Insurance Market Outlook and Critical Strategies for Public Entities

In 2024, high claims costs have resulted in a more limited insurance marketplace with reduced capacity and increased retentions and premiums. Public entities continue to face challenges with their accumulation of values in a broad range of properties, from historical buildings to jails and inherited properties. This can result in either insufficient coverage in the event of a loss or paying higher premiums than necessary.

However, the pace of overall property insurance rate increases is beginning to slow, and capacity is starting to improve. Rates are leveling out on some layers of coverage while increasing on others. Multiple insurance markets have announced an increase in capacity for 2024, and insureds with optimal risk profiles are in the best position to take advantage.

Trends to Watch
Adequate Valuations
To secure optimal (or sometimes any) coverage, public entities must focus on obtaining adequate valuations of their properties and assets. As today’s economic conditions are inflating property values, accurate valuations and claim recovery are top priorities. Surging natural disasters are also increasing property risks, especially for organizations without up-to-date insurance strategies.

More frequently than ever, underwriters are questioning the validity of values for fixed assets, such as buildings and vehicles. When underwriters are dissatisfied with valuations, they usually impose coverage restrictions. Some underwriters may even refuse to offer any coverage unless the values are adjusted to their satisfaction.

Insurance carriers use third-party data sources and internal tools to capture and assess values. However, relying solely on these tools without vetting the output can lead to negative results for insureds. Public entities should partner with a knowledgeable broker to conduct a thorough review based on the actual circumstances of their individual properties. This helps secure maximum coverage at the time of loss while minimizing premium expenses.

Sexual Abuse and Molestation (SAM) and Traumatic Brain Injury (TBI) Insurance
Public entities are particularly at risk for SAM and TBI liabilities, as they often serve children, students, and other vulnerable populations. As a result, insureds might need to purchase SAM and TBI policies from a secondary market, which can be expensive and limited in capacity. It’s crucial to implement effective risk management strategies and maintain a strong risk profile to obtain the necessary coverage.

Insurance Strategies

Public entities can implement effective strategies in a challenging market by:

• Preparing a comprehensive market submission that highlights a strong or improving safety culture and risk management approach.
• Developing analytics around risk financing opportunities that improve decision-making and outcomes.
• Using catastrophic property modeling to identify the appropriate amount of wind, flood, and earthquake coverage.
• Ensuring that construction, occupancy, protection, and exposure (COPE) data is detailed and accurate.
• Evaluating all U.S. and London market options, focusing on risk appetite and industry.
• Performing a cyber policy review to ensure an organization’s program includes current coverage updates and uses risk management tools to help navigate cyber exposures and claims.
• Addressing specific needs — for example, threat/terror solutions that offer a broad coverage option for strikes, riots, and civil commotion.
  

*The views and opinions expressed in the Public Risk Management Association (PRIMA) blogs are those of each respective author. The views and opinions do not necessarily reflect the official policy or position of PRIMA.*