Lihue – There are only three insurers willing to underwrite in the county, and costs are rising.
Premiums in the prefecture have been “rising for some time,” according to Chief Financial Officer Riko Matsuyama at the November 17 Kauai Prefectural Council meeting.
“We always kind of budget for an increase,” Matsuyama said. “This time, it was more than we thought it was. The main reason for the increase this time is to cover excess liability.”
Matsuyama said the prefecture received advance notice that the current carrier with excess liability would not provide the prefecture’s renewal terms due to the decision not to cover public entities moving forward.
One company declined to quote the risk due to the county’s claims history. One of them, Allied World, had submitted a surplus quotation but would not participate in the initial tier, Matsuyama said in a note, citing a history of past losses and a large claim the province has recently paid.
Matsuyama said the prefectural broker toured the market and approached 20 different carriers.
The county is seeing a total increase of $537,000, about 28% over the last fiscal year.
The total budget for FY22 with total insurance is approximately $1.8 million, and total new premium costs are $2.16 million. Bill 2841 reviews the county’s budget for the 2021-22 fiscal year by adding $315,000 to the Treasury’s budget to cover these new costs.
We are also reducing our coverage. “We went from covering a commitment of $20 million to $10 million,” Matsuyama said. “So getting the same $20 million this period would have cost us $1.4 million.”
The decision not to conform to the higher coverage, Matsuyama said, was because the county “never had a claim anywhere near $10 million, (so) we chose to lower the amount of coverage to that level.”
Councilman Billy DeCosta said the administration was “looking at the boycott.”
“I wanted to thank you for researching the county and saving us money in lower installments,” DeCosta told Matsuyama.
Council Chairman Ariel Kaneshiro acknowledged that these types of expenses may become more necessary in the future.
“I know we get a lot of claims,” Kaneshiro said. “Ultimately, I would say we will never get allegations that we need to be seized or resolved and never sued. But that is very unrealistic. And I think that with time, all things are likely to become more litigious and it will be difficult to find insurance and it will be difficult to obtain On more expensive insurance, you know, I think that’s just the cost of doing business nowadays.”
At the council meeting on October 20, Bill 2839 was introduced to review the estimated amounts in the General Fund for money to be paid in settlement claims to $900,000.
Board member Felicia Cowden said this rise in prices may be indicative of a broader inflation issue.
“I just want to acknowledge to the public how the county, just like every family, is dealing with increased costs and with less capacity,” Cowden said. “What I’m hearing is we didn’t get anything even $10 million, so that’s fine. We probably don’t need $20 million to cover, but what I’m getting is that everything is getting better. So who knows where we’ll be in the future, what level of a liability claim is? against us.”
A public hearing is scheduled for December 15.
Sabrina Boudon, editor, at 0441-245 or email@example.com.
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