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Trending Issues for Pools

Posted by Scott Moss on July 19, 2016 at 12:51 PM

Municipal insurance pools are an excellent example of local governments working together to create efficiencies, preserve resources, and create value.

As a manager for a municipal pool, I offer my Top 10 Trending Issues for Pools:

  1. Coverages.  Pools seek to provide the best coverages at the best price. To meet the needs of members, pools are examining additional coverages and how to price them. Two non-traditional coverages trending among pools are cyber-liability coverage and drone coverage.
  2. Products. Pools are leaders in introducing loss control and risk management products to members. Currently, a few pools have mobile loss control apps. Such apps provide inspection tools, in-field related safety information and resources, root cause information and analysis, and claims assistance. Pools also offer comprehensive learning management systems with online courses and videos.
  3. Services. Pools offer services in the areas of risk management and loss control. Public officials training is now trending with pools. Another service many pools offer is emergency preparedness and response. Pools are monitoring the services needed by members and are working on meeting those needs comprehensively and cost-efficiently.
  4. Best Practices.  A current trend of pools is providing best practices to members in the areas of employment, risk management, finance, technology, training, and many others. School pools are leaders in head injury prevention and gender identity best practices. Many pools offer incentives, bonuses, or reduced contribution for implementing best practices.
  5. Surplus Capital.  Pool directors and administrators are always thinking about how to determine the right amount of surplus capital to maintain. A popular trend now is to model surplus capital needs using enterprise risk management. Other popular techniques to model capital needs include ratios such as the IRIS or Risk-based capital (RBC) that are common in the insurance industry.
  6. Data Analytics. Pools have a large amount of claims and exposure data. Several pools are combining data to improve analytics. Using cloud technology, advanced data mining tools, and algorithms, pools are able to do more analytics and predictive modeling than ever before. The latest trend is to employ staff or consultants to provide advanced analytics to members.
  7. Enterprise Risk Management (ERM). A current trend with pools is how to use ERM in their own operations — and how to push it out to members. ERM examines uncertainties, good and bad, and aligns uncertainties with the strategies of the organization. Many pools see the valuable management features of ERM and are studying ways to implement it.
  8. Succession Planning. Pool administrators are being asked by boards to plan for their aging workforce. Pool administrators are identifying those in the organization to train as the next generation of pool administrators.
  9. Competition. When pools were formed, there was far less competition than now. Commercial insurance — and other municipal pools — compete for the limited supply of local government agencies. Pools must be different and better to attract and retain membership.
  10. Problem Claims. Pools are being hammered by large claims: employment, law enforcement, firefighters, concussion, gender identity, Title 9, etc.  Federal lawsuits that come with very high legal costs now outpace state claims. Also, the aging workforce is increasing the cost of workers’ compensation. State legislatures are giving away benefits to public safety, while juries are giving away local government dollars via large verdicts. And, in the meantime, immunities are eroding.

The exciting part of being a manager for a pool is the ever-present opportunity to handle change.  Ironically, change is the trend that never changes.