https://www.americancityandcounty.com/wp-content/themes/acc_child/assets/images/logo/footer-logo.png
  • Home
  • Co-op Solutions
  • Hybrid Work
  • Commentaries
  • News
  • In-Depth
  • Multimedia
    • Back
    • Podcast
  • Resources & Events
    • Back
    • Resources
    • Webinars
    • White Papers
    • IWCE 2022
    • How to Contribute
    • Municipal Cost Index – Archive
    • Equipment Watch Page
    • American City & County Awards
  • About Us
    • Back
    • About Us
    • Contact Us
    • Advertise
    • Privacy Statement
    • Terms of Service
American City and County
  • NEWSLETTER
  • Home
  • Co-op Solutions
  • Hybrid Work
  • Commentaries
  • News
  • In-Depth
  • Multimedia
    • Back
    • Podcasts
    • Latest videos
  • Resources/Events
    • Back
    • Webinars
    • White Papers/eBooks
    • IWCE 2022
    • How to Contribute
    • American City & County Awards
    • Municipal Cost Index
    • Equipment Watch Page
  • About Us
    • Back
    • About Us
    • Contact Us
    • Advertise
    • Cookie Policy
    • Privacy Stament
    • Terms of Service
  • newsletter
  • Administration
  • Economy & Finance
  • Procurement
  • Public Safety
  • Public Works & Utilities
  • Smart Cities & Technology
  • Magazine
acc.com


Is flow to insurance pools slowing?

Is flow to insurance pools slowing?

The viability of municipal insurance pools remains strong, despite soft pricing in the traditional markets and the growing interest of regulators. There
  • Written by Hyman, Allen
  • 1st February 1995

The viability of municipal insurance pools remains strong, despite soft pricing in the traditional markets and the growing interest of regulators. There are more than 400 municipal pools nationwide, and cities and counties continue to look to them as a cost-effective means for insuring workers’ compensation, general and professional liability, property, employee benefits and specialty services.

Most pools carry with them the advantages of shared cost and shared risk. On the other hand, some pools are designed as joint purchase groups for the sole purpose of volume purchasin, and others are formed to bank funds and make loans for loss payments or to share risk management services but no actual risk.

In the 1970s, when insurance prices rose sharply and availability declined, governments began turning to pools in an effort to make their coverage more affordable. Prior to that, insurance was an insignificant portion of a government’s budget; but with increased litigation, workers’ compensation claims and federal civil rights cases, governments were deemed poor underwriting risks, and prices soared in response.

Preexisting legislation known commonly as the Intergovernmental Cooperation Acts and designed to permit local government entities to band together and share in the provision of essential services was interpreted to enable the creation of insurance pools. At the time, insurance regulators were generally uninterested in local government affairs, so early pools went unregulated.

Pricing has historically been unbeatable for governmental pools that share risk. The pools are tax-exempt, they do not have stockholders, and their staffs are generally lean and paid on a scale more equivalent to public payrolls than private enterprise. In the absence of major regulation, participants have been able to increase limits and enhance or add coverages quickly because there was no time lost in seeking approval.

The popularity of municipal risk-sharing pools has grown steadily, with their numbers nearly doubling since 1987. In a 1993 study authored by Peter Young, business professor at St. Cloud State University, St. Cloud, Minn., and published by the Public Risk Management Association (PRIMA), 60 percent of participants cited unavailability and unaffordability of coverage as the main reasons their pools were formed.

Despite the return of affordable insurance coverage in the traditional marketplace, municipalities continue to take advantage of pools. Public risk managers have long complained that the conventional insurance market cannot always provide the support or the specialized services that government entities need, and pools, in addition to lowering coverage costs, have given participants the framework to tailor their own services, including claims and litigation management, information management systems and loss prevention.

Also, administrators report a sense of control with pools. For example, pools generally design their own coverage documents, and membership requirements based on in risk management guidelines ensure that individual losses and the cost of coverage for all members remains low.

As the number of municipal insurance pools has grown, so has regulatory interest in them. Young reports that 60 percent of municipal pools responding in his study are regulated to some degree, primarily by state insurance commissioners.

The National Association of Insurance Commissioners has examined pools recently, but municipalities should expect no immediate change in federal scrutiny. In fact, until regulation brings on insurance taxes or more in-depth disclosure requirements –neither of which is imminent — the outlook for pools is promising.

