Hupke updates supervisors on ICAP opportunities

The Montgomery County Board of Supervisors received an update on its insurance through the Iowa Communities Assurance Pool, or ICAP, which covered the county’s buildings, properties, and vehicles.
The supervisors met with Rick Taylor, as well as ICAP representative Beau Hupke, at the April 25 meeting. Taylor said Montgomery County had been insured with ICAP since 2007, and while there had been many changes over the years in the insurance industry, ICAP had been a good program for the county. However, there had been some changes that raised questions.
“I had a conversation about the contributions Montgomery County paid to ICAP, and the changes we’d seen. In 2021, the contribution was $110,000, in 2022, it was $135,000, and in 2023, it’s approximately $168,000, so you’ve seen quite a large increase over the last three years,” Taylor commented. “Having said that, over the last five years, Montgomery County has paid in approximately $525,000 in contributions, and the claims over that time were almost $500,000, so for every dollar spent, ICAP has paid back about 90 cents in claims.”
Also, Taylor said coverages had increased over the last five years due to inflationary prices for replacement costs of insurable items such as buildings.
“We have increased coverages to keep buildings and property insured to the values it should be insured at if there was a catastrophe,” stated Taylor. “One thing we haven’t updated is the county’s general liability limit. It hasn’t been changed in a very long time, and probably should be examined before the next renewal. $1 million and $5 million isn’t what it used to be.”
Hupke said ICAP was created to specifically provide insurance to governmental entities, and rates were up both in the ICAP sector and personal lines of insurance as well.
“There are a couple reasons for the increase. The cost of claims has gone up. In one year, the same cost of a claim from the previous year has increased by 40%, and a $10,000 claim is now $14,000 due to the cost of trying to get a labor force. This isn’t just locally, it’s nationwide. The cost of construction has also increased. Five years ago, it was about $150 per square foot, and now it’s $225 per square foot, to cover the costs of construction,” Hupke explained.
Hupke also agreed with Taylor that the county should consider increasing its liability coverage, due to the prevalence of lawsuits being filed as of late.
“You see multi-million and multi-billion dollar lawsuits on a weekly basis it seems like. Someone is always suing someone for something, that’s just the world we live in now. What’s the market forecast? Your guess is as good as mine,” advised Hupke.
Hupke added ICAP was always looking at ways to reduce losses, such as slip and slide situations, and mandatory seatbelt use.
“It’s a good habit to get into. A little fender bender could have a $5,000 med pay if the victim had the seat belt on. If they didn’t, it could be a $250,000 medical bill, and all those things contribute to the rates. We need to right the ship a little bit, and a lot of things might be out of the county’s control, but that’s why you have insurance for the things that are unavoidable. The things that we can avoid we need to look into,” Hupke stated.
Supervisors Chair Mike Olson said he was aware that building costs have gone crazy, as well as everything else, and there wasn’t an end in sight. Hupke agreed.
“Everything is in a big circle. One thing goes up, and another thing goes up, and if that goes up, then another thing goes up,” Hupke said. “When there’s a big verdict lawsuit, ICAP or any insurance company has a liability limit. If it gets through that, it goes to reinsurance markets. The reinsurance market that ends up with the majority has rates go up, and they pass it down. It’s one after the other until they can become profitable.”
Taylor said Berkshire Hathaway owned reinsurance companies, and recorded a huge loss in 2022. Taylor said that affected everyone.
“It not only cost the county, it cost property owners and individuals. I will say, when I first started doing insurance for the county, it was all through private insurance companies, and there were tough times. There were times we got canceled by companies or were denied markets. ICAP really leveled the playing field for the county, and they’ve been there. Standard insurance companies, based on the loss ratio the county has, probably wouldn’t insure you, but ICAP is committed to counties and cities,” advised Taylor. “I don’t know what the future is going to bring, but I hope it stabilizes.”
According to Hupke, based on nationwide statistics, roughly 85% of the country was in some sort of insurance pool, and agreed with Taylor that it was unclear when things would stabilize. Also, since the county was in a pool, it was in a unique position.
“You guys are part owners of the pool with vested credit. If there’s something you want to know or see as far as coverage, you let us know, we take it to the board, and they determine if it’s necessary, You’re not going to find anything better than what ICAP has to offer,” commented Hupke. “However, I want to make it clear that the increases in the insurance are not just in your county, it’s in all the counties,”
No further action was taken by the supervisors.