Public entities are committed to providing communities with the services and amenities they need to go about their daily lives, but at the same time they also face a particularly complex risk environment. Often working within tight budget constraints, public sector entities must balance pursuing new opportunities with addressing basic needs, such as improving IT infrastructures, cybersecurity preparedness and law enforcement liability, to name just a few.
Historically, municipalities enjoyed total immunity from civil liability, but that all changed in the mid-’90s with the passing of the Federal Tort Claims Act. Since then, litigation against municipalities has been on the rise in many areas, ranging from highly publicized allegations of civil rights violations by police, to drone usage or property damage claims blamed on deteriorating infrastructures, according to the whitepaper Rising Risk in Public Entity from Risk Placement Services.
To mitigate the increasing costs of insurance for public entities, independent agents can play an important role in assisting their clients through the effective handling of accounts. Here are three ways agents can add value:
1) Take extra time to complete a submission. It’s important “to sit with a client, at least virtually, to go through the application and ask questions,” says Kevin Beer, president, Wright Specialty Insurance. “If there are losses, try to get a little more detail around the loss. What caused the loss? Has the insured done something to mitigate that or prevent it from happening in the future? Was it truly just a one-time occurrence?”
Particularly in cases where there are liability losses, “the more you can give an underwriter, the better they’ll understand the risk and the better they’ll be able to provide a solution for the client,” Beer says. “It can really help to say, ‘the entity had a big loss, but this is what they’ve done to prevent it from happening again.'”
2) Understand current and emerging challenges. Public entities are facing an ever-increasing range of risks and understanding these risks is essential for agents operating in this market.
In particular, the challenges surrounding law enforcement entities is evolving day by day. “There has been some talk of the industry developing a professional liability coverage for police officers as some, and likely more, jurisdictions are requiring officers to carry liability coverage for potential excessive force lawsuits,” says Patrick Albrecht, president, Associated Insurance Administrators Inc. “Staying current on this changing legal environment is a must in the public sector arena.”
Cybersecurity is, of course, a serious concern for public entities with ransomware the biggest cybersecurity threat businesses are facing today. Ransomware’s widespread impact on public entities includes attacks on several U.S. cities, including Baltimore and Atlanta. “Cyber liability is one of the leading exposures for public entities,” Albrecht says.
Cyber is “definitely an area that will be evolving,” Beer says. “New products are being developed all the time for this risk because it’s a relatively new coverage and I would say that agents who specialize in this type of coverage for public entities will be in better shape than ones that do not.”
Additionally, the increased use of drones by government agencies has grown more popular. As of March 2020, at least 1,578 state and local public safety agencies in the U.S. had acquired drones, and 70% of those agencies were law enforcement bodies, according to Bard College researchers.
In the absence of a federal framework for governing the technology, cities and states have written a patchwork of rules and regulations for police drone use that, taken together, show what a more transparent and just set of laws governing police aerial surveillance might look like, according to the Brookings Institution.
“Knowing the exposures and staying up to date of the changing legal environment can give an agent a jump on the competition,” Albrecht says.
3) Effective use of risk management tools. Some agents may not have the risk management tools available in-house to effectively assist a client but “if they can get those from a carrier partner, that’s a home run,” Beer says. “Make sure to leverage carrier risk management functions and resources.”
Considering the past year and the impact of the COVID-19 pandemic, agents for public entities need to ensure they address any coverage changes so that their clients remain adequately protected. “This will help mitigate the more intense underwriting employed by carriers with emphasis on risk transfer, such as hold harmless agreements and additional insured provisions,” Albrecht says.
“We encourage our agents and our clients to ask questions and ask for help for things like training, laws and more,” Beer says. In doing so, an agent can add so much more value to a client account.
Olivia Overman is IA content editor.