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You are here: Home / Anderson On Health Insurance / Insurers as a pressure point of change

Insurers as a pressure point of change

by David Anderson|  June 6, 202011:29 am| 26 Comments

This post is in: Anderson On Health Insurance, Civil Rights, Criminal Justice, Shitty Cops

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The 57 Buffalo cops that resigned from the emergency response unit did it for at least partially economic reasons.  Their legal bills won’t be back-stopped by someone else.  If  they get caught on camera rioting and beating the shit out of innocent civilians, they are taking on the financial  risk of at least defending themselves.  That is expensive.

WKBW has more:

“We quit because our union said [they] aren’t legally backing us anymore. So why would we stand on a line for the City with no legal backing if something [were to] happen? Has nothing to do with us supporting,” said another….

we did obtain an email sent to PBA members by Evans.

“In light of this, in order to maintain the sound financial structure of the PBA it will be my opinion the PBA NOT to pay for any ERT or SWAT members legal defense related to these protests going forward. This Admin in conjunction with DA John Flynn and or JP Kennedy could put a serious dent in the PBA’s funds.”

I am thinking as an insurance guy at the moment as that is my training. Pressure on the risk bearing entities is a key leverage point. Liability insurers could be looking at very large pay-outs over the next year or two from the caught on camera police actions of the past week. Liability insurers really don’t like to write policies where the premiums are systemically underpriced for correlated, predictable and solvable pay-out events.

What does this mean?

If counties, cities and towns’ don’t reform their police practices and union contracts, liability insurers will rate future contracts as high risk. High risk insurance contracts mean high rate increases. Insurers will insure almost anything as long as the premium is sufficient to cover both expected risk and random tail risk over a big pool. Counties, cities, and towns that have policies, procedures and accountability systems in place that minimize the probability of frequent and correlated liability events will see lower insurance rates.

Figuring out where the insurance contracts are is not a today problem. It is not a this week problem. It is a now and the next three to five year process. However, active pressure on liability insurers to correctly rate their premiums for correlated police brutality risk and pushing for reforms that will lead to lower local liability premiums is an avenue of progress that can be done in conjunction with other reforms.

Be brave, be safe, be kind.

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Reader Interactions

26Comments

  1. 1.

    Ken

    June 6, 2020 at 11:35 am

    So the same union that issues a press release claiming the officers quit out of solidarity, had actually told them that it would not be providing legal backing? Remarkably hypocritical. I wonder if the police will be looking for a new union, or at least new leadership.

  2. 2.

    David Anderson

    June 6, 2020 at 11:39 am

    @Ken: They can look for both, but the accountant and union counsel will both say the same thing — keep this up and we’re bankrupt

  3. 3.

    Aziz, light!

    June 6, 2020 at 11:42 am

    Sad that these guys are motivated only by money, not morality.

  4. 4.

    Kenneth Krasity

    June 6, 2020 at 11:44 am

    Will the courts expand qualified immunity? Will the GOP sponsor legislation to have the Feds assume the risk of big payouts related to police brutality lawsuits?

  5. 5.

    scav

    June 6, 2020 at 11:45 am

    Well, they’re consistent in demanding unaccountability — moral, legal and financial — for their preferred activity of smashing heads.

  6. 6.

    David Anderson

    June 6, 2020 at 11:47 am

    @Kenneth Krasity: Given that Nancy Pelosi has a veto position on a bill that would either give complete police immunity to lawsuits OR have the feds act as the insurer, NO, that bill won’t pass.

    And if the GOP wants to sponsor that bill, they can kiss the suburbs good bye

  7. 7.

    Amir Khalid

    June 6, 2020 at 11:50 am

    In a rational world, the risk of personal financial ruin over an act of professional misconduct would persuade these police officers to behave more like actual cops and less like an armed gang.

  8. 8.

    West of the Cascades

    June 6, 2020 at 11:55 am

    I now have this mental picture of mild-mannered Richard Mayhew jumping out of a phone booth to reveal his true identity as Insurance Guy, ready to right the world’s wrongs through better underwriting.

  9. 9.

    Barbara

    June 6, 2020 at 11:59 am

    Anyone who has worked with a daycare center understands how insurance can change behavior. Unfortunately, the larger the organization the harder it is because it takes a lot of pay outs to get attention. The police department that employed the Ferguson cop who shot Michael Brown before he worked for Ferguson disbanded because of excessive liability judgments.

  10. 10.

    Ken

    June 6, 2020 at 12:00 pm

    @West of the Cascades: I’m reminded of an SF novel with alien interstellar probes. The line was something like “The alien engineers did the best job they could, but as always the alien cost accountants had the last word.”

    I think it was James Hogan’s Code of the Lifemaker.

  11. 11.

    Immanentize

    June 6, 2020 at 12:03 pm

    Actuarial risk assessment has always been a friend of justice. This is why the NRA fights hammer and tong to prevent insurance requirements for gun ownership to cover negligent use “accident” costs to society. Still a favorite goal of mine.

  12. 12.

