Diane Nakano
Diane Nakano

Assistant General Manager
Sacramento Regional Transit District, Sacramento, Calif.
Employees: 53
Population Served: 1 million
Budget: $9 million

Why on earth would a public agency pay the contractor’s workers’ compensation and general liability insurance premiums?

Because if, done correctly, taking the risk saves money and increases the number of bids the agency receives.

In 2012, Sacramento Regional Transit District’s Assistant General Manager Diane Nakano suggested using an owner-controlled insurance program (OCIP) for a $270 million light rail expansion in one of Sacramento County’s fastest-growing areas. Completed last year, the South Sacramento Corridor Phase 2 Project adds four stations, almost 3,000 park-and-ride spaces, and a new transit center.

Anticipate your city manager’s needs.

Contractors and their subcontractors typically roll insurance costs into their bid price. Under an OCIP, the owner eliminates this particular project cost by buying insurance for qualified parties. You’d think this would raise costs, but consolidating coverage under a single carrier gets the owner a volume discount. The policy minimizes losses by requiring owners to implement an aggressive safety program.

As she always does, Nakano cleared the change with the city manager first.

“They work directly for the board, so they expect to know when board members are contacting staff and what those discussions relate to,” she says. "As a rule, I only engage with elected officials if given direction by my city manager or general manager and always report back on conversations that have taken place.”