Public Sector Risk

For Less Police Violence, Train More

Insurers who help pay for improved police training today may save on future claims.
By: | June 1, 2017 • 5 min read

In the emotionally and politically charged climate surrounding police violence, a consensus emerges from the right and the left, from cops, attorneys, academics and the insurance community: Mitigation depends on more and better training for law enforcement.

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Every stakeholder — from the cop on the beat through prison management and the insurance industry — has a role in affecting change.

“Sometimes police have to use force, and then bad things happen,” said Greg Champagne, a sheriff in St. Charles Parish, Louisiana, and president of the National Sheriff’s Association. “The best risk management is the best training a police force can afford. Insurers can help us provide free training.”

Communities are feeling the financial impact of police training. Bloomberg reported in February 2016 that spending on police training in 23 of the 25 biggest U.S. cities grew 17 percent to $317.9 million in 2015 from 2013.

The cost of not training may be even higher. For example, Chicago residents paid nearly half a billion dollars in settlements over the past decade, according to the Chicago Sun-Times, and spent $84.6 million in fees, settlements and awards in 2013.

Costs fall primarily on taxpayers, since most large cities are self-insured. Many smaller cities belong to self-insured risk pools.

Fewer than five insurers cover public entities nationally, said Scott K. Thomason, vice president, public sector, at Arthur J. Gallagher & Co., but the self-insured cities rely on reinsurers, which have a vested interest in improving risk profiles.

Greg Champagne, president, National Sheriff’s Association

“Civil unrest is not created equal, in likelihood and severity,” said Hart S. Brown, senior vice president, organizational resilience, HUB International. For example, riot-type events explode with high energy and emotion but usually dissipate within 72 hours. Labor unrest may last longer but has less geographical impact.

“Carriers and brokers can conduct real risk assessments of the kind of event that’s likely and its cost to municipalities.” Brown said.

Many experts believe that a disproportionate number of claims are caused by a small number of officers, said John Rappaport, assistant professor of law, University of Chicago School of Law.

Insurers “could be bolder” in urging departments to get rid of the bad apples, he said. While carriers don’t want to be perceived as interfering in personnel matters, he said, “this is an occasion for managing risk.”

Training, Training and More Training

In April, the National Association of Black Law Enforcement Officers Inc. (NABLEO) conducted a two-day de-escalation training program. The curriculum aims to unpack “implicit bias,” which the Justice Department defines as “the unconscious or subtle associations that individuals make between groups of people and stereotypes about those groups.”

“Our assumptions of who other people are dictate how we treat them,” said Charles P. Wilson, national chairman at NABLEO. “Assumptions create risk.”

Training aims to change the attitudes and behaviors that can erupt into violence. “How does the officer perceive the other person? How is he speaking to him? What kind of words is he using? How does he interpret body language? How does his cultural lens affect what he sees?”

Implicit bias training is part of the reform in some of the consent decrees the Justice Department reached under the Obama Administration with several troubled police departments.

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The current attorney general, Jeff Sessions, is seeking a review of the consent decrees, citing concerns about their overuse and potential stigma for the police departments.

The DOJ action is “a disservice to law enforcement and the community,” Wilson said. “Police have to understand what they’re doing wrong so they can stop doing it.”

The Fraternal Order of Police, which vociferously supports Sessions on its website, may disagree.

“Sometimes police have to use force, and then bad things happen.” —Greg Champagne, president, National Sheriff’s Association

Regardless, said Rappaport, if consent decrees were abandoned, affected municipalities could see more violent interactions and lawsuits to follow. Most of these cities are self-insured, so only their excess carriers might be affected.

And if federal funding for de-escalation and other training were withdrawn, would the insurance industry have a role in picking up the tab?

Derek Broaddus, senior vice president, Allied World Insurance

“Absolutely,” Rappaport said. “Carriers can do the calculations: Do we expect to save more on claims and lawsuits than we spend on training? Research suggests they will.”

