Warsaw city police officer Brent Caldwell thought he was making a routine patrol check in August 2002 when he came across an abandoned vehicle in a local park. As Caldwell got closer to the car to investigate, he spotted a man lying underneath a park pavilion.
“I thought maybe it was someone who was homeless and we would lend him a hand,” said Caldwell. “But the man didn’t say a word to me. He just pulled out a gun and shot me.”
The bullet was headed toward Caldwell’s liver, a wound that would have been serious, if not fatal.
But two weeks before the incident, Caldwell and some fellow Warsaw officers received new bulletproof protective vests, thanks to a safety grant program offered through the Kentucky League of Cities Insurance Services.
“If I didn’t have the vest, I’d be dead,” Caldwell said. “I think (the safety grant program) is a wonderful asset to any municipality.”
Born In Crisis
The specialized insurance services program began in 1987. That was a year after the Lexington-based municipality-support association formed a committee to look into the mounting problem municipalities were having with skyrocketing liability insurance costs.
Shelbyville’s then-Mayor Neil Hackworth, now deputy executive director and chief operating officer of the Kentucky League of Cities, chaired a committee of commonwealth city officials, risk managers and others to work toward a solution.
“There were two things,” Hackworth said. “One was that city insurance rates were skyrocketing, and some cities were losing their insurance. It was essentially an insurance crisis that was going on nationally and creating problems across the country.”
After meeting with actuaries and consultants, the group decided to form its own insurance program.
“It started off relatively small, but in the first year we were able to get about $3 million in premiums,” Hackworth said. “Any time you start a program like that, you want to be sure to do it right. We wanted to be sure we had enough money to make the claims. But we also made a commitment to loss control from the very beginning.”
Today, KLCIS is a $40 million-per-year program that goes beyond basic insurance coverage for municipalities. It focuses on loss control, training and educating city officials in best practices and providing safety grant matches to communities to help keep employees safe.
Proactive Approach
“It’s insurance, but then it’s not insurance,” said Bill Hamilton, KLC’s deputy director of finance and insurance services. “We are an insurance company, but we don’t do just that aspect. We do safety, loss control, etc. – things normal insurance companies don’t put in their basket to do. We are trying to find ways to make these cities safer and to prevent losses.
“We think beyond just the employee,” Hamilton said. “We do a lot of behind-the-scenes work.”
That makes it difficult to put the savings for taxpayers into dollars, but Hamilton can quantify some of the results.
“The most accurate way I can put it in is the drop in the number of claims. Fifteen years ago we would average about 50 public-official claims a year. That would be for wrongful termination, or planning and zoning, or employment issues. The last three years we’re averaging less than 10,” Hamilton said. “I can’t necessarily say it’s $22 million, but I can say it’s dropped from 50 to 10 claims.
“What we’re looking for is a trend downward. Then we feel like we’re impacting the marketplace.
“In the area of workers’ comp, we used to average around 3,000 claims a year and now we’re down to 1,800. That’s still a lot,” Hamilton said, “but (our insured) do a lot of dangerous things. They use Weedeaters, and they dig ditches. We’ve got police and firemen, and they have to chase people … they climb ladders. They’re doing dangerous work. It’s tough work. It’s physical work.”
Sometimes the program can be credited with saving a life, such as Officer Caldwell’s in Warsaw, and the benefit goes beyond the mere budgetary. Financially, however, the payoff comes in what taxpayers don’t pay. Contrast the rate-hike shock of 20 years ago that was blowing holes in municipal budgets with the premium increases program participants paid the past three years: 3 percent, zero percent and zero percent.
Today, KLCIS is the largest municipal insurer in the commonwealth, providing services through a self-insurance pool that makes Kentucky citizens its “stockholders.” Its 537 customers include 311 cities, 63 housing authorities and others – including the UNITE drug enforcement task force, transit authorities, boards and commissions, arts councils, utilities, housing authorities, libraries, museums, parking authorities, river port authorities, tourism councils, convention centers and even the Valley View Ferry.
The program offers general liability insurance as well as liability overage for public officials, law enforcement and automobiles. KLCIS generally offers limits of $1 to $5 million, with higher amounts available on request. Municipalities can tailor deductibles to their needs. Annual premiums range from $500 to more than $1 million, varying based on deductibles, limits, types of training and accreditations.
“The program is designed to and has stabilized (insurance) rates,” said Hamilton. “We’re proud to say that while our rates, like any others, are affected by the market, our rates have not gone up in the last two years. In some of our 20 years, our rates have actually decreased for our customers.”
Member input
A board of trustees made up of participating members governs KLCIS, which KLC Executive Director Sylvia Lovely says is an important aspect of the program.
“This program is run by a board of their peers – a board right on the street that understands the plight of our cities,” said Lovely.
KLCIS helps its customers keep costs in check through loss-control programs and a scorecard program that allows cities to assess themselves, providing incentives to municipalities that meet certain levels of performance.
One aspect of that behind-the-scenes work is the safety grant program, which provides $3,000 per customer for safety equipment and training – including the bulletproof vests that went to members of the Warsaw Police Department.
In 2007, KLC provided awards to more than 118 cities and other entities, who together received $246,564 in safety grants. More than $1.9 million has been awarded through the safety grant program since its inception.
While the KLCIS program thrives now, Lovely says she would like to see it continue to grow and to offer more for its customers in today’s changing world.
“We want to change with it, and we feel like we have that flexibility,” Lovely said. “We can try innovative programs and expand our loss control. I would love to see us grow and do more of what we do, and be more solid on what we do well.”
A Training Resource
One way league officials did that is by establishing the KLCIS Online University, an opportunity for municipalities to expand training for employees in health, safety and human capital.
Partnered with FirstNet Learning, the KLCIS Online University offers a variety of courses specific to its clients through its Web site – www.klc.org. The method is a low-cost approach to employee education and training, and a convenient way to help clients reduce liability and workers’ compensation losses.
Other states are looking to Kentucky as an example of how to model similar programs. KLC officials recently worked with West Virginia officials as they look to implement a similar program I the future.
“I would say Kentucky is a leader,” said Kathy Spain, director for the National League of Cities’ Member Program. “They have spent time going to other states and helping them create pools, as they are looked to as a model. They have been very supportive to states that are creating programs.
“KLC is not just an insurance provider. They really excel at customer service,” Spain said. “They are someone these cities can call up with they have problems. It’s great that you can pick up the phone and get advice from someone who isn’t that far away and who knows your city.”
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