What if Police Departments Can't Get Insurance?

Insurers are starting to address police misconduct by doing what they do: raising rates to reflect risks. And soaring premiums are beginning to change behavior. 


While the debate continues about police departments in the U.S. and sometimes devolves into a national shouting match, insurers are starting to have their say, and their voice will be an important one. 

I've often said that no plan goes forward until the risk is dealt with -- you can talk about innovation all you want, but even Silicon Valley won't try something bold without insurance. Policing is no different. And insurers are starting to address police misconduct by doing what they do: raising rates to reflect the risks.

The costs of those risks have been heightened by the attention policing has attracted over the past few years and the changing attitudes that have resulted among many, including those on juries in civil lawsuits. So, those rate increases have a real bite and are starting to change behavior. 

An article in the Washington Post looks at a small police department with a history of high-speed pursuits and shows how it has had to adjust in the face of soaring insurance premiums. The article also explains how the fear of rising rates is driving change at small to medium-sized police departments across the U.S. (Large cities often just absorb the costs.)

The article opens with a look at St. Ann, Missouri, a city of 12,700 whose police department had been involved in high-speed chases that left 11 people injured in 19 crashes over two years. One man was permanently disabled when a fleeing suspect crashed into his car. (Police were trying to pull the suspect over because his registration had expired three weeks earlier.)

The article says Police Chief Aaron Jimenez "doubled down on the department’s decades-old motto: 'St. Ann will chase you until the wheels fall off.'"

"Then," the article continues, "an otherwise silent stakeholder stepped in. The St. Louis Area Insurance Trust risk pool — which provided liability coverage to the city of St. Ann and the police department — threatened to cancel coverage if the department didn’t impose restrictions on its use of police chases. City officials shopped around for alternative coverage but soon learned that costs would nearly double.... [So,] the chief and his 48-member department agreed to ban high-speed pursuits for traffic infractions and minor, nonviolent crimes.

"'I didn’t really have a choice,' Jimenez said.... 'I was going to have to lose 10 officers to pay'" for the insurance.

The article says departments with a long history of civil rights settlements have seen rates soar by 3X to 5X in the past three years, and insurers "are telling departments that they must change the way they police."

They have effected change, too, in thousands of departments nationwide. The article says "entire states are having to adjust to insurers’ demands." In New Mexico, a risk pool that provides coverage for one-third of the state’s police officers "hired an instructor last year to travel the state and retrain officers in de-escalation skills after private insurance rates climbed by more than 60%.... 

"For some police departments, insurers are refusing even to provide initial coverage unless they change their policies on a variety of matters including body cameras and chokeholds, according to industry experts....

"In Springfield, Ore., complaints and settlements involving excessive force by police became so costly two years ago that the city’s insurance risk pool, Citycounty Insurance Services, was given oversight of overhauling the 82-member police department."

There is, of course, concern about what can happen to policing when insurers start dictating policies. The article quotes one officer who says that "some of the riskiest calls to which patrol officers respond — domestic violence, threats of suicide or disorderly conduct — might be curtailed or eliminated by insurers. 'Their goal is to have no injuries or accidents, but that isn’t realistic, and that isn’t policing.'”

While policing will remain a complex and hot button issue, I think what's happening here shows the real power that insurance has to send signals that carry a punch and that can change behavior on a whole range of important issues.

I'll never understand why more people don't see insurance for the fascinating, powerful industry it is.



P.S. I'll be at InsurTech Connect in Las Vegas this week. If you see me running around, please say, "Hi."