Police liability insurers — many of which are non-competitive, state-specific municipal risk pools — are an important “bumblebee” in cross-pollinating best practices, he said.

Just as carriers share positive results about telematics devices installed in police cars, revealing location, speed and response times, they also share technology and training success stories.

The need for thorough training runs the entire law enforcement and judicial gamut, said Champagne.

“Use of force, medical care, automobile crashes — those are the liability triggers. Sheriffs run jails, and they and their deputies have to understand the law and procedures in their operations,” he said.

Body Cameras, Pros and Cons

With some reservations, body cameras attached to police officers’ shirts are almost universally hailed by police organizations, insurers, academics and even the ACLU.

Some insurers offer grant funding to municipalities to help finance the equipment, said Derek Broaddus, senior vice president at Allied World Insurance, a specialist primary and excess carrier.

Others offer grant-writing training to help put the funds within smaller municipalities’ reach.

The pros? “Body cameras can raise the level of officers’ responsibility because they know they’re being recorded,” said Thomason. They can also influence the behavior of the person on the other side of the lens.

The cons? At $400 to $1,000 apiece, they’re expensive, said Kenny Smith, risk control manager at OneBeacon.

“And then you have the cost of storage, retrieving images, copying and redaction when someone requests them through the Freedom of Information Act,” he said.

“Cameras alone may be prohibitively expensive for an entire police department,” said Brown, “and storage is expensive, whether on a municipality’s own servers or on the cloud.”

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Taser International — now Axon — announced in April a program to equip every U.S. police officer with a free body camera and provide police departments with supporting hardware, software, data storage and training, free for one year. After a year, cameras would cost $399 and use of the company’s Evidence.com platform $15 to $89 per month, per officer.

“The image that appears on the evening news can look awful, but it doesn’t show the run-up to the incident,” Broaddus said. “It doesn’t show the pre-arrest history between the participants, the altercation or instigation.”

“When you don’t have the full scope of context, it creates more risk,” said Thomason.

Video footage can stir up negative public perception, Smith said.

“Once it’s released to the public or the media, it can be very damaging. Police departments need to have their procedural ducks in a row before they venture into this thing.” &

Susannah Levine writes about health care, education and technology. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Black Swan: EMP

Chaos From Above

An electromagnetic pulse event triggered by the detonation of a low-yield nuclear device in Earth’s atmosphere triggers economic and societal chaos.
By: | July 27, 2017 • 9 min read

Scenario

The vessel that seeks to undo America arrives in the teeth of a storm.

The 4,000-ton Indonesian freighter Pandawas Viper sails towards California in December 2017. It is shepherded toward North America by a fierce Pacific winter storm, a so-called “Pineapple Express,” boasting 15-foot waves and winds topping 70 mph.

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Normally, Pandawas Viper carries cargo containers. This time she harbors a much more potent payload.

Unbeknownst to U.S. defense and intelligence officials, the Viper carries a single nuclear weapon, loaded onto a naval surface-to-air missile, or SAM, concealed below deck.

The warhead has an involved history. It was smuggled out of Kyrgyzstan in 1997, eventually finding its way into the hands of Islamic militants in Indonesia that are loosely affiliated with ISIS.

Even for these ambitious and murderous militants, outfitting a freighter with a nuclear device in secrecy and equipping it to sail to North America in the hopes of firing its deadly payload is quite an undertaking.

Close to $2 million in bribes and other considerations are paid out to ensure that the Pandawas Viper sets sail for America unmolested, her cargo a secret held by less than two dozen extremist Islamic soldiers.

The storm is a perfect cover.

Officials along the West Coast busy themselves tracking the storm, doing what they think is the right thing by warning residents about flooding and landslides, and securing ports against storm-related damage.

No one gives a second thought to the freighter flying Indonesian colors making its way toward the Port of Long Beach, as it apparently should be.

It’s only at two in the morning on Sunday, December 22, that an alert Port of San Diego administrator charged with monitoring ocean-going cargo traffic sees something that causes him to do a double take.

