The California Association of Joint Powers Authorities (CAJPA) is a state-wide association for risk-sharing pools and the state’s leading voice for JPAs. As part of its advocacy for pools like the California JPIA, CAJPA is heading an effort to understand rising California public sector tort claim costs.
At the same time, all appearances point to a hardening excess and reinsurance market. These carriers play a vital role in working with pools by allowing them to lay off risk in a fiscally prudent manner, resulting in lower coverage costs for pool members.
Given the acceleration of large judgments and deep pocket settlements, carriers that work with pools are increasing retentions or carving out certain coverage lines while delivering sharp premium increases.
As such, CAJPA is initiating a tort liability project that would develop the data needed to validate these increases, quantify the impact, and identify the losses that are at the root of the problem. This project will be a multi-year effort that also seeks to determine potential strategies that would lead to legislative reform.
Briefly, the project will begin by collecting ground up data from risk-sharing pools and other public entities, including larger self-insured cities. An actuarial analysis will then be performed to project ultimate costs for the past 10 years. It is estimated that approximately 100,000 claims will be included in this phase of the project.
From this data, closed files with a total paid value of $500,000 or greater will be identified and subjected to in an in‐depth analysis. Early estimates are that 3,000 claims will be included. A methodology will be created to help agencies that provided data capture critical additional information. This analysis will serve as the statewide baseline of tort liability claims.
Aon Public Sector Pooling has been hired to serve as the technical lead for this project. This will allow access to government affairs professionals and subject matter experts, and will also utilize actuarial professionals that are recognized industry leaders.
The California JPIA will continue to keep members apprised of this project and its progress. Please direct any questions to Norm Lefmann, Assistant Executive Officer.