County’s insurance premiums rising

LIHU‘E — There are only three insurance carriers willing to underwrite the county, and costs are rising.

The county’s insurance premiums have been “going up for a while,” according to Finance Director Reiko Matsuyama at the Nov. 17 Kaua‘i County Council meeting.

“We’re always kind of budgeted for the increase,” Matsuyama said. “This time, it was just more than what we thought it was. The primary reason for the increase this time is because of our excess-liability coverage.”

The county had advanced notice that its current excess-liability carrier was not going to offer the county renewal terms due to a decision to not cover public entities moving forward, Matsuyama said.

One company declined to quote the risk due to the claims history of the county. And one, Allied World, provided an excess quote but would not participate on the primary layer, Matsuyama said in a memo, citing past loss history and a recent large claim paid by the county.

The county’s broker canvassed the marketplace and approached 20 different carriers, Matsuyama said.

The county is seeing an overall $537,000 increase, about 28% over last fiscal year.

The total FY22 budget with total insurance is about $1.8 million, the new premium costs total is $2.16 million. Bill No. 2841 revises the county’s fiscal-year 2021-22 budget by adding $315,000 to the Department of Finance’s budget to cover these new costs.

”We’re also reducing our coverage. We went from a $20-million liability coverage to $10 million,” Matsuyama said. “So to get the same $20 million this period would have cost us $1.4 million.”

The decision to not go with the higher coverage, Matsuyama said, is because the county has “never had a claim for anywhere near the $10 million, (so) we opted to cut the coverage amount to that level.”

Councilmember Billy DeCosta said the department was “looking out for the county.”

“I wanted to say thank you for looking out for the county and saving us money on the lower premium,” DeCosta said to Matsuyama.

Council Chair Arryl Kaneshiro acknowledged that these types of expenditures may become more necessary in the future.

“I know we get a lot of claims,” Kaneshiro said. “Ultimately, I would love to say that we would never get claims that we need to set or settle and never get sued. But that’s very unrealistic. And I think as time moves on, all things are probably going to get more litigious and it’s going to be even harder to find insurance and it’s going to be even more expensive to get insurance and, you know, I think that’s just the cost of doing business nowadays.”

At the council’s Oct. 20 meeting, Bill No. 2839 was introduced to revise the amounts estimated in the general fund for money to be paid in settlement claims to $900,000.

Councilmember Felicia Cowden said this price-hike may be indicative of a more-encompassing inflation issue.

“I just want to acknowledge to the public how the county, just like every family, is coping with increasing costs with less capacity,” Cowden said. “What I’m hearing is we’ve never had something even $10 million, so that’s good. Maybe we don’t need $20 million for the coverage, but what I’m getting is that everything is going up. So who knows where we’ll be in the future, what would be the level of liability claim against us.”

A public hearing is scheduled for Dec. 15.

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Sabrina Bodon, editor, can be reached at 245-0441 or sbodon@thegardenisland.com.