GPS tracking information indicates to him that the Pandawas Viper is not heading to Long Beach, as indicated on its digital shipping logs, but is veering toward Baja, Calif.

Were it to keep its present course, it would arrive at Tijuana, Mexico.

The port administrator dutifully notifies the U.S. Coast Guard.

“Indonesian freighter Pandawas Viper off course, possibly storm-related navigational difficulties,” he emails on a secure digital communication channel operated by the port and the Coast Guard.

“Monitor and alert as necessary,” his message, including the ship’s current coordinates, concludes.

In turn, a communications officer in the Coast Guard’s Alameda, Calif. offices dutifully alerts members of the Coast Guard’s Pacific basin security team. She’s done her job but she’s about an hour late.

At 3:15 am Pacific time on December 22, the deck on the Pandawas Viper opens and the naval surface-to-air missile, operated remotely by a militant operative in Jakarta, is let loose.

It’s headed not for Los Angeles or San Diego, but rather Earth’s atmosphere, where it detonates about 50 miles above the surface.

There it interacts with the planet’s atmosphere, ionosphere and magnetic field to produce an electromagnetic pulse, or EMP, which radiates down to Earth, creating additional electric or ground-induced currents.

The operative’s aim is perfect. With a charge of hundreds and in some cases thousands of volts, the GICs cause severe physical damage to all unprotected electronics and transformers. Microchips operate in the range of 1.5 to 5 volts and thus are obliterated by the billions.

As a result, the current created by the blast knocks out 70 percent of the nation’s grid. What began as an overhead flash of light plunges much of the nation into darkness.

The first indication for most people that there is a problem is that their trusty cellphones can do no more than perform calculations, tell them the time or play their favorite tunes.

As minutes turn to hours, however, people realize that they’ve got much bigger concerns on their hands. Critical infrastructure for transportation and communications ceases. Telecommunication breakdowns mean that fire and police services are unreachable.

For the alone, the elderly and the otherwise vulnerable, panic sets in quickly.

Hospital administrators feverishly calculate how long their emergency power supplies can last.

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Supermarkets and other retailers anticipating one of their biggest shopping days of the year on that Monday, December 23, instead wake up to cold homes and chilling prospects.

Grocery stores with their electricity cut off are unable to open and product losses begin to mount. Banks don’t open. Cash machines are inoperable.

In the colder parts of the United States, the race to stay warm is on.  Within a day’s time in some poorer neighborhoods, furniture is broken up and ignited for kindling.

As a result, fires break out, fires that in many cases will not draw a response from firefighting crews due to the communication breakdown.

As days of interruption turn into weeks and months, starvation, rioting and disease take many.

Say good-bye to most of the commercial property/casualty insurance companies that you know. The resulting chaos adds up to more than $1 trillion in economic losses. Property, liability, credit, marine, space and aviation insurers fail in droves.

Assume widespread catastrophic transformer damage, long-term blackouts, lengthy restoration times and chronic shortages. It will take four to 10 years for a full recovery.

The crew which launched the naval surface-to-air missile that resulted in all of this chaos makes a clean getaway. All seven that were aboard the Pandawas Viper make their way to Ensenada, Mexico, about 85 miles south of San Diego via high-speed hovercraft.

Those that bankrolled this deadly trip were Muslim extremists. But this boat crew knows no religion other than gold.

Well-paid by their suppliers, they enjoy several rounds of the finest tequila Ensenada can offer, and a few other diversions, before slipping away to Chile, never to be brought to justice.

Observations

This outcome does not spring from the realm of fiction.

In May, 1999, during the NATO bombing of the former Yugoslavia, high-ranking Russian officials meeting with a U.S. delegation to discuss the Balkans conflict raised the notion of an EMP attack that would paralyze the United States.

That’s according to a report of a commission to assess the threat to the United States from an EMP attack, which was submitted to the U.S. Congress in 2004. But Russia is not alone in this threat or in this capability.

