Pools rush in ...

• Author: Kutska, Betsy
• Position: Intergovernmental insurance pools

As intergovernmental insurance pools attempt to stay competitive in a soft insurance market, they turn to offering nontraditional coverage options.

As the saying goes, "Fools rush in where wise men fear to tread," or something close to that. However, intergovernmental insurance pools have taken that phrase and put a bit of a twist on it: "Pools rush in where conventional insurance fears to tread." This action has proven to be anything but foolish.

Customized Coverage

In general, a relatively small local government does not have enough clout with the commercial insurance marketplace to negotiate terms and conditions much different from what the standard insurance policy form provides. If an entity needs specialized coverage, traditional insurers issue either separate policies and/or endorsements with corresponding increases in cost.

This is where pools have rushed in: they have the knowledge and negotiating power to provide customized coverage to meet the particular needs of local governments and often offer coverage for previously uninsurable exposures such as coverages described below.

Employment-related Claims. Local governments are no different from other employers in their concern about claims in the personnel area. Claims alleging discrimination, sexual harassment, retaliatory discharge and wrongful hiring are commonplace. Historically, many insurers may have either specifically excluded or denied these claims under the exclusion for intentional acts. However, what many pools have recognized is that, although the acts of hiring, firing or disciplining are intentional, employers do not intend to cause harm or injury. Pools have therefore provided coverage by expanding the definition of "personal injury," by providing public officials errors and omissions coverage, by manuscripting coverage or by having traditional exclusions deleted from general or public officials' liability policies.

Discrimination in Provision of Services. Although allegations of discrimination are often seen in employment areas, new liability imposed by the Americans with Disabilities Act (ADA) affects provision of services provided to and for the public. Pools have recognized this is an area that affects all members and have conducted training, offered information and provided coverage for claims that might be brought against their members.

Environmental Liability. With recent court decisions finding that old occurrence-form insurance policies provide pollution...