Santa Fe's insurance premiums drop by more than $400,000 with new contract

The city’s insurance premiums will drop under a new liability insurance contract the City Council approved Monday.

Under the contract, which was approved unanimously at a special meeting on the last day of the fiscal year, the city will retain the same coverage as it had for the past fiscal year when it switched to being insured by Berkeley Insurance after being dropped by its previous provider.

However, its total premiums decreased from $4.3 million to $3.9 million and its self-insured retention rate — that is, the amount the city has to pay directly before its insurance kicks in — decreased from $1.5 million to $1 million, something city officials pointed to Monday as a win.

“We continue to try to reduce our claims wherever we can,” said Andrea Phillips, who recently joined the city as deputy city manager. Her portfolio includes oversight of the Risk Management and Safety Division.

Part of the savings come from separating the city’s law enforcement coverage from its general liability policy with Berkeley into its own policy with Lexington Insurance Co. In a Wednesday email, Phillips wrote the city’s insurance broker Arthur J. Gallagher negotiated the change and the city will pay a total of $412,000 less than in the previous year for the same level of coverage.

High number of lawsuits

The city has budgeted $2.5 million in the 2026 fiscal year for potential payouts, which Phillips wrote are “highly unpredictable” since lawsuits can be filed years after an incident.

The city has struggled in recent years with a high number of tort claims and lawsuits, many resulting in settlements. Along with many people seeking restitution from the city because of problems caused by sewer line breaks or injuries from falling on uneven city streets — some of which have resulted in significant payouts — it is contesting a lawsuit filed by the widow of a transgender man fatally shot by police in September, among other litigation. It has also paid a number of recent settlements to people alleging the city violated the Inspection of Public Records Act with long response times.

In 2024, the city paid $560,000 to the estate of a man who died after suffering a cardiac event at a city pool and $1 million to the estate of a man who died of an overdose in the Santa Fe County jail.

The city earlier this year settled a case with the family of a 4-year-old girl whose rape kit was lost by the city’s police department and whose mother alleged this crippled the state’s ability to prosecute the suspect, who received a suspended sentence. District Judge Bryan Biedscheid sealed the entirety of the agreement, including the dollar amount the city paid out.

City works to reduce risk

The city transitioned to a new insurance carrier last year after being notified by its previous carrier, Travelers Insurance, that its policy would not be renewed.

Last month, city risk analyst Melanie Lovato filed a whistleblower lawsuit against the city, alleging the city retaliated against her after she raised concerns about her office being left out of the city’s claims-handling process, which she said contributed to an increase in payouts. The city declined to comment in detail on the lawsuit.

On Monday, Phillips credited the “good work” of city staff, including Lovato, for implementing new policies, procedures and trainings to try to reduce claims.

By email, she wrote some of the city’s ongoing work includes implementing additional internal controls in the Finance Department, increased cybersecurity protocols, buying new personal protective equipment for staff to improve job safety, hiring more staff in the records custodians office and publishing crash reports online automatically as measures it has taken to try and reduce its liability, something she described as an “evolving process.”

“We are always looking for ways to identify possible exposures and to the extent that we can — given budget and staffing constraints — we are reducing or eliminating those risks,” she wrote. “There is more work to be done, especially in an old city with decades old infrastructure.”

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