Tumwater’s insurer lauds city’s low losses

Tumwater’s insurance provider, Washington Cities Insurance Authority (WCIA), commended the city for its low loss history compared to other WCIA members.

WCIA Deputy Director Rob Roscoe attended the Tumwater City Council’s meeting last week to give an update about the ongoing challenges of the insurance market in the state.

WCIA is a not-for-profit state agency that provides insurance coverage to 170 members comprising of local municipalities and municipal agencies in the state. Roscoe said that WCIA members decide and agree to the agency’s coverage every year.

The agency insures its members up to $20 million in liability, with the first $4 million directly insured by WCIA while the remainder is secured through reinsurance. The agency also provides risk management, in-house claim handling, training, and pre-defense review services.

Roscoe explained that WCIA members are divided into five groups based on the number of employee work hours needed by every group. Tumwater belongs to group four, which requires more than 400,000 work hours.

For every type of liability WCIA covers, Tumwater incurs fewer losses than group four members incur on average.

Tumwater’s loss history by department from 2013 to 2023.

For example, in the past five years, Tumwater only incurred $62,153 in public safety cases, whereas group four incurred $1,944,616 on average. For general liability cases, Tumwater incurred $407,494 in losses, while group four members incurred $1,043,225 on average.

“It's not that bad because you're looking at losses below a million dollars and you're looking at five-year periods. And that is really a very favorable loss history when you look at group for members,” Roscoe said.

Roscoe added that the city’s low losses contribute to lower insurance rates. To determine a member’s rate, WCIA determines the member’s modification factor, which is calculated based on the member’s loss history. Due to the city’s low loss history, Tumwater only has a modification factor of 0.69, meaning the city pays less for insurance than other group four members.

Roscoe said that the city’s modification factor will likely go down further next year as a significant claim will be removed from the city’s five-year loss history.

To further demonstrate the city’s low loss history, Roscoe added that what WCIA pays for reinsurance has increased by 506% from 2014 to 2024, whereas the rate Tumwater pays only increased by 77% during the same period.

Roscoe explained that WCIA’s insurance rate is considerably higher as the agency has a higher exposure to risks but also noted that the increasing insurance rates show how difficult the insurance market has been. He described the current period as a “hard market” where coverage is hard to get due to increasing costs.

The city departments that incurred the most liabilities in Tumwater from 2013 to 2023 were the police, public works, and fire departments. The police department incurred $515,133, which Roscoe praised.

“This is really tremendous. Just because the nature of what police do, to have losses that low is really something else. You guys must be doing something right or you have the citizenry that obeys and doesn't file claims,” Roscoe said.