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3 Ways Agents Can Help Public Entity Clients Navigate a Difficult Market

Independent agents can make sure their public entity clients understand their risks and have the insurance protection they need at a price they can afford.
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3 ways agents can help public entity clients navigate a difficult market

Because of their unique position in society, public entities face a high level of scrutiny in their roles serving the public. This scrutiny has led to a significant increase in the number of claims against these entities, as well as an increase in the severity of payments being awarded. Today, there are two notable public entity markets seeing such an increased level of scrutiny that it is adversely impacting their insurance coverage options: law enforcement and public school districts.

“Law enforcement liability remains a focal point in the underwriting process, with continued concern given the heightened media attention, civil unrest statistics, and federal court considerations entailed," says Brian Frost, executive vice president, Amwins.

The complexities and risk exposures of law enforcement make it difficult to find coverage, particularly as jury awards reach thermonuclear levels with verdicts that are more than $100 million. Such verdicts are creating challenges for the insurance industry, making it difficult to underwrite the risk and increasing premiums. This has resulted in public entities struggling to find the coverage they need. 

“What's driving a lot of the verdicts these days, and driving up rates as a result, is thermonuclear verdicts," says Bob Lombard, area president, Risk Placement Services (RPS). “In the past, cases could be settled out of court, but law enforcement cases especially are getting driven into the courts and the cases are getting placed in front of juries and scrutinized, and in a lot of cases that is not favorable to public entities."

Similarly, in school districts, “we have observed a notable rise in the frequency and prevalence of litigation targeting schools where a child sustains an injury during school hours or at a school-sponsored event," says Manny Cocurull, president of KidGuard School Insurance, a DOXA Insurance Company. “This surge in litigation is often a result of parents being burdened with medical expenses following student accidents. Consequently, decision-makers are becoming more inclined to explore alternative approaches to mitigate risks, such as considering the implementation of student accident coverage."

For both segments of the market, the answer to increasing insurance costs is “typically to take on more risk," Lombard says. It is here that independent agents can add value to that relationship, making sure clients understand their risks and have the insurance protection they need at a price they can afford, while also offering options to assist entities to stay within their budget.

Here are three ways agents can help clients navigate the difficult environment:

1) Understand the risk. “To effectively support public entities, it is crucial to have a comprehensive understanding of the risks they face and the type of coverage that can help mitigate those risks," Cocurull says. “While student accident insurance cannot prevent accidents, it can play a vital role in minimizing the potential impact of accidents that could lead to costly liability claims. Moreover, it can indirectly contribute to reducing liability premiums by decreasing the frequency of expensive legal settlements."

Within the law enforcement segment, “if it's a line of coverage where entities are seeing significant losses, allow them to pay a higher retention for that particular line of coverage and still maintain some form of coverage and some form of limits," Lombard says. “Agents need to help the entities understand where their losses are coming from and let them work on reducing these losses."

Agents can help clients recognize “the importance of proactive measures to address potential liabilities," Cocurull says. 

2) Mitigate risks. In those segments of the market facing escalating loss severity and absorbing increasing retention levels, agents should work with their clients in mitigating loss occurrence and adverse claim outcomes.

According to Frost, insurers, agents and brokers can support insureds in the following ways: using data scientists to allow for predicative analytics and improved quantitative data; prioritizing risks by including training and loss control implementation for abuse claims beyond mandatory reporting levels and regulatory compliance standards; elevating claims communication and litigation management and facilitating best practices; and making use of ever-evolving technology such as collision avoidance systems and law enforcement incident monitoring and body camera audio algorithms to collect and analyze trends.

3) Instill confidence. By demonstrating an understanding of each unique risk facing public entity clients, agents can ensure clients feel confident in the coverage they are offering.

By possessing this industry-specific knowledge and demonstrating a genuine interest in the client's business and needs, agents instill a sense of confidence in customers, assuring them that their business is well-protected," Cocurull says. “This approach fosters stronger partnerships and increases the likelihood of clients choosing to work with the agent."

Olivia Overman is IA content editor. 

Monday, March 25, 2024
Public Entities
Big I Markets