While government entities are shelling out more for insurance coverage, the amount that Utah's two largest insurance conglomerates paid out in claims and attorney fees hit rock bottom last year.
The Utah Local Government's Trust — an insurance pool that maintains liability coverage for 300 Utah cities, towns, counties and special service districts — paid a meager $564,887 in settlements and attorney costs for 1999. Utah Risk Management Mutual Association — a pool that includes about 25 larger Utah cities — paid only $823,605 in legal fees and claims.
Both figures were the lowest amounts the two pools paid during the '90s.
"Last year was kind of a fluke," Marilynn Beesley, executive assistant for ULGT said. "They expect that this year it would jump back up again."
But for URMMA, losses (money paid out in claims and attorney fees) have continued to plummet. Through Dec. 1 the association paid a slim $252,029 for lawyers' fees and claims.
"We don't really pay that much out in settlements because we don't lose a lot of lawsuits," explained Daryl Berlin, executive director for URMMA.
Until last year, URMMA had spent more than $1 million each year in legal costs and settlements during the past decade. The association's losses peaked at $1.64 million in 1997.
Similarly, at ULGT, the trust paid out more than $1 million annually in claims and attorney fees since 1995.
Losses for the trust also peaked in 1997 at $1.93 million but dipped to $1.37 million in 1998 before plummeting to a 10-year low last year.
Still, while losses for the majority of Utah's government agencies were tiny in 1999, decreasing insurance premiums have not followed. In fact, premiums are rising.
Bryce McEuen, risk manager for the city of Sandy, blames the premium hikes on a "hardening" insurance market. McEuen, who founded URMMA, noted the premium on Sandy's general liability policy saw its first significant increase in October, and the city now pays some $125,000 annually.
"Recent insurance industry literature has been replete with articles about the hardening insurance market, with most of the emphasis being on the rising cost of reinsurance," McEuen said. "These costs . . . will inevitably be passed on to all customers."
A "hardened" market is one that is seeing price increases. McEuen said costs are rising because the companies that insure the insurance companies (reinsurers) have been losing money for years and now need to make up deficits by increasing rates.
"They've been waiting for a long time to raise their rates, and now they're going to do it," he said.
E-MAIL: bsnyder@desnews.com