Presentation on theme: "NY State, City, County Management Association State of the Municipal Insurance Market: Coverages & Exposures Presented By: Susan O’Rorke, John Congdon."— Presentation transcript:
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 Market Consolidation / Change in Players Pricing Trends Coverage Trends “Alternative” Markets
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 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 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 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” 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: Risk Management/Loss Control Services Customer Service Claim Management Services
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 Bidding Your Insurance Consultants - Pros and Cons Carrier Options Selecting a Broker
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 PROs Objective Third Party Eliminate the “politics” Thorough professional review CONs Objective Third Party? Additional Costs
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 Control - Annual funding - Claim processing - No coverage disputes - Capture interest income Non-Profit Structure - Tax exempt Stability
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 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
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 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 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 1. Adopt Anti-Harassment and Discrimination Policies 2. Implement Workable Complaint Procedures 3. Supervise the “Supervisors” 4. Look for Informal Resolutions 5. Investigate Fairly 6. Train, Train and then Train Again 7. Prohibit, Prevent and Preclude Retaliation
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? Size Number of participants Supervision Type and number of ramps Fencing/signage Loss history Use of waivers
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 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 Use a use of facilities form Require insurance coverage from most facility users Address alcohol use
Construction Insurance Requirements Should be reviewed by insurance representative Municipality as an additional insured by specific endorsement “Reasonable” limits Non-admitted insurers