Law Enforcement Liability: Municipalities Bear Growing Risk for Police Actions

Allegations of police officers’ excessive use of force reached a flashpoint in 2020, igniting massive protests and riots across the nation. As officers in several cities face criminal charges in fatal interactions with suspects, one might expect civil liability claims against those individuals to follow. In fact, that is not the case. For various reasons, public entities bear the liability risk for police department actions. And that exposure is becoming more difficult to transfer.

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 Featuring:

• Ben Merris is Senior Vice President and Director of Public Entity at CRC, based in Chicago. 
• Bob Greenebaum is Executive Vice President, Central Regional Director, and Casualty Practice leader for CRC Group, based in Chicago. 

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Transcript

Dan Wentz: [00:00:00] allegations of police officers. Excessive use of force reached a flashpoint in 2020 igniting massive protests and riots across the nation. The survey by Pew research in mid June found that two thirds of Americans believed.

Individual officers should be held liable for excessive use of force as officers in several cities, face criminal charges and fetal interactions with suspects. One might expect civil liability claims against those individuals to follow. Will they? Okay. So we're joined now by Ben Merris, who is the senior vice president director of public entity at CRC based in Chicago.

And. Also from Chicago, Bob Greenebaum. He's the executive vice president central region, director, and casually practice leader for CRC group. Also, of course, in Chicago. Welcome to the podcast guys. How are y'all doing today? 

Ben Merris: [00:00:49] Doing well. How are you? Very well. Thanks for having us, Dan. 

Dan Wentz: [00:00:52] We're talking law enforcement liability with, Ben and Bob here.

And Ben, you, you specialize in law enforcement liability, municipalities, this kind of insurance you're well known within CRC as the guy to go to for this kind of stuff. so you're a great resource, to, to work through, This insurance and exactly the issues that are going on right now, we've seen a lot of, news about law enforcement officers and protests and interactions with the public.

The insurance angle on this obviously is pretty important right now. So what is what's, what's feeding this, what's the legislative part policy background going on, we're hearing about defunding the police. We're seeing potentially lawsuits, with police officers and municipalities. who's being sued.

And, and what is, you know, what is the risk here, really, if you could get into that and explain that to us a little bit 

Ben Merris: [00:01:46] know, certainly, I think within, within the insurance community, there's been a heightened focused on law enforcement, legal liability for the past number of years, really stemming from, kind of the first major domino that fell was the Michael Brown shooting in Ferguson, Missouri.

That was a, it was a case. It was actually a claim that was an insured of ours and we placed the coverage for them. so you were intimately involved with that and how that was handled and what transpired after that. And so what's happened. Is that the there've been a lot of protests and people have been certainly upset, in certain situations, you know, very justified, for how law enforcement has been treating some of the local communities that they're supposed to protect and serve.

And so what we're seeing is with that shift of people, number one, looking at this a lot more, being a lot more cognizant of it. And then in the. Kind of digital technologies that were in the advent of body cameras. The fact that everyone's got, you know, a video recorder on their phone, that has brought a lot more of these incidents, to light, not only just from a reporting standpoint, but all of a sudden there is a visual record and evidence of some of these things happening where I think in, in years past, it's easier to, to dismiss, Or to kind of gloss over some of these issues.

And now it's, when you see it starkly put in front of you on video, it's a very hard thing. One to look away from and to not to feel some sort of, you know, compassion, and just a, a desire for us to be able to do a little bit better as a society. so with that, you know, there's been a lot more focus.

there've been protests, there's been a lot of actions. And with that, there's been a lot more. No claim activity where, you know, there's going to be an allegation of excessive force where before, once again, there's, there's no video evidence, something is disputed and it's where the officer versus, you know, the word of the, a potential perpetrator and these things have kind of gone away.

And so what we've seen now is with a lot of the video evidence and the garnering public support for, you know, more likely to believe people when they accuse some police of wrongdoing, is that the claim amounts, And the lawsuits and the settlements that we're seeing in this particular line of business have certainly certainly indexed up, probably by a large order of magnitude over what we've seen in the past.

Dan Wentz: [00:03:48] Yeah. So I've heard it referred to as social inflation. It's kind of what's going on here now. 

Ben Merris: [00:03:54] Yeah. And that's, that's a big part of it. I think we've seen that through, you know, multiple lines of coverage simply in casualty. as we move forward here and people are looking for. Sometimes, if they're feeling a little bit powerless, you know, people, what we've seen is if they're on a jury or if they're involved in a case here is if they feel someone was wrong under, there was, you know, some something at fault in order to restore some, some powers and justice back to the agree party is that, you know, the mechanism they have is to say, okay, well, you know what?

