ref: reel030484 date: 1978-04-01 content: INSURANCE POOLING FOR VIRGINIA'S LOCALITIES
An issue of increasing concern to local officials is insurance and risk management. Premium rates for many categories of insurance have skyrocketed in recent years, and some localities have even had difficulty in obtaining bids from insurance companies for certain forms of coverage. The once mundane administrative task of renewing reasonably priced insurance policies has, in some instances, become an administrative nightmare. Some larger localities have even decided to become self-insured for certain of their insurance needs.
Nationwide Problem
According to the National League of Cities (The New World of Municipal Liability, April 1978, p.4): "localities have not been viewed as good liability risks by commercial risk bearers -- insurance companies. They advance a number of reasons for this point of view. Disappearing immunity and ill-defined scope of tort laws increase exposure and create unpredictable risks. A related factor is poor data on exposures, hazards and losses, a problem that has always plagued municipal government.... The fact is that insurance companies, like most other institutions, do not like unpredictable situations. Making a profit in the financial risk protection business hinges on the long haul certainty of income exceeding payout by a large enough margin to cover expenses and turn over a 6 to 8 percent, or better, average annual profit. The insurance industry cannot be condemned out of chunkid: 20633 recordid: 1653 page_number: 1