A town divided cannot stand. As it turns out, it can’t even keep its insurance policy. Calexico, California, one of the founding members of the California Joint Powers Insurance Authority CJPIA) way back in 1977, has been told its liability and workers comp policies will be canceled, largely because of a city council known more for bickering than taking care of business.
The town of about 40,000 people is located smack on the border with Mexico, tight against a national border with its sister city Mexicali.
CJPIA CEO Jonathan Shull told Insurance Business America that the problems with Calexico go back several years. Once you get past council infighting, he said the biggest problem is that the town can’t keep a city manager. “They’ve had 6 or 7 people in that position in the last 5 years,” he said.
“The city government has significant challenges,” he said, noting the city has also gone through 3 or 4 police chiefs in that time and has also been unable to keep a finance director for very long. “The council is constantly bickering with the police chief,” he said. The current acting city manager did not return a call seeking comment.
“The city council is too involved in the kinds of day to day business that should be handled by a city manager or other executive staff,” Shull said.
Shull said this is not the first time CJPIA has had to cancel a member’s insurance. As a risk pool, he said the members are accountable to each other and have made it clear to him and other staff that the organization cannot afford to have insured members who pose abnormal risk. The association has 117 members, all of them governments, up from around a dozen when Calexico helped start the group.
CJPIA’s executive committee voted 7-2 to cancel the coverage, but has been working with the city for several years, since Shull said they started seeing red flags, and the city has been on a Performance Improvement Plan that was agreed to both by the CJPIA executive committee and the city council in 2013. “We have sat down with them and tried to help them work things through,” Shull said.
He said one of the 7 requirements of the plan was that the city hire a permanent city manager, and that the city had agreed to do so, and in fact hired Richard Warne as city manager in June, but he was placed on administrative leave in September, which Shull said was probably the last straw.
As a membership organization, Shull said the organization tries to work with members who have problems, but that enough is enough. He described Warne as someone who “did not have the best relations with council, but he took charge and took control of some risk issues that needed to be addressed.”
He said the city council had convinced the executive committee that Warne would be the one who would deal with the committee and address any remaining issues. He said it was “disingenuous” of the city remove Warne from the position and that the executive committee had finally had enough.
The city may still appeal the cancellation, which does not take effect until Jan. 1. “The executive committee thinks it has given the city enough time already, but if they appeal it wouldn’t surprise me if the committee again gives them more time.”
“I truly believe the worst is behind us and given the opportunity by March 2016 we will have completed all 7 compliance standards,” City Councilman John Moreno said before the Executive Committee voted to curtail the city’s insurance..
City officials have said they are already in talks with private insurers.
