Dear Trusted Partner:

You will receive your entity’s 2023-2024 coverage declarations in the coming months. For fiscal year 2023-2024, most Members will see increases. (Your Member Services Manager will contact you to review this year’s changes and how they will impact your entity.)

Local, state, national, and global conditions, particularly regarding property issues like inflation, supply chain issues, natural disasters, and reinsurance, make modest increases unavoidable. Just as these issues affect us as individuals, they affect your entity and the Pool. Despite these pressures, the Pool will increase overall rates across all lines of coverage by 4.8 percent, considerably less than the current rate of inflation.

The increases – and proper apportionment of costs among Members – ensure relative rate stability compared to the commercial insurance marketplace and other competitors. Through volatile times, the Pool’s fidelity to its Core Values (Integrity, Public Service, Fiscal Responsibility, and Operational Excellence) continue to provide Members with the best source of local government risk management and financing. 

The 4.8 percent increase is a Pool-wide number – it doesn’t necessarily mean your entity will see only a 4.8 percent increase. Instead, your entity’s contribution will – as always – depend on your experience, rate, and exposure based on the following individual lines:

• Workers’ Compensation: The Pool is not increasing workers’ compensation rates. Despite lingering costs related to the COVID pandemic, the workers’ compensation program has rebounded and allows for a year in which base rates are not changed.  Each Member’s contribution will depend on your own experience and payroll changes.

• Liability: The Pool is not increasing the General Liability and Errors and Omissions Liability rates. However, the Pool will increase Law Enforcement and Auto Liability rates by 10 percent largely due to the increase in losses for these coverages.

Members operating a gas utility will see a modest increase.  Other adjustments related to liability experience modifiers could affect some Member’s contributions.

• Cyber: The Pool has, until now, retained the cost of a base level of cyber coverage for any Member with Liability and/or Property coverage. Coverage is provided through a partnership with Beazley, and that agreement remains the “best in class” for public entities. For 2023-2024, the Pool is passing a de minimis increase along to Members and working to determine how to best structure coverage in future years. Most Members will see those coverage changes implemented October 1, 2023, and the Pool will provide a detailed explanation well in advance of that date.
  
  
• Property: The Pool is increasing Property rates in several ways, which is necessary to ensure appropriate coverage. For most Members, property rates will increase six percent. In addition, an inflationary factor of 12 percent will be applied to all building values and eight percent will be applied to contents. (Many housing authorities, which have special exposures due to the residential nature of their property, will see larger increases.)

The increases are based on actuarial indications, property schedule values, and reinsurance modeling and price, and they are also based on continued increases in cost of materials, labor, and diesel fuel, as well as increase in demand with infrastructure investments and influx of residents to Texas.

• Minimum Contributions: Some Members will see their contribution increase in an amount necessary to cover their administrative costs of membership. While the percentage increase may appear drastic, the actual dollar amount typically won’t.

The Pool’s Board of Trustees takes rate decisions very seriously. The Pool is governed largely by local government officials, and they understand the consequences of their actions on local budgets.  

Unlike the commercial insurance industry, which uses profits to measure success, the Pool provides coverage, services, and risk management tools with the goals of saving lives, preventing injuries, protecting property and most importantly, stabilizing costs year-to-year for the Membership. Put simply, the Pool is Member-owned, Member-governed, and Member-driven. This Member-first risk management philosophy ensures that, over time, the Pool offers the best value proposition for cities and the taxpayers who support them. 

Please contact your Member Services Manager with questions about coverage, rates, and contributions.