Pooling Perspective on COVID-19 (April 20, 2020)


By Ann Gergen, Executive Director

Someone asked me last week what, if anything, is common to most pools’ COVID-19 experiences. Not all pools face the exact same circumstances, but I think it’s fair to say these are the typical realities and issues pools are facing today:

1. Liability claims volume is down.

Several pools are reporting decreases of 20 to 40 percent in auto liability claims and 10 to 20 percent in general liability claims. It’s not clear, though, to what extent these decreases are because public entities aren’t promptly reporting claims during crisis operations. 

This decrease in claim counts is expected to be temporary, but the timing of a rebound (and whether the level returns to “normal” or something else) is unknown. 

Pools are also proactively considering how COVID-19 might impact general liability claims, such as potential new bases for claims or novel pleadings.

2. Workers’ compensation claims volume (unrelated to COVID-19) is also down, in some cases considerably.

Because many public entity operations have been curtailed, some work comp pools are experiencing as much as a 40 to 50 percent reduction in the number of claims. 

In some cases, the number of COVID-19 workers’ compensation claims might make up for this reduction, but that’s very much dependent on the type of employees covered by any particular pool.

3. Not including COVID-19 claims, health claim counts appear steady.

Health claims data for many pools may only be available for the first half of April, but claims volume is at a typical level so far. 

For many health pools, information on the first claims for COVID-19 testing is just emerging, so it will be at least another month before we learn more about COVID-19 claim numbers and short-term costs.

4. Renewals for property and liability reinsurance as well as health stop-loss insurance feature notable rate increases. Liability reinsurance coverage terms may also include new exclusions upon renewal.

Property reinsurance rate increases, even in traditionally low-risk states, are reportedly as high as 30 percent. Early reports based on July 1 liability reinsurance renewals suggest rate increases of up to 30 percent. Some health pools report stop-loss insurance rate increases of up to 50 percent.

The more notable issue related to liability reinsurance renewals involves coverage terms, specifically communicable disease exclusions. There are early reports of very broad exclusion language that would not insure losses directly or indirectly arising out of, attributable to, or occurring concurrently with a communicable disease or the threat of one.

Several pools bidding for reinsurance or stop-loss coverage this year report having done so with positive outcomes. Overall, though, reduction in capacity and capital within the reinsurance market coupled with current events may result in difficult renewal pricing and terms.

5. Proposed expansions of business interruption language are concerning.

Early reports of U.S. federal and state revisions to business interruption coverage are focused on commercial insurance policies. There’s less talk of this at the Canadian federal or provincial level, but it’s still an issue to monitor. Current proposals would eliminate the property damage trigger required by most business interruption policies and/or eliminate business interruption exclusions.

For pools regulated as insurance, such legislative changes would have immediate and dramatic impact. In most states, coverage provided by public entity pools is not considered to be insurance, so these changes, if implemented, may not be applicable to pools right away. However, market pressures and the ramifications of such changes would most certainly have consequences throughout the pooling community over time.

Given the significant financial implications of these sorts of legislative changes, they’re hopefully unlikely to be implemented. But stranger things have happened.

6. States continue to implement COVID-19 workers’ compensation presumptions.

At least seven states have new workers’ compensation COVID-19 presumption laws or regulations relevant to public entities. At least seven also have legislation under consideration or ready for their governor’s signature.

Some pools may already be interpreting existing presumption laws to cover COVID-19 for certain employees. There are a few key definitional issues that impact the scope of each presumption:

  • Which workers are included
  • Whether the presumption is rebuttable or conclusive
  • Whether it includes only workers who contract COVID-19, those with known exposures to COVID-19, or those who are quarantined without definitive work-related exposure

There are related conversations happening around how the health and workers’ compensation systems might coordinate for COVID-19 testing and treatment. And there is some discussion about death benefits that might be available to public safety officers who die from COVID-19.

7. Local public entities are looking to pools for guidance in every aspect of their operations.

It’s nothing new for pools to act as trusted advisers for their member public entities. Even so, AGRiP member pools are reporting an increase in the number of inquiries they’re responding to and record-breaking participation in pool-sponsored or -delivered online training.

Many pools have introduced COVID-19 resource hubs and are sharing information with members through weekly webinars, conference call briefings, emails or news posts. Most pools are proactively identifying issues for their members and briefing them on solutions or considerations.

As you might expect, public entity member inquiries to pools run the gamut. We hear from pools responding to questions about issues including:

  • Open meeting and video meeting rules for public entities
  • Changing employment and leave regulations
  • Managing public entity layoffs or furloughs
  • Benefits for public safety or other essential employees
  • Local government enforcement of state or provincial mandates for stay-at-home orders, business closures, etc.
  • Cleaning and disinfecting protocols in public buildings and for vehicle fleets
  • Guidelines for reopening parks and recreational facilities
  • Protecting vacant facilities from crime and damage
  • Keeping different types of employees safe from coronavirus exposure
  • Federal, state or provincial financial assistance for local public entities
  • Physical and mental health services for employees
  • Ergonomic and network security issues due to newly implemented work-from-home practices

To see what kinds of guidance other pools are providing to their members, be sure to visit AGRiP’s COVID-19 Resource Center and review a sampling of pool resources.

8. The fiscal health of public entity pool members is a serious concern.

All public entity revenue sources face significant disruption and decreases, including property taxes, sales taxes and program fees. News sources tend to focus on the fiscal status of larger public entities, but financial concerns are just as real for the smallest.

It would be overstating it to say fears about public entity bankruptcy or disincorporation are “widespread.” But given how infrequently these things typically happen, the current heightened risk is notable.

One pool reports several of its municipal members are actively talking about whether bankruptcy or disincorporation might be necessary. Another pool reports a handful of schools are projecting shortfalls that will be difficult to overcome, especially given enrollment unknowns. A pool with special district members projects some will see revenue decreases by over 50 percent and face long-term closures.

There’s a related secondary issue for pools to consider amid the local public entity fiscal crisis: membership renewals. Not only might your pool be considering how best to make rate decisions at this time, but you may also need to carefully determine the allocation of increases between members with very different operational and financial profiles.


Ann Gergen is AGRiP’s executive director and a former pool administrator. She has worked closely with and for pools, public entities, reinsurers and related service providers throughout her career.

Each week, Ann will offer insight into COVID-19 issues AGRiP members are experiencing and related trends to monitor. For more, access the full series of COVID-19 perspective posts.

Access AGRiP’s COVID-19 Resource Center for coronavirus information, links and news relevant to pools. Email us with questions or comments, or connect with us on LinkedInTwitterYouTube and Facebook.