    Barbara

    June 6, 2020 at 12:13 pm

    @Immanentize: Probably even more to the point, many people won’t bother owning guns if it is factored into their homeowners’ insurance.

  13. 13.

    David Anderson

    June 6, 2020 at 12:16 pm

    @West of the Cascades: hey, don’t kink shame.

  14. 14.

    TaMara (HFG)

    June 6, 2020 at 12:17 pm

    That’s fascinating. The union’s press release created a real PR problem yesterday. If they really did not quit in solidarity with their fellow thugs, I think the truth would have served them better. Who among us would not understand avoiding such a financial risk? Of course, the real solution would be to not be a thug and abuse the citizens you were hired to protect and serve, but that seems a bridge too far these days.

    It seems in Buffalo, the default PD position is to lie until caught…

  15. 15.

    WereBear

    June 6, 2020 at 12:17 pm

    @West of the Cascades: Insurance Guy, ready to right the world’s wrongs through better underwriting.

     
    He calculates the odds! [flourish]

  16. 16.

    TaMara (HFG)

    June 6, 2020 at 12:17 pm

    @WereBear:

    @West of the Cascades:

    Oh, you two are killing it this a.m.

  17. 17.

    hueyplong

    June 6, 2020 at 12:37 pm

    @TaMara (HFG): More like the default position is to continue to lie up until and even after getting caught.

    After that, the last line of defense is the parade of horribles that will ensue if they are not permitted to wield arbitrary power and violence.

  18. 18.

    MAURA

    June 6, 2020 at 12:56 pm

    so not fun if you have to pay for your own lawyer.  wah wah wah call the wahmbulance

  19. 19.

    cwmoss

    June 6, 2020 at 12:58 pm

    @Ken: Also too, in THX 1138, the chase of Robert Duvall’s character at the end is abandoned when the cost became too high.

  20. 20.

    Ydobon

    June 6, 2020 at 1:14 pm

    @Aziz, light!: If money gets the unions to behave, it’s a-ok by me. Obligatory: the feds got Al Capone for tax evasion, not mayhem.

  21. 21.

    dnfree

    June 6, 2020 at 1:37 pm

    Thanks for this!  Excellent information I wouldn’t see elsewhere.

    When my husband was on our local county board, the “conservatives” passed an act called Constitutional Carry, meaning anyone could have any weapon they wanted, no restrictions. If you want to mount a machine gun in the back of your pickup truck, have at it, it’s your right.  What finally put the kibosh on it was the county’s insurance company saying they would drop coverage of the county if it weren’t repealed.

    https://www.journalstandard.com/article/20130810/NEWS/308109952

  22. 22.

    Urza

    June 6, 2020 at 1:41 pm

    I read this article, noted the police quitting so they wouldn’t have personal liability.  It gave me a bit of hope that they weren’t all human trash.
    Then I see them cheering as the ones being charged are walking out of the courthouse.  It wasn’t the liability they cared about, they seriously thought quitting would make some sort of point about needing them.

  23. 23.

    dnfree

    June 6, 2020 at 1:42 pm

    Thanks for this!  Excellent information I wouldn’t see elsewhere.

    When my husband was on our local county board, the “conservatives” passed an act called Constitutional Carry, meaning anyone could have any weapon they wanted, no restrictions. If you want to mount a machine gun in the back of your pickup truck, have at it, it’s your right.  What finally put the kibosh on it was the county’s insurance company saying they would drop coverage of the county if it weren’t repealed.

    https://www.journalstandard.com/article/20130810/NEWS/308109952

  24. 24.

    Feathers

    June 6, 2020 at 1:54 pm

    Some portion of brutality payouts needs to come out of police pensions. My choice would be half of the payout and that it should be spread equally across all of the retirees. The thin blue line got us into this mess, they can all pay the consequences. Someone previously said that these were defined benefit plans, but they can have line item deductions, can’t they?

    My other insurance wish is that Catholic hospitals stop getting a free ride on providing reproductive health care that does not meet the medical standard of care.

  25. 25.

    Chacal Charles Calthrop

    June 6, 2020 at 2:54 pm

    @David Anderson: Now you know why Mitch McConnell is so desperate to confirm judges.  Qualified immunity is in the eye of the beholder – and that beholder is a federal judge.  The Republicans don’t need to be able to pass laws if they have enough judges.

  26. 26.

    Ted Doolittle

    June 9, 2020 at 10:01 am

    When I was the Deputy Director of the Center for Program Integrity within the Centers for Medicare & Medicaid Services (Please note BTW Dave that the “C” in “CMS” stands for “Centers” not “Center”) we were taking a similar approach by requiring DME suppliers to post a bond.  This adds marketplace pressures to the fed govt’s own regulatory authorities — DME suppliers who cannot get a company to sell them a surety bond at all (or at least at a reasonable rate) because of their personal risk profile & past bad behaviors will be washed out of the system without employing the heavy hand of government.

     

    https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/MedicareProviderSupEnroll/DMEPOSEnrollment

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