Local Government Property Insurance Fund Update
On Friday April 17, 2015, the Joint Committee on Finance debated Governor Walker’s proposal to close the Local Government Property Insurance Fund. The committee voted unanimously to delay the closure of the fund. Under this action, the last day for coverage renewal would be January 1, 2018 and the last day to file claims would be July 1, 2019. Final determination on closure of the fund is still subject to final action on the State Budget by the Legislature and Governor.
Additionally, the motion required the Insurance Commissioner to adopt the policy rates and structure recommended by the Local Government Property Insurance Fund Advisory Committee at its April 9, 2015 meeting. The Advisory Committee recommended that premium for each policyholder be based partially on the previous year’s loss experience. Historically it has been based on the average losses of all policyholders. The Advisory Committee also proposed other changes, including property appraisal procedures, and rate increases to restore the fund to solvency. The set of recommendations passed by the Advisory Committee on April 9 would result in an average premium increase of 45%, effective July 1, 2015. These changes are not subject to approval by the Legislature or Governor.
Over the course of the last five-year period, the LGPIF surplus has declined, ending fiscal year 2013-14 with a negative surplus of $1.4 million. More recent financial statements of the fund show that the negative surplus level has grown, however, a dispute with the fund’s reinsurance carrier could return as much as $30 million should the pending court case rule in the fund’s favor.
On behalf of Wisconsin County Mutual Insurance Corporation and its subsidiary Community Insurance Corporation, WCA and Aegis Corporation staff have been working diligently to develop a property insurance option for members. With tight budgets it is imperative to find the best combination of cost and coverage for members. We expect to have all actuarial and reinsurance information studied and a final determination on a product soon. When the policy structure is finalized, representatives of Aegis Corporation will meet with each member to explain and determine which option is best for that member.