Wes Dupont, vice president and general counsel, Allied World Assurance Company

North Korea also has the capability and the desire, according to experts, and there is speculation that recent rocket launches by that country are dress rehearsals to detonate a nuclear device in our atmosphere and carry out an EMP attack on the United States.

The first defense against such an attack is our missile defense. But some experts believe this country is ill-equipped to defend against this sort of scenario.

“In terms of risk mitigation, if an event like this happens, then that means the best risk mitigation we have has already failed, which would be our military defense systems, because the terrorists have already launched their weapon, and it’s already exploded,” said Wes Dupont, a vice president and general counsel with the Allied World Assurance Company.

The U.S power grid is relatively unprotected against EMP blasts, Dupont said.

And a nuclear blast is the worst that can occur. There isn’t much mitigation that’s been done because many methods are unproven, and it’s expensive, he added.

Lloyd’s and others have studied coronal mass ejections, solar superstorms that would produce a magnetic field that could enter our atmosphere and wipe out our grid.  Scientists believe that an EMP attack would carry a force far greater than any coronal mass ejection that has ever been measured.

An extended blackout, with some facilities taking years to return to full functionality, is a scenario that no society on earth is ready for.

“Traditional scenarios only assume blackouts for a few days and losses seem to be moderate …” wrote executives with Allianz in a 2011 paper outlining risk management options for power blackout risks.

“If an event like this happens, then that means the best risk mitigation we have has already failed … because the terrorists have already launched their weapon, and it’s already exploded.” — Wes Dupont, vice president and general counsel, Allied World Assurance Company

“But if we are considering longer-lasting blackouts, which are most likely from space weather or coordinated cyber or terrorist attacks, the impacts to our society and economy might be significant,” the Allianz executives wrote.

“Critical infrastructure such as communication and transport would be hampered,” the Allianz executives wrote.

“The heating and water supply would stop, and production processes and trading would cease. Emergency services like fire, police or ambulance could not be called due to the breakdown of the telecommunications systems. Hospitals would only be able to work as long as the emergency power supply is supplied with fuel. Financial trading, cash machines and supermarkets in turn would have to close down, which would ultimately cause a catastrophic scenario,” according to Allianz.

It would cost tens of billions to harden utility towers in this country so that they wouldn’t be rendered inoperable by ground-induced currents. That may seem like a lot of money, but it’s really not when we think about the trillion dollars or more in damages that could result from an EMP attack, not to mention the loss of life.

Allianz estimates that when a blackout is underway, financial trading institutions, for example, suffer losses of more than $6 million an hour; telecommunications companies lose about $30,000 per minute, according to the Allianz analysis.

Insurers, of course, would be buffeted should a rogue actor pull off this attack.

Lou Gritzo, vice president and manager of research, FM Global

“Depending on the industries and the locations that are affected, it could really change the marketplace, insurers and reinsurers as well,” said Lou Gritzo, a vice president and manager of research at FM Global.

Gritzo said key practices to defend against this type of event are analyzing supply chains to establish geographically diverse supplier options and having back-up systems for vital operations.

The EMP commission of 2004 argued that the U.S. needs to be vigilant and punish with extreme prejudice rogue entities that are endeavoring to obtain the kind of weapon that could be used in an attack like this.

It also argued that we need to protect our critical infrastructure, carry out research to better understand the effects of such an attack, and create a systematic recovery plan. Understanding the condition of critical infrastructure in the wake of an attack and being able to communicate it will be key, the commission argued.

The commission pointed to a blackout in the Midwest in 2003, in which key system operators did not have an alarm system and had little information on the changing condition of their assets as the blackout unfolded.

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The commission’s point is that we have the resources to defend against this scenario. But we must focus on the gravity of the threat and employ those resources.

Our interconnected society and the steady increase in technology investment only magnify this risk on a weekly basis.

“Our vulnerability is increasing daily as our use of and dependence on electronics continues to grow,” the EMP commission members wrote back in 2004.

But “correction is feasible and well within the nation’s means and resources to accomplish,” the commission study authors wrote. &

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]