know about this Editorial: The risks of public entities reach new levels
in complete details.
Public entity risk managers are having as hard a time as any insurance buyer as they prepare for renewals. A combination of market-wide trends and industry-specific challenges has created insurance and risk management puzzles that would test even the most seasoned risk professionals.
As we reported starting on page 32, in the last two years, the most prominent problem that municipalities have had to face is police liability coverage. Highlighted by the chilling footage of the murder of George Floyd in 2020, police misconduct is being graphically documented much more frequently than it was a few years ago. The inevitable increase in lawsuits and claims against police departments led to severe capacity constraints as insurers and reinsurers cut limits or exited the market.
Other liability concerns are also testing the ability of buyers and brokers to find adequate coverage for municipalities and school districts. Increased parent-teacher friction that has resulted from virtual classes during the pandemic, fights over social issues like the treatment of transgender students, and the rise of historic sexual abuse claims are making already wary insurers even more wary. concerned about the limits they offer and the prices. charge
On the property side, things are not much better. As people continue to move away from parts of the Northeast and Midwest toward areas of the country that are more vulnerable to windstorms, such as Texas and Florida, inevitably public entities and school districts in those states are growing and occupying more buildings. . The rise in costly hurricane loss cases over the past three decades has been felt acutely by the public entity sector, and looking ahead, the situation is unlikely to improve anytime soon (see chart). .
While there are some signs that the property/casualty market may be stabilizing, given the economic environment, there is no reason to think that there will not be more uncertainty to face in the coming years.
To address the issues, public entity risk managers and their brokers must be creative in how they approach their insurance programs and the resources they draw upon. Like buyers in the public and private sector, they may seek self-insurance facilities to some extent. While captives are not as attractive to public entities as they are to private companies because they don’t see the same tax benefits, municipal hedge funds and other structures are gaining popularity in the hard market.
If there is anything positive in the troubled market, risk managers are likely to get more attention as they look to implement policies that help prevent losses in the first place. Changes in police protocols, policies for intervening in contentious school disputes, and improvements in property resiliency should be considered more seriously as ways to improve safety and save taxpayer money in the long run.