From The Iowa County magazine May 2018 issue

Public Risk Pools: Membership = Ownership

Nationally, public entity risk pools have increasingly become the preferred source of local governments for coverage of both expected and unexpected losses. More than 30 states now sponsor or endorse public entity risk pools that provide coverage for a variety of exposures from property, liability and workers’ compensation, to health and employee benefits. Since pool members/ participants have ownership in the process, coverage is designed to meet their specific needs, and they have a vested interest in the performance of their pool.

The success of local government pooling organizations is an excellent testament to what can be accomplished when local governments work together toward common goals.

Q: What is governmental entity pooling?

The concept of pooling governmental risks was born during the insurance crisis of the late 1970’s and early 1980’s when market conditions forced standard insurance carriers to stop insuring what they deemed to be high-risk municipal business. Even a smaller city with an excellent loss history represented greater risk than insurers were willing to assume. This resulted in a call for action by cities across the nation.

Iowa was one of the first states to identify a solution for its municipalities. In 1976, the Iowa League of Cities (League) Executive Board appointed a committee to study the issue and recommend a course of action. Over the next four years, committee members worked with both insurance agents and local insurance companies but were unsuccessful in attempts to create any type of municipal program.

Then in 1980, with the market becoming even more difficult, discussions turned to the possibility of pooling. This arrangement would allow cities to pay premiums into a “pool” from which their claims would be paid. By July 1, 1981, the Iowa Municipalities Workers’ Compensation Association (IMWCA) was organized and ready to accept municipal members.

In the meantime, counties were experiencing the same difficulty acquiring coverage and approached the League and IMWCA about membership in the association. As a result, the 28E Agreement was restated to include counties as municipalities, making them eligible for membership beginning July 1, 1987. In the 1990s, other entities organized according to Chapter 28E, as well as other political subdivisions, were deemed eligible for membership in IMWCA.

As of this writing, IMWCA membership has grown to 524, including 359 cities, 78 counties, and 87 other political subdivisions. An additional 10 counties also participate in a pool, bringing the total number of counties in Iowa that participate in pools to 88. This matches recent data from the Association of Governmental Risk Pools, which shows that nationally 80 percent of local governments participate in some form of pooling.

Q: How are pools governed and run?

What is unique and attractive about pooling is that the members govern the organization and have a stake in the process. Their ability to govern allows them to make choices that create rate stability and ensure coverage availability regardless of economic conditions and cycles.

Pool members accomplish this through an elected board of directors or trustees. IMWCA is governed by a nine-member board of trustees, all of whom are elected or appointed officials of member entities. Four of IMWCA’s Trustees are from counties, and their first-hand knowledge and experience with local government operations guides the decisions they make for the pool.

While governance is generally provided through a board comprised of elected and appointed officials, the administration of member services is handled in different ways depending on the structure of the pool and its relationship with the state league. The League was instrumental in creating IMWCA, and thus, has always been the overall administrator of the program.

The IMWCA Board meets with League administrative staff throughout the year to review and approve operations, set policy and make decisions regarding pricing and program changes. At each meeting, staff provide comprehensive reports and makes recommendations for the Board’s consideration. In addition, IMWCA financials are audited annually and available online, and an actuarial evaluation of rates and unpaid claim liabilities is performed each year.

Q: What are some of the advantages of pooling?

In addition to being governed by members of the pool, who are appointed by the members, pools often provide savings to pool members in comparison with traditional insurance options due to the non-profit statuses of the pools.

Finally, because pools are comprised of governmental entities, they are also in the unique position to tailor their services to the specific needs of their members, like providing safety programs unique to exposures of local governments.

Q: What kind of safety programs do pools offer?

Pools in general place great emphasis on risk management, or safety, and work with members to successfully implement programs in these areas. Preventing an injury is generally far less costly than helping an injured worker heal, and IMWCA is committed to helping member’s employees return home safe at the end of each day. That’s why pools, including IMWCA, work together with members to create safety programs and provide guidance and personal assistance in their implementation. Many training and education programs, both online and in classroom settings, are also available to IMWCA members at no cost.

Learn more about the Iowa Municipalities Workers’ Compensation Association, which is endorsed by ISAC, at www.imwca.org.