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NY State, City, County Management Association. State of the Municipal Insurance Market: Coverages & Exposures. Presented By: Susan O’Rorke, John Congdon & Bob Bambino NY Municipal Insurance Reciprocal. State of the Municipal Market. Industry Results Recap

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Ny state city county management association

NY State, City, County Management Association

State of the Municipal Insurance Market:

Coverages & Exposures

Presented By: Susan O’Rorke,

John Congdon & Bob Bambino

NY Municipal Insurance Reciprocal


State of the municipal market
State of the Municipal Market

  • Industry Results Recap

  • Market Consolidation / Change in Players

  • Pricing Trends

  • Coverage Trends

  • “Alternative” Markets



Industry results recap1
Industry Results Recap

Property/Casualty Income/Loss

  • 1997: $36.6 Billion

  • 1998: $30.8 Billion

  • 1999: $21.9 Billion

  • 2000: $20.5 Billion

  • 2001: -$7.9 Billion


Market consolidation change in players
Market Consolidation / Change in Players

  • Thirteen years of rate decreases and deteriorating profits have driven many competitors from the field.

  • The opportunity to ride a wave of rate increases will entice new players to enter the market.


Pricing trends
Pricing Trends

2003 Projections

Property: 30-40%

General Liability: 10-20%

Auto Liability: 10-20%

Excess / Umbrella: 30-50%

Law Enforcement: 30-40%

Workers’ Comp.: 25-35%


Coverage trends
Coverage Trends

Positive Developments

  • Liability Limits to $10M and more

  • Sudden and Accidental Pollution Liability

  • Zoning and Land Use Coverage

  • Flood Coverage - even in flood zones

  • Earthquake available

  • Terrorism no longer excluded


Coverage trends1
Coverage Trends

Negative Developments

  • Windstorm Deductibles

  • EPL as a stand-alone policy

  • Deductibles that include expenses

  • Erosion of blanket property limits; specific

  • limits being used

  • Mold Exclusions

  • Coverage for skate parks??


Alternative markets
“Alternative Markets”

  • NYMIR - New York Municipal Insurance Reciprocal

  • Workers’ Compensation Pools

  • Comp. Alliance - New York Workers’ Compensation Alliance

  • PERMA - Public Employer Risk Management Association

  • Self-Insurance


Service cutbacks
Service Cutbacks:

  • Risk Management/Loss Control Services

  • Customer Service

  • Claim Management Services


Claim management
Claim Management

  • Litigation Strategy – companies more inclined to settle lawsuits?

  • First-Party Claims – tougher claims adjusting?

  • Attorney Assignment – less cases to outside firms?

  • Claim Investigator Assignment and Procedures – reduction in staff?


Purchasing insurance
Purchasing Insurance

  • Bidding Your Insurance

  • Consultants - Pros and Cons

  • Carrier Options

  • Selecting a Broker


Bidding your insurance
Bidding Your Insurance

PROs

  • Create Competitive Environment

  • Understand the Marketplace

  • Eliminate the “politics” of insurance.

    CONs

  • Increased Costs

  • Loss of Potential Competitors

  • Loss of Stability


Consultants
Consultants

PROs

  • Objective Third Party

  • Eliminate the “politics”

  • Thorough professional review

    CONs

  • Objective Third Party?

  • Additional Costs


Carrier options
Carrier Options

  • Direct Writers

  • Agency Companies

  • Pools & Reciprocals


Selecting a broker
Selecting a Broker

  • Expertise – how many municipal clients?