They. They were run by the police. Something was, was done to them improperly. And so we need to, you know, they need to be compensated when someone needs to be held accountable for that. And the mechanism a lot of times for that as a lawsuit, I think that what most people don't traditionally understand though, is when it comes to law enforcement, legal liability with the doctrine of qualified people, it's extremely rare there.

And basically almost near impossible to Sue a police officer individually for their actions. 

Dan Wentz: [00:04:47] That was 

Ben Merris: [00:04:48] my next question. Someone has helped. 

Dan Wentz: [00:04:51] Yeah, it was. I was going to say, is it tough to Sue a police officer? I 

Ben Merris: [00:04:54] guess it is. It is. And with that, you know, with, with, with that doctrine of qualified immunity, being unable to Sue a specific officer individually for their actions, when those suits are filed, and then those complaints are made, it's actually against the, you know, the municipal organization, the Sheriff's office, you know, if they're part of a town or a County.

That's who's actually sued. And the end of the day that's who's. If they have insurance or not, that's where those funds are paid from. To, to settle some of these suits. It's not the individual officer. It's the Sheriff's department, it's the town, it's the County, it's the state and whatever that entity is, if they've got insurance, then a lot of times that that insurance is triggered to pay the indemnity.

And if they don't, then they're self funding. Some of those losses out of their, out of their budget and their general fund, which ultimately is paid for by the taxpayer. So if you're suing your local police in your community, a lot of times you're suing. Yeah, the very, the very entity that's supposed to be.

Right. You know, law enforcement, all of these other services and those tax dollars have to be allocated in places probably where you prefer they not be. 

Dan Wentz: [00:05:50] What an interesting concept. When you go to raise a lawsuit against a police officer, you're essentially suing yourself and your neighbors at the same time.

what about personal liability insurance? is that, does that play in at all here? Does that have any kind of effect? It's 

Ben Merris: [00:06:06] really not. There's not there for most of the personal liability insurance out there. There's always an exclusion for an intentional act, which law enforcement inevitably is. So there's really no coverage and no way to kind of collect under traditional.

Personal liability insurance, whether it's the homeowner's personal umbrella there, there does exist a few programs out there that will sell standalone personal liability insurance to law enforcement officers, not a very big or wide market. There's a few key players there and traditionally with, with things that are.

That are tough to figure out. And there's not a ton of data points. It's, it's, it's price, it's something they're going to get their pound of flesh for, because you know, there's not enough of the data points in there to kind of smooth out and have a predictive curve for the actuaries to be happy. So everyone's going to, it's going to be conservative and how they price and look at these things.

And if you're wanting to go out and buy it, you are, you're going to pay for it. 

Bob Greenebaum: [00:06:56] Let me just throw in something like that. We've also seen that. The 

Ben Merris: [00:07:01] union side of 

Bob Greenebaum: [00:07:02] law enforcement, you know, it's a, it's a fairly heavily unionized, employment, the unions and providing services to their members, have come up with various, insurance programs, which may not pay the indemnity, but will pay the defense costs.

For an individual officer and that's sort of an opt in kind of thing for the individual officer, if they want to buy that insurance, but it's not an indemnification for an intentional act. It's just to help them pay their legal costs. Should they be brought up in an action? 

Dan Wentz: [00:07:35] And it seems like the environment that's becoming more and more likely right now.

And with all the news and the protests and everything we've been seeing bandy think that. how are insurance markets reacting to all this? what stance are they taking on it? 

Ben Merris: [00:07:51] I mean, with, you know, kind of the admin that said that everything for law enforcement, I think changed from Ferguson going forward, there's been increased scrutiny.

and people are a little bit warier about, you know, the coverage that they're writing and how they're providing that coverage. You know, that coupled with the number of other drivers in the public entity sector now, That are pushing costs. You know, there's overall in the market, there's a crunch for capacity.

and people who have been cutting back and pushing up limits and pushing rate, and along with law enforcement, you know, people are worried sexual abuse liability, which is in the municipal space for, for schools. you know, that are, that are funded from the government as well as, you know, cams or other things that are going on that there's just in a high, in a heightened focus on this.

And so law enforcement we've seen people. Carved back coverage, increased deductibles, increased retentions, cut, back limit, push, you know, crease pricing. and what the net effect has been is like, yes, can't, you know, if you had a a hundred million dollar tower that you had all your coverages, excess follow form all the way up this year, you know, you may not be able to take all the, all your affirmative coverage is all the way up the tower.

At some point you may run out of capacity or partners are willing to follow the law enforcement, the sexual abuse. Yeah, TBI, concussion coverage for education. These things have become harder and harder to do, and there's less and less people doing them. And do you overlay 

Bob Greenebaum: [00:09:05] that with the broader casually marketed as a whole, which is in what we call a hardening market anyway?

