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The police liability market is still tough for buyers



Two years after the assassination of George Floyd by a police officer and the nationwide turmoil triggered by the killing, the market for law enforcement liability insurance, which has already hardened, is still in question, and many experts say it is unlikely to change dramatically any time soon.

However, signs of moderation are beginning to show due to efforts to reform police policy and procedures, some say.

Legislative efforts to reform police responsibility, such as a Colorado law requiring police officers to pay 5% of each jury prize against those up to $ 25,000, have failed to make much of an impact elsewhere (see related history).

Mr. Floyd, a 46-year-old African-American, died in Minneapolis on May 25, 2020, after Derek Chauvin, a white police officer, was filmed kneeling on his neck for about nine minutes. The incident led to protests in several cities. Mr. Chauvin was later found guilty of second-degree murder and sentenced to 1

7 to 21 years in prison.

The market for law enforcement responsibilities has been further aggravated by so-called nuclear jurisdictions, civil unrest, the pandemic and the social environment.

The market has been challenging in recent years but became much more so after the murder of Mr. Floyd, says Adam Mazan, Newport Beach, California-based Vice President of Accident Risk Placement Services, a unit of Arthur J. Gallagher & Co.

“The situation is still difficult,” said Sandra McFarland, New York-based senior vice president of Marsh LLC’s U.S. public placement agency. “We are still seeing reduced capacity,” which depends on the customer’s location and size, she said.

McFarland said there are about $ 5 million in limits available for law enforcement coverage from individual insurance companies, and units seeking higher limits must use multiple insurance companies, which offer less capacity than they did in the past.

Small municipal authorities have managed to get coverage through pools, and most public insurance companies still offer law enforcement responsibilities as part of an overall integrated program, but larger cities have some difficulty securing capacity, McFarland said.

Robert Bookhammer, Dallas-based senior vice president of USI Insurance Services LLC, said in a recent case “we need to split” law enforcement coverage from the public package.

Prices and restrictions are rising, and “there seem to be fewer and fewer markets willing to write it off,” a trend that has continued since 2020, says Jose Peralta, Washington-based CEO, U.S. public sector and national practice leader, commercial risk , at Aon PLC.

“The reality is that what drives the underwriter’s perspective seems to be the enormous level of uncertainty,” he said. In the current environment, settlement and jury awards are difficult to predict, he said.

In Washington, state-of-the-art state courts have led to more cases being filed with the state rather than federal court for police liability, where plaintiffs face fewer challenges, says Ann Bennett, executive director of the Tukwila-based Washington Cities Insurance Authority, a risk pool. who self-insures the first $ 4 million of each loss for its members, then reinsures over it.

At the same time, the movement for social justice has influenced the jurors’ attitudes to law enforcement, and there has been an overall increase in the frequency and severity of the plaintiff’s claims, Bennett said.

In December, for example, a federal jury in Austin, Texas, awarded $ 67 million to the family of a man who was fatally shot by police, according to news reports.

The Washington Post reported in March that more than $ 1.5 billion has been spent on resolving police misconduct involving thousands of police officers who have been repeatedly accused of misconduct. The newspaper’s investigation included more than 7,600 salaried employees for whom payments had been made more than once.

The market is still very stable, says Mark Dillard, president of Richardson-based Public Risk Underwriters in Texas, which is a managing general agency for QBE North America.

“We are pushing the pace of each renewal. It is a function of their loss experience,” training and policies and procedures,
he said.

“All accounts that have shown a propensity for frequency will look at double-digit interest rate hikes and higher retentions,” he said. Dillard.


Police risk management

Experts say that measures taken by law enforcement agencies to reduce their responsibilities include:

  • Training in the use of body cameras
  • Introduction of traffic stop protocols
  • To have legal departments periodically review policies and procedures and to retain defense attorneys or experts in the use of force to conduct seminars on legislative amendments
  • Deal with high-speed yachts
  • Develop policies for the use of tasers
  • Communicate with the public via social media about high-profile incidents and explain the next steps they plan to take in their investigations
  • Work with social service workers to escalate situations, including setting up units for mental crisis management
  • To allow prison systems to take steps to review prisoners’ medical conditions and to hire medically trained providers to deal with these conditions

Source: Business insurance interview


In addition, most insurance companies that are still on the market are asking for much more information about coverage applications, Peralta said.

But the market is “marginally” better than it was for most of 2021, says John Klecha, Meriden, internship manager for national public entities in Connecticut and president of the Connecticut operations for USI.

While the public insurance sector is cutting some capacity, insurance companies are less aggressive in terms of prices and terms, but the risks are still being examined, he said. Prices increase by about 10% to 30%, he said.

“We are definitely starting to see some market stabilization,” which is a change from the “very tumultuous” of the past two years, “said Thanh Hoang, Concord, California-based senior vice president and public health risk risk insurer with Munich Re Specialty Insurance.

“We are beginning to see fewer program restrictions and fewer dramatic price changes,” although coverage will depend on loss experience and jurisdiction, focusing on the individual characteristics of units, said Mr. Hoang.

Insurance companies have a less general approach to renewals this year, says Brian Frost, Woodland Hills, California-
based vice president of Amwins Inc.

Insurance companies that “still write law enforcement at this point are comfortable with it but are picky about it” and may ask more questions, says Timothy Staunton, Chicago-based vice president of wholesale broker Apex Insurance Services.

The outlook is more of the same.

“It will remain fixed,” said Mr. Dillard. Demonstrations, civil unrest and allegations of excessive police violence continue to deter some guarantors.

Bob Saville, founder and CEO of Norcross, Georgia-based Saville Public Entity, a wholesaler, said: “My hope is that the policies and procedures are in line with law enforcement agencies and that they comply with the Guarantee Guidelines, and you see a reduction in the losses. ”

But the claims are affected by higher awards and settlements “so I see no relief in sight in the near future”, he said.


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