When insurance rates tripled, the city of Gardena decided to start its own insurance company. Now it is selling the idea to other cities.
More than a year ago, Gardena joined with Industrial Indemnity Co. to form the Municipal Mutual Insurance Co. Its mission is to provide California municipalities with liability insurance. The city financed the company with $10 million in bonds, and Industrial Indemnity matched that amount.
As an independent company, Municipal Mutual's first client was the city of Gardena. In October, the city of Richmond in the San Francisco Bay area joined, and officials are anticipating more business when budget time comes around in July.
What Municipal Mutual offers that is different from most insurance companies is that all policyholders become owners, said Jim Gregg, president of Municipal Mutual.
So far, Gardena has talked with about 150 cities throughout the state. Gregg said the talks could lead to more contracts.
"Like any new company, it takes time," said James Cragin, a member of the firm's board of directors.