Public Sector Risk
Ambush Killings Put WC Cover for Cops at Risk
While not immediately reacting to a spike in ambush-style killings of law-enforcement officers, workers’ compensation underwriters concerned about police risks were already pushing public entities to increase their self-insured retentions.
Other underwriters stopped providing coverage for police workers’ comp risks in recent years because of the occupation’s dangers.
Now insurers and brokers are watching the rise in the shooting deaths of law-enforcement officers to see whether a longer-term trend will unfold.
In 2014, ambush attacks — including last month’s killing of two New York police officers shot while sitting in their patrol car — “were the number one cause of felonious officer deaths for the fifth year in a row,” according to the National Law Enforcement Officers Memorial Fund (NLEOMF).
The Washington, D.C.-based organization serves as a clearinghouse of statistics on law enforcement line-of-duty fatalities.
“When you bring up the topic, underwriters will say, ‘We have not addressed this formally. We are very quietly watching it to see what will happen,’ ” said Nancy Sylvester, managing director, public sector, at broker Arthur J. Gallagher.
U.S. law-enforcement fatalities occurring in the line of duty increased 24 percent to 126 during 2014, reversing two years of declines in total fatalities, according to an NLEOMF report released last month.
Firearms were the leading cause of the 2014 fatalities with 50 law-enforcement officers killed with guns, up 56 percent over firearms deaths in 2013. Other causes included traffic fatalities and heart attacks.
But ambush attacks claimed a large human toll.
“Fifteen officers nationwide were killed in ambush assaults in 2014, matching 2012 for the highest total [of ambush-related deaths] since 1995,” according to NLEOMF, which cited anti-government sentiment and anti-law enforcement influences.
“With the increasing number of ambush-style attacks against our officers, I am deeply concerned that a growing anti-government sentiment in America is influencing weak-minded individuals to launch violent assaults,” NLEOMF Chairman and CEO Craig W. Floyd said in a statement.
For example, 2014 saw the shooting deaths of two Las Vegas police officers ambushed while lunching in a restaurant. The killers draped a “don’t tread on me” flag over one victim and authorities said the husband and wife shooters harbored militia-type ideological leanings.
The tally also included the ambush of two Pennsylvania state troopers outside of their barracks. A survivalist who evaded a manhunt for 48 days is accused of killing one of the troopers and the wounding the other.
The Federal Bureau of Investigation said in November that with statistics showing “a significant uptick in ambushes and unprovoked attacks on police” it will study the crimes to help improve officer safety.
Although the human toll is tragic and heart wrenching, in strictly insurance terms the loss frequency from ambush assaults remains limited, observers said. Accordingly insurers have not increased their overall coverage pricing or changed underwriting requirements in response.
The number of law enforcement deaths across the country fluctuates annually, several insurance sources said. So while expressing concern for the human losses, industry observers are watching to see whether a trend is underway.
“We are concerned as brokers and watching the situation because if it does become more widespread obviously there would be a (coverage) problem,” said Mark Goode, executive VP for the public entity group at broker Willis.
Some of the financial expenses for medical and workers’ comp indemnity benefits are likely falling within the self-insured retentions maintained by public entities rather than falling on insurers.
Over the past five years or so, underwriters have demanded that public entities take on increasingly larger retentions because of the severity of police injuries, Sylvester said.
After years of gradual increases, the SIRs are now substantially larger, even for smaller entities.
“Somebody who had a $250,000 SIR for workers’ comp for police — they don’t have that anymore,” Sylvester said. “The minimum I am seeing for police is somewhere close to a half a million. Some of my clients have law enforcement-related SIRs over a million. It’s intense.”
The insurers have not backed down from demanding larger retentions. And unlike in past years when public entities had only one SIR for all employee categories, insurers now require a separate, larger retention for police injuries, Sylvester added.
Insurers “are without exception driving up that SIR, which tells me they are worried about the large losses,” Sylvester said.
Large losses driven by a variety of injury causes, such as auto accidents and scuffles while apprehending suspects, drove some insurers to stop writing police workers’ comp risks in recent years, said Goode.
“It’s not just the shooting situations, but the rate of loss for police officers is higher,” he said. “The markets simply don’t want to take on that exposure.”
To help save officer lives and reduce financial losses, the Texas Municipal League of Intergovernmental Risk Pool provides awareness training for police employed among the 850 municipalities the pool insures.
The training improves decision making in high-stress situations and is in addition to skills, such weapons use, taught by police departments. Because pool members are experience-rated, the training improves their loss experience and reduces their costs, said Carol Loughlin, executive director for the risk pool.
It also helps officers working for pool members meet state law-enforcement certification standards.
Importantly, the training helps officers improve decision making so that workers’ comp and third party liability losses are both avoided.
“It helps the officers make better decisions so they are going to go home at night and also the citizens can go home at night,” said Les Horne, the pool’s loss prevention manager.
Decision-making training is paramount for keeping deputies safe whether the risk is high-speed driving or confrontations, said Jack Bienvenu, deputy chief and chief risk officer for the St. Martin Parish Sheriff’s Office in Louisiana.
“That is the most critical part, training your deputies on decision making,” he said. “The risk benefit analysis is just like if they were a risk manager in the field, but making that split second decision, weighing the cost benefit.”
Yet observers said that many of officers ambushed in 2014, such as the two Las Vegas officers eating lunch, likely thought they were in a safe situation.