Right. So you've got, you've got sort of the double or triple whammy going on of a difficult overall environment and a very difficult specific environment in the public entity space. And so. everybody's wary, you know, the insurance carriers are wary of, of, getting blindsided by large verdicts and things like that.

And they're being cautious 

Ben Merris: [00:09:35] as to how they 

Bob Greenebaum: [00:09:36] deploy their capital. Right. And, and that 

Ben Merris: [00:09:40] it makes our 

Bob Greenebaum: [00:09:40] job 

Ben Merris: [00:09:41] much more 

Bob Greenebaum: [00:09:41] difficult, but it also makes our job, much more important in an environment where it's 

Ben Merris: [00:09:46] hard to place coverage. Yeah, I think that really dovetails with something we've been having a lot of skills with our retail agents, with the names of new relationships is that obviously the market's hardening specifically than public entity.

I think it's probably one of the hardest sectors out there when you're facing conditions like that. And you have a duty and you want to make sure you perform the best for your insured client as a retailer, you want to make sure you're bringing the best resources, market access and end results you possibly can.

And for that, like, you really need to team up with someone who knows the sector. those intimately does a lot of it. And does it well, and have some of those Mark relationships to make sure number one, you're not leaving any stone unturned or to any, any sort of mechanism they can bring to the forefront instead of just the deductible plan, maybe it's and sir, maybe it's reinsurance.

Maybe it's a buffer. Buydown, there's a whole host of different ways that you can, you can help someone it's for the risk. and without having all those tools in your toolbox, you may be not bringing the best results for your insurance. Yeah. 

Dan Wentz: [00:10:38] What about risk financing? what exists for municipalities?

Are they using? 

Ben Merris: [00:10:44] Yeah, they do. And for, for, for the most part, for, for public entities, you know, there's a couple of different kind of traunches within the market for where people elect to do their coverage, you know, for the small kind of antelope folks, there is, you know, the guaranteed cost deductible markets.

And that's your travelers, your one beacon, sometimes your Philly, where those folks are just writing a simple package policy. They, you then have folks who are a little bit larger and more sophisticated. No, they can take on a self-insured retention. Usually there's a TPA involved to handle claims, some people self administer, and then kind of in between those two.

and also, you know, Providing, coverage for folks who are in those two buckets is there are the public entity pools and the public entity pools were born in the early eighties during a very hard market crunch for, for public entities where most States were able to enact statutes that allow these public entities to pull together, to buy, to share risk and buy coverage together.

And in effect, they are almost setting up their own little mini captive insurance companies. It's just that the barriers of entry for the pools are way lower than they are for the captives. So it's easier for these guys to set up and do it. And. The pools across the country are our major factor, for how this coverage is placed and how it's done.

And our team currently supports over 40 pools nationwide, whether from a, you know, a reinsurance excess buffer perspective, and in helping them figure out what the most optimal, way for them is to handle their restaurant. 

Bob Greenebaum: [00:12:00] You were talking about doing re-insurance for, for these pools in today's current environment.

But, you know, topics like, pandemic coverage and law enforcement, right? Liability. How are the reinsurers responding or not to providing those coverages? 

Ben Merris: [00:12:16] The reinsurance are still for the most part, offering some of those skills. We're just, with the exception of almost every single reinsurer out there now we're seeing has a communicable disease, pathogen, biological agent exclusion on there.

You know, what we're seeing is, you know, as these things work their way through the reinsurance markets, as the reinsurers are mandating that their, a, that their clients, whether it's the individual pool or the insurance company themselves, have these exclusions, you know, we're seeing more and more of this kind of a hundred percent take through through the market.

It's not there yet, but we're, we're certainly expecting it to be. however, with some of the other firms, the coverages law enforcement people are still looking at it and writing it. But once again, you know, what we're seeing from the casualty market is being driven from the reinsurance market, where you're pushing up attachments, you're shortening limit, you're cutting capacity, you're tightening up terms and you're ultimately, you know, charging more for the whatever portion of the risk that you're still on.

Great question 

Dan Wentz: [00:13:01] and great answer. So let's talk about agents, what agents need to know for their municipality clients. What steps can they take to better prepare them? Make sure they're adequately covered and meeting all the needs. 

Ben Merris: [00:13:13] I think the most important thing is I think for a lot of agents who aren't familiar with the public entity space is understanding the timelines and how a lot of this work is, is done and approved and how coverage goes into place.

You know, we, we, we traditionally send out our renewal solicitations. We like to try to be out in the market somewhere between 150 and 120 days out from effective date. and part of that is due to number one is the complexity of the risks that we're looking at. for most, most carriers that are looking at this stuff, they're doing multiline casualty, with packages re-insurance so it's all GL EBL law enforcement, public officials, employment practices can be educators legal.

