Two of the biggest challenges in the public entities insurance market currently lie with the concerns around law enforcement and the marked increase in mass shooter events in public schools, according to the 2022 U.S. Casualty Market Outlook by Risk Placement Services (RPS).

In recent years, there has been an increase in claims from police actions, jail supervision and law enforcement-related auto claims, according to the report. In addition, the number of mass shooter events continues to rise, with educational institutions facing the brunt of these incidents.

Over the past decade, the amount of payments made to resolve claims of misconduct against 25 of the largest police and sheriff's departments in the U.S. was over $3.2 billion, according to a report by the Washington Post. Across the country, the potential to demand large sums, regardless of liability or potential immunity, has increased significantly given the latest social sentiment and negative publicity around law enforcement, according to a report by Allied Public Risk. Concerns regarding insuring and defending law enforcement has become more challenging for public entities.

“There are a number of drivers behind the increasing severity in law enforcement claims," says Christopher Skarinka, president, Tokio Marine HCC. This severity has increased due to the following, according to Skarinka:

• The shifting perception of law enforcement within our society, with civil unrest relating to law enforcement negatively impacting the social sentiment toward law enforcement in many communities.
• Continued loss development over a longer period, with issues such as “a large metro city reporting the number of high-speed chases increasing from around 20 per month to 60," says Lisa Blackmon, underwriting manager, public entities workers compensation, Associated Insurance Administrators Inc. 
• Higher verdicts due to the generational shift in juries.
• Increasing use of the “reptile theory" where plaintiffs' attorneys ignore liability and negligence while highlighting injuries and damages. This approach can be a contributing factor to nuclear verdicts as attorneys feed on jury members' distrust and make them fearful it could happen to them.
• A reduction or lack of training within law enforcement agencies. 

“Higher severity law enforcement and auto liability claims are occurring even in traditionally well-performing public entities," Skarinka says. “As a result, these trends—which historically have been limited to specific states or regions—are now nationwide."

Meanwhile, in 2021, the FBI designated 61 shootings as active shooter incidents. In these incidents, 103 people were killed and 140 wounded, excluding the shooters, according to the “FBI Active Shooter Incidents in the United States in 2021" report. The number of active shooter incidents in 2021 represents a 52.5% increase from 2020 and a 96.8% increase from 2017.

Due to the increasing prevalence of active shooter events, “we've had more and more buyers asking for and actually writing and buying policies on that," says Adam Mazan, vice president, Pacific Region, RPS.

Currently, there are a limited number of carriers that offer this coverage—and those that do offer it are starting to require insureds to confirm there have been no threats, incidents, or violent or criminal events on the insured's property, whether a claim was reported or not, according to the RPS report.

Active shooter coverages are an expansion of a general liability policy but, the market has not yet come out with any products in response to tragic events such as the shooting in Uvalde, Texas, where 19 children and two teachers were murdered at an elementary school. However, “there are tailored workplace violence products that we encourage our agents to offer their clients," Skarinka says.

“One of the interesting components that has come out of some of the most recent incidents is there is an insurance product that is in the works," Manza says. “While it has not come out yet, carriers are looking at including the cost to demo and rebuild a location that's had an active shooter event. It's become more and more prevalent that kids, as well as others involved in a mass shooting event, do not necessarily want to go back to that school or building." 

It is critical for agents to help procure the best possible coverage despite these growing risks. Here are three ways agents can assist:

1) Know your client. “The key component is to understand each public entity's unique coverage needs," Skarinka says. “Unlike other markets, there are a wide variety of specialty exposures within public entities—from municipal golf courses to power generation to transit operations—and not all carriers and pools have comfort and appetite for some of these risks."

2) Get ahead of the game. “Starting the renewal discussions early with your insured is really important," says Stacy Kaplan, chief operating officer, Amwins Specialty Casualty Solutions. “Prepare them based on current market conditions, so they are not completely caught off guard or surprised if there is a significant increase."

For accounts that have seen losses, “orchestrating a plan early can work to a client's benefit. Then you can decide together if it makes sense to market or stick with the current placement—it often depends on the loss experience," Kaplan says.

Also, set up meetings with underwriters. “If you can do it in person, I think that goes a long way," Manza says. "But if you can't do it in person, at least getting them on the phone to help walk them through what that specific insured is doing to control all these outside forces and get an understanding of what needs to be done from the insured side in order to deliver and meet those expectations."

3) Weigh your options. To control rising insurance costs, particularly for law enforcement, insureds should look to self-insured retention (SIR) programs.

“Whether it is $1 million, $5 million or some that are $10 million or higher, taking that loss information and doing loss modeling or loss forecasting, and being able to look at pricing parameters or pricing expectations at different retention levels is incredibly helpful for the insured to figure out where and how to make their buying decisions," Manza says.

In today's marketplace, active shooter coverage is “becoming more popular and agents should collaborate with their clients to consider the cost benefit analysis of the premium versus the potential exposure to that entity or municipality," Kaplan says.

Olivia Overman is IA content editor.