In these difficult economic times, the South Carolina Municipal Insurance Trust and the South Carolina Municipal Insurance and Risk Financing Fund recently provided their municipal members with some much needed good news. SCMIRF reduced its tort, law enforcement and public officials liability rates by 10 percent and returned $1 million to its members due to lower than normal losses over the last several years. SCMIT did not increase its rates for the upcoming year and even reduced rates in the law enforcement and firefighting categories.
Harvey Mathias, director of risk management services, said, "The Municipal Association-sponsored insurance programs are as strong financially and programmatically as they have ever been. We must continue to strive to maintain strong financial positions in our programs. Our newly-announced 2009 rates allow us to do that, as well as help some of our struggling cities and towns."
"Stable rates, as well as continued availability of insurance coverage, have long been the primary goals of insurance pools like SCMIT and SCMIRF. In good economic times, commercial insurance competitors nip at the heels of pooling programs, promising unsustainable low rates with an unlimited hunger for new business. In tough economic times, however, commercial insurers’ capacity to write new business evaporates. Pricing increases at a staggering pace."
Jeff Thompson, assistant director of risk management services, noted, "Insurance markets are typically lagging indicators of what is going on in the overall economy. When investment options dry up – or worse yet – when their investments plunge in value, commercial insurers see their financial wherewithal diminish and begin to pull back on what they are willing to insure. We’ve only begun to see this happen in this most recent cycle. With AIG’s capacity diminished and the stock market losing 40 percent of its value in just November, I look for a deterioration in the commercial insurance marketplace for at least the next couple of years."
That deterioration is in stark contrast to the current positions of SCMIT and SCMIRF. Mathias noted, "SCMIT and SCMIRF may not always be the cheapest insurance product at any one time, but they prove their worth during tough times by dampening the blows of a struggling economy and continuing to provide affordable insurance protection. We share a graph with our members showing how pool pricing compares to commercial insurance pricing. That graph clearly shows overall stable pricing for pools and very cyclical pricing for commercial insurers. By participating in a self-insured pool like SCMIT and SCMIRF, you are not only purchasing insurance, you are assuring the continued availability of your municipality’s insurance in tough economic times like we’re seeing now."