In April 2019, the City joined the States Risk Retention Group (RRG), which provides liability protection to participating public entities. Coverage lines included law enforcement liability, general liability, public official errors and omissions liability, and automobile liability. The City has a self-insured retention of $250,000 within which it must pay and administer its own claims within the retention amount.
The City’s loss experience has been good in the last two years, but nationally the public entity insurance market continues to deteriorate. Social inflation is driving up the cost of jury verdicts and settlements against public entities, particularly law enforcement. States RRG procures their own excess insurance to cover large losses, and the costs of States RRG’s excess coverage has increased significantly over the last twenty-four months. In order to remain fiscally sound and not deplete its reserves, States RRG passes the increased cost of excess insurance on to its members, which is reflected in higher premiums.
Lockton approached four other insurers regarding possible comparisons. One insurer would only offer $5,000,000 in total limits with premium approaching $1Million; another also noted a $5Million limit with a $500,000 Self-Insurance Retention. The two others approached declined to quote as not being competitive.
To fund losses, the City has established a Risk Management fund which is administered by Finance and Administration. The City uses outside legal counsel on all litigated claims and a third party administer for any claim involving personal injury or significant property damage. Charlesworth Consulting, Legal, and Finance and Administration work together in the administration of the claims handling process.
The City also procures specialty insurance coverage for unique risks, like cyber liability insurance and police drones. The anticipated renewal premiums of these ancillary lines will be within the City Manager’s authority.