Executive Director's Message
In the mid-1980s, the insurance marketplace was in the midst of financial crisis, and the insurance industry largely abandoned the public sector. Schools experienced non-renewal or cancellation of their insurance policies, or large increases in premiums. Out of this crisis, public entity pooling was born. As public entities faced funding their own losses, these agencies placed tremendous emphasis on safety, risk control, and risk reduction.
Intergovernmental pooling is a risk financing mechanism based on cooperative agreements among public entities to provide for many of their risk financing needs through a jointly owned program. Pooling involves group self-insurance and/or group insurance purchasing. Now public entity pools account for almost 40 percent of the insurance market.
Here in southwest Washington, the Southwest Washington Unemployment Insurance Pool was formed in 1978, the Southwest Washington Worker's Compensation Trust started in 1983, and the Southwest Washington Risk Management Insurance Cooperative was formed in 1985. These cooperatives have been going strong since they began serving their member districts' needs.
The advantages of pooling are many, and include the following:
- Pools offer favorable coverages, terms, conditions, and limits tailored to the needs of the public entity participants.
- Pooling spreads the risk of a severe financial loss over a group, rather than being borne by one entity.
- The combined purchasing power of pool members gives each member district more clout when negotiating terms and conditions for excess insurance.
- Pool premiums are generally more stable, since the pool is somewhat insulated from the regular fluctuations of the insurance market.
- Pool participants have ownership in any equity that the pool accumulates.
- Pool members have a significant voice in how the pool is operated, since the policy-making board is composed of representatives of its members.
- Data regarding losses is provided to members on a regular basis.
- Claims handling is dictated by the pool's claim philosophy, and members have a voice in how claims are resolved.
- Services, especially risk control, are tailored to the needs of its members.
Pools have evolved into an effective means of reducing loss, and controlling the members' individual and collective destiny regarding insurance purchases and administration. School staff help make the pools work in the risk control choices they make daily.