Tags:

Most Recent


  • broadband
    Funding fiber broadband: The path to growing communities
    The Infrastructure Investment and Jobs Act (IIJA) presents communities with the ability to build broadband infrastructure that has been shown to deliver substantial and long-lasting economic benefits by creating jobs and attracting businesses as well as improving the quality of life for the people who live there. Local leaders need to be proactive and engaged […]
  • Report: Traffic fatalities from motor vehicle accidents increased by 7% in the first quarter
    The National Highway Traffic Safety Administration’s first-quarter traffic fatality estimates are in, and they’re not encouraging. Around 9,560 people died in motor vehicle accidents in the first three months of 2022, representing a 7 percent increase over last year’s data from the same quarter (there were 8,935 fatalities in the first quarter of 2021).   “We […]
  • Biden: Inflation Reduction Act represents 'one of the most significant laws in our history'
    Don’t be deceived by its name: the Inflation Reduction Act represents the most significant act combating climate change Congress has ever passed. On Tuesday, President Joe Biden signed the measure into law—injecting $370 billion into sustainability and energy initiatives over 10 years with the stroke of a pen.  “This bill is the biggest step forward […]
  • CRM
    CRM beyond sales: How government CRM can improve citizen engagement and satisfaction
    Private companies know the value of customer relationship management and CRM workflows. For anyone new to CRM, it is a technology that helps companies manage relationships with current and potential customers. CRM systems help companies manage customer relationships throughout the entire customer life cycle, including sales, ecommerce, marketing and more. CRMs help organizations focus on […]

Leave a comment Cancel reply

-or-

Log in with your American City and County account

Alternatively, post a comment by completing the form below:

Your email address will not be published. Required fields are marked *

Related Content

  • A call to action: Moving procurement past its pre-pandemic mindset
  • Making deals: Cooperative agreements can help governments achieve supplier diversity goals
  • Procurement methods go to the head of the class in the Pennsylvania State System of Higher Education
  • Arbor Day Foundation and Intrinsyx Environmental offer natural solution to clean up industrial contamination in cities and towns

White papers


2000+ Government Customers Reveal a Roadmap to Fleet Management Success

17th August 2022

Modern American Perspectives on Law Enforcement

14th July 2022

Reimagine the Employee Experience

12th July 2022
view all

Events


PODCAST


Young Leaders Episode 4 – Cyril Jefferson – City Councilman, High Point, North Carolina

13th October 2020

Young Leaders Episode 3 – Shannon Hardin – City Council President, Columbus, Ohio

27th July 2020

Young Leaders Episode 2 – Christian Williams – Development Services Planner, Goodyear, Ariz.

1st July 2020
view all

Twitter


AmerCityCounty

Funding fiber broadband: The path to growing communities dlvr.it/SWsW6f

18th August 2022
AmerCityCounty

Report: Traffic fatalities from motor vehicle accidents increased by 7% in the first quarter dlvr.it/SWsJFc

18th August 2022
AmerCityCounty

Biden: Inflation Reduction Act represents ‘one of the most significant laws in our history’ dlvr.it/SWpMDZ

17th August 2022
AmerCityCounty

CRM beyond sales: How government CRM can improve citizen engagement and satisfaction dlvr.it/SWp9lg

17th August 2022
AmerCityCounty

Taking on the heat with tech: Cities create chief heat officers dlvr.it/SWp77d

17th August 2022
AmerCityCounty

2000+ government customers reveal a roadmap to fleet management success dlvr.it/SWng6T

17th August 2022
AmerCityCounty

Here are 12 of America’s most walkable cities with vacancies for renters dlvr.it/SWlBkd

16th August 2022
AmerCityCounty

Amid digitization of public infrastructure, cybersecurity is increasingly a challenge dlvr.it/SWh6Ww

15th August 2022

Newsletters

Sign up for American City & County’s newsletters to receive regular news and information updates about local governments.

Resale Insights Dashboard

The Resale Insights Dashboard provides model-level data for the entire used equipment market to help you save time and money.

Municipal Cost Index

Updated monthly since 1978, our exclusive Municipal Cost Index shows the effects of inflation on the cost of providing municipal services

Media Kit and Advertising

Want to reach our digital audience? Learn more here.

DISCOVER MORE FROM INFORMA TECH

  • IWCE’s Urgent Communications
  • IWCE Expo

WORKING WITH US

  • About Us
  • Contact Us

FOLLOW American City and County ON SOCIAL

  • Privacy
  • CCPA: “Do Not Sell My Data”
  • Cookies Policy
  • Terms
Copyright © 2022 Informa PLC. Informa PLC is registered in England and Wales with company number 8860726 whose registered and Head office is 5 Howick Place, London, SW1P 1WG.
This website uses cookies, including third party ones, to allow for analysis of how people use our website in order to improve your experience and our services. By continuing to use our website, you agree to the use of such cookies. Click here for more information on our Cookie Policy and Privacy Policy.
X