,” he said.

Anaheim paid the cooperative about $800,000 for coverage this year, which, barring catastrophe, will be returned to the city with interest in about 1997. Barring any unforeseen losses in any of the member cities, that $800,000 premium is expected to be halved by 1994, Vance said.