You know, there's all these pieces that have to go into play. So it's, it's a little bit longer, a little bit more of a deep dive from an underwriting perspective. So you'd have to allow the underwriters more time for that. And then from the enemy level, These things traditionally have to be approved by bio board.

You know, whether that's it's the town council, if it's the, you know, the, the school board for that particular school district. And so with those timelines, they have to be managed appropriately. So if something is going to be approved at a board meeting, you know, usually the board meetings are the first or second week of the month.

So let's say you have a 10, one effective coming up the board meeting, usually to present and approve the insurance. It's going to be bound on ten one. Has to be presented by the first or second week of September, which means in order to get on the agenda, you need to have your quote into your retail before the first of the month.

so we have with the, usually at the very least, we have to quote, our quotes have to be at least 30 days out, have to be on our retailers hands so they can get on the agenda. They can get at the board meeting and then they can present, and it can be bound in time, to be bound effective. 

Dan Wentz: [00:14:44] How does the CRC producer specifically benefit, you know, benefit someone who's working on these clients and, and pursuing this type of risk?

Bob you are the leader for the casually practice group. So you're one of the, the people in charge of making sure we are benefiting our agents, to the, the most extent possible, the best extent possible that we can. So maybe you could talk a little bit about that and explain, explain how a CRC producer meets those needs.

Bob Greenebaum: [00:15:13] So the practice group exists for the benefit of the actual casualty producers in the company. We have over 500. members of our practice group, who would do all things casually, right? And, and, but contained within the broader group are subject matter experts, such as Ben, who have spent their career focusing on a particular area.

And in this case, it's the public entity space. So where this all comes together is the broader brokers in the practice group are out trying to get new business all the time. And if they run across. I had an opportunity in a public entity space. They could try, but on their own. But what we've been able to successfully do is to point them in the right direction, to where the subject matter experts lie.

So in this case, Ben and we we've promoted Ben across our system. and, and it's been very successful in, in, connecting Ben with those producers, students, CRC, and their customers. I've been, we'll spend. Probably 20% of his time working on deals for other producers in the system. It's, you know, we've often used, it's kind of an old analogy, but we will often use the old Verizon commercial as an analogy where they have the one guy in front and, and thousands of people behind it.

You know, that's, that's kind of the way that we think that it works really well in our system is to, is to have the resources and tools available for all of our producers and letting them know where to go. And then that benefits a much broader group, within the company and obviously benefits our customers, the retail brokers and agents 

Ben Merris: [00:16:53] who probably don't have 

Bob Greenebaum: [00:16:56] in house expertise in many of the areas, they can come to a CRC and find that expertise in the areas that they need 

Dan Wentz: [00:17:04] in bed.

If I liked my, if I'm an agent and I liked my CRC producer, I can work with 

Ben Merris: [00:17:08] them. Right. Certainly, you know, we're, we're, we're not looking to, you know, to supplant or replace a relationship where we're, I mean, we're there to enhance it. Right. So, you know, the benefit of, of bringing me in to something new one is, you know, I don't think there's, you know, we're, we're, we're top in class and more, best, best in the public entity sector in, in the U S.

And so you're going to get the benefit of our, our expertise, our market relationships, our creativity, And if you'd like your, your, your CRC agent, you should cause he's CRC agent and they're great guys and girls, you know, then you should continue that relationship and they can just bring us in as expertise for you.

They can still interface and be your point of contact. And we're just another tool that they have in their toolbox to make sure that we can deliver the best results and best, best in class service. 

Dan Wentz: [00:17:49] Excellent. So if an agent wants to get started, they can search out online. Any of our producers, your existing producer, just give them a ring, tell them you're interested in this.

you can also look up Bob or Ben online, CRC group.com. We've got all our producers and their specialties listed up there. You can find someone that. Is writing the type of insurance that, that you want to, move forward with. yeah, search it out right there. And we've also got a bunch of articles and stuff up there that you should check out.

lots of tools and Intel, on our website@crcgroup.com. So Ben, Bob, thank you so much for joining us today. I think this has been a great conversation, very informative and very timely as well. Appreciate you guys being 

Ben Merris: [00:18:31] here. No. Thank you, Dan. It's been a pleasure. 

Bob Greenebaum: [00:18:33] Thank you, Dan. Thank you, Ben. Everybody stays safe and well, 

Ben Merris: [00:18:37] thank you for listening to the place in you.

First podcast from CRC green. Learn more about our company@thecrcgroup.com and subscribe to our YouTube channel by searching CRC group on YouTube.