Navigating Public Entity Risk Management Challenges
Public entity risk professionals face unique challenges that most recently include issues with law enforcement liability and a variety of workers’ compensation presumptions. This RIMS 2021 session discussed investigated these various challenges and offered approaches to managing those issues.
- Mark Walls, Vice President Communications & Strategic Analysis, Safety National
- Barry Scott, Risk Manager, City of Philadelphia
- Julie Mileham, Director, Risk Management, Colorado State Office of Risk Management
In Colorado, the legislature recently introduced 557 bills, 178 of which directly apply to the risk management division of the state. Of them, 73 have included fiscal notes, which is unheard of. This legislation ranges from healthcare, discrimination, law enforcement and COVID presumptions – all of which come with various challenges.
They look at these challenges as a way to educate the legislators and participate in follow-up meetings to make them aware of how some of these bills heavily impact state risk management. These bills can ultimately affect their budget as well, so risk management makes sure to make the legislators understand that budget may need to be increased in response to certain bills.
Child Sexual Abuse Exposures
In Colorado, there was a child sex abuse bill that opened the statute of limitations indefinitely, which dramatically affected various operations in their entity. Notably, it created difficulties for the applications and documentation they have to present to employees when working with minors. They also expect that, due to the statute of limitations, it may result in some fraudulent claims. Finally, in addition to staff, the parks and rec programs have a lot of volunteers in which they have less control over. This creates additional exposure.
They anticipate that the bill may affect the entity’s insurance renewal because often carriers want to shy away from public entities that have a lot of interaction with minors. It is possible that there will be some exclusions from related coverage.
In Pennsylvania, they have a cap of $500,000 for any child sex abuse occurrence, so they purchase very little related liability insurance. Their legislation did change last year, with specific focus on church child sexual abuse cases. This legislation is not well written and it has been difficult for governmental organizations to determine their role in helping to follow it. Overall, they look at this as a way the government is trying to limit social issues within the community, but sometimes these bills create unintended difficulties.
Needs Not Addressed in the Market
Property values are going up in Philadelphia and developers are very active in the city. There are a lot of row homes in many communities. They are consistently receiving complaints that developers are causing costly damage to neighboring homes. All that the city has is general liability insurance, but nothing exists to specifically address this challenge and the financial loss that accompanies it. They invite development, but need a way to find a risk solution to accompany this activity.
Law enforcement liability has also been a hurdle to purchase. For instance, Philadelphia was hosting a political convention in the city. Their excess workers’ compensation carrier wanted to stop the coverage a week before the political convention and pick it back up a week later. The provider did not want to insure the city during that event, leaving the entity no options. Risk managers agree that there seems to be a preconceived notion about the lack of ability public entities have to protect their city, which is incorrect.
The public sector has been low-hanging fruit for hackers. Insurance carriers have concerns about all the personally identifiable information (PII) housed, often antiquated systems. According to the risk managers, the market seems to be deteriorating for them in the cyber space.
Cost is an issue. Across the board, the cost of cyber insurance has been rising significantly with no real loss history. Liability limitations have also become onerous. Various factors, from personal information linked to voter registration, to handicap stickers in cars with linked health information, create challenges on rates. Everyone expects that it will continue to increase, especially after COVID. Public entities are looking for ways to draw a harder line in insurance negotiations.