Skip to content
California JPIA
  • Resources
    • Library
    • Newsletter
    • News & Updates
    • White Papers
  • Training
    • Catalog
    • Classroom
    • E-Learning
    • Academies
    • Educational Forum
  • Coverage
    • Risk-sharing Pools
    • Insured Programs
    • Additional Programs
    • Program Certificates
    • Evidence of Coverage
    • Memoranda of Coverage
  • Risk Management
    • Risk Managers
    • Risk Management Services
    • LossCAP Program
    • Risk Management Awards
    • Capstone Award
    • ReClaim Initiative
  • Join
  • About
    • Meetings & Agendas
    • Members
    • Affiliations
    • Governance
    • Captive
    • Financial Information
    • Staff
    • Compensation
    • Career Opportunities

Home > Newsletters > Risk Pool Finance Series: Hard Markets

Newsletter

The Authority is a monthly newsletter that provides information of interest to members, including legal updates, risk management matters, upcoming educational events, and happenings at the California JPIA.

Search Newsletters


Share via:

Print Page Email Page Facebook Share on Twitter Share on LinkedIn

Current Issue

    • Register Now for the California JPIA’s 27th Annual Risk Management Educational Forum
    • Annual Meeting of the Board of Directors
    • Updated Cal/OSHA COVID-19 Emergency Temporary Standards
    • Risk Managers Roundtable: Outdoor Dining Risks
    • Electronic Resource Update – Evidence of Coverage
    • The City of Chino Hills Receives FEMA Funding to Support Fuel Reduction Project
    • City of Camarillo Wins Earth Day Award for North Pleasant Valley Groundwater Desalter Facility
    • City of Dana Point’s Public Works Department Exemplifies “Ready & Resilient”
    • California JPIA Recognizes Milestone Anniversary for Maintenance Worker Chris Yanonis
  • Newsletter Archive

Newsletter Archives

  • Issue 122 – April 2022
  • Issue 121 – March 2022
  • Issue 120 – February 2022
  • Issue 119 - January 2022
  • Issue 118 - December 2021
  • Issue 117 - November 2021

Issue 115 - September 2021

NEWS: WORTHY

Risk Pool Finance Series: Hard Markets

One of the benefits of being in a risk pool is having a degree of insulation from hard insurance market cycles. The insurance marketplace ebbs and flows and public entity risk pools provide an important buffer to the volatility.

Soft markets are characterized by stable premiums, broad coverage, relaxed underwriting criteria, higher available limits, and more competition among insurance carriers for new business. Conversely, hard insurance markets bring higher premiums, less coverage, more stringent underwriting, less available capital, and fewer companies selling insurance which makes coverage more difficult to find at reasonable prices.

Read More

The current hard market began in 2019 and was precipitated in large part by an increase in claims from natural disasters and catastrophic events, social inflation accompanied by large litigation payouts, low investment returns from fixed income portfolios, and economic uncertainty.

During these challenges, California JPIA members are insulated from the full impact of the hard market because the Authority optimizes its mix of self-insurance and purchased insurance.

For example, in the 2021-22 coverage structure of the liability programs, only 26% of the total insurance cost was composed of excess and reinsurance premiums or “pass-through premiums,” which are subject to market pricing. 74% was self-insured funding for claims and claim-related expenses. This means that about 3/4ths of the total liability insurance cost is determined by internal factors such as the Authority’s own loss history, exposure profile, funding policies, and actuarial analysis; all of which allow for some degree of control.

Admittedly, external factors can potentially sneak in through the back door and be reflected within the Authority’s loss history such as social inflation, however, the remedy for that is direct investment in risk management and member support services. To this end, the Authority partners with members to implement long-term, customized strategies for managing risk, and invests in loss prevention programs, cost containment initiatives and provides comprehensive training resources. If risk management is the first line of defense, best practice claims management techniques are the second. With these measures effectively in place, the indirect impact of external factors on the Authority’s total cost of risk is mitigated substantially.

< Back to Full Issue Print Article
  •   Home
  •   News
  •   Regions
  •   Report A Claim
  •   Educational Forum
  •   Current Agenda
  •   Staff
  •   FAQ
CJPIA Home
 

California Joint Powers Insurance Authority
8081 Moody Street, La Palma, CA 90623
(800) 229-2343 | (562) 467-8700

 

Providing innovative risk management solutions
for our public agency partners

Facebook Social Media Icon Twitter Social Media Icon LinkedIn Social Media Icon
  • Terms & Conditions
  • Privacy Policy
  • Fraud Policy
  • Social Media Policy
  • Sitemap
  • ADA Accessibility
  • Contact
  • Resources
    ▷
      ◁
    • Library
    • Newsletter
    • News & Updates
    • White Papers
  • Training
    ▷
      ◁
    • Catalog
    • Classroom
    • E-Learning
    • Academies
    • Educational Forum
  • Coverage
    ▷
      ◁
    • Risk-sharing Pools
    • Insured Programs
    • Additional Programs
    • Program Certificates
    • Evidence of Coverage
    • Memoranda of Coverage
  • Risk Management
    ▷
      ◁
    • Risk Managers
    • Risk Management Services
    • LossCAP Program
    • Risk Management Awards
    • Capstone Award
    • ReClaim Initiative
  • Join
  • About
    ▷
      ◁
    • Meetings & Agendas
    • Members
    • Affiliations
    • Governance
    • Captive
    • Financial Information
    • Staff
    • Compensation
    • Career Opportunities