  • Market Access

  • Volume

  • Value-Added Services


How to stabilize your premiums
How to Stabilize your Premiums

  • Increase deductibles

  • Review coverage limits

  • Eliminate unnecessary coverages

  • Consider self-insured retentions

  • Practice aggressive risk management


Workers compensation alternatives
Workers’ Compensation Alternatives

  • For-Profit Private Carriers

  • Individual Self-Insurance

  • Group Self-Insurance


For profit private carriers
For-Profit Private Carriers

  • Traditional Policy

  • Pay an annual premium

  • Post-expiration date premium audit

  • Potential coverage limitations & disputes

  • Carrier controls claims process & services

  • Carrier benefits from interest earned on funds set aside to pay future claims


Self insurance
Self-Insurance

  • Control

    - Annual funding

    - Claim processing

    - No coverage disputes

    - Capture interest income

  • Non-Profit Structure

    - Tax exempt

  • Stability


Individual self insurance
Individual Self-Insurance

  • Total Control of annual funding requirement

  • Total control of claims process

  • Assume entire risk

  • Assume all operational costs

  • Potential volatility


Group self insurance
Group Self-Insurance

  • Shared control/determination of annual funding requirement

  • Shared control of claims process

  • Spread risk amongst members

  • Share operational costs

  • Stability


Municipal risk management current issues and trends

Loss Drivers

EPL

Snowplow Claims

WC – Slip & Fall Claims

Problems & Concerns

Community Use of Facilities

Skate Parks

Construction Insurance Requirements

Municipal Risk Management – Current Issues and Trends


Employment practices liability
Employment Practices Liability

  • Leading loss driver for the POL Policy

  • Our experience: Discrimination based on age, disability and sexual harassment

  • Not all allegations are covered by a

    POL Policy

  • U.S. workforce becoming more diversified - presents challenges and opportunities


Changes in us workforce
Changes in US Workforce

By 2020:

  • Hispanics will make-up 14% of the workforce

  • Asians – 6%

  • African-Americans – 11%

  • Women – 50%

    Employment Policy Foundation: The American Workplace,

    “A Century of Progress…A Century of Change”

    http://www.epf.org


Impact of these changes
Impact of these Changes

  • More workers in federally protected classes

  • Greater exposure for the POL policy

  • More complaints to the EEOC

    - Steady increase in national origin and race complaints

    - Large increase in payments made by the EEOC for national origin and race complaints


Seven ways to stay out of the epl quagmire
Seven Ways to Stay Out of the EPL Quagmire

  • Adopt Anti-Harassment and Discrimination Policies

  • Implement Workable Complaint Procedures

  • Supervise the “Supervisors”

  • Look for Informal Resolutions

  • Investigate Fairly

  • Train, Train and then Train Again

  • Prohibit, Prevent and Preclude Retaliation


Skating dilemma
Skating Dilemma

  • 7-10 million skateboarders

  • 8-10% annual increase in participation

  • Over 300 skate parks in use

  • Over 54,000 participant injuries; a 13% increase in injuries

  • Most common reason for injury – falls from irregular surfaces or debris on the riding surface

  • Very little litigation!


What do underwriters consider when evaluating skate parks
What do Underwriters Consider When Evaluating Skate Parks?

  • Size

  • Number of participants

  • Supervision

  • Type and number of ramps

  • Fencing/signage

  • Loss history

  • Use of waivers


Risk control methods
Risk Control Methods

  • Building a Skating Facility

    • Check local ordinances

    • Arrange for adequate space - at least 9,000 sq. feet

    • Retain an experienced design professional & contractor. No national standards at this time

    • Get certificates of insurance

    • Specs should include the maximum number of skaters, ramp heights, signage, lighting, fencing & maintenance

    • Compliance with the ADA

    • Use waivers & require personal protective equipment – helmets, knee and elbow pads


Snowplow claims
Snowplow Claims

  • Section 1103 (b) of the MV & Traffic Law (“Hazardous Vehicle Doctrine”)

  • Defense for municipalities for accidents during snow removal operations

  • Doesn’t apply if actions were reckless


Community use of facilities
Community Use of Facilities

  • Use a use of facilities form

  • Require insurance coverage from most facility users

  • Address alcohol use


Construction insurance requirements
Construction Insurance Requirements

  • Should be reviewed by insurance representative

  • Municipality as an additional insured by specific endorsement

  • “Reasonable” limits

  • Non-admitted insurers


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