Washington County sees insurance rate increase

WASHINGTON — An adviser to the Washington County Board of Supervisors said to the government’s insurance rates were going up. The county’s coverage is provided by the Iowa Communities Assurance Pool, or ICAP.

The new coverage rates took effect July 1, the start of the fiscal year. The numbers represent an 11% net increase compared to last year’s costs.

“ICAP is owned by its members, it’s not a for-profit entity, it’s not an insurance company … in the past there’s been a voucher that comes out every year which is basically a rebate or discount on the contribution,” said Paul Horak, owner of Horak Insurance. “In so many years, that voucher was paid out and for a while we took it for granted, the year it disappeared, that shattered the budget a little bit.”

Horak said the rising costs came from a perfect storm of factors across the economy.

“The first part of it is insurance to value, which needs to come up, and then construction cost is skyrocketing,” he said. “There’s lots of weather events that are coming in at strange times, tornadoes that were in January and February, and there was the derecho … and then there’s social inflation.”

ICAP implemented a $10,000 fee for every jail in member counties this year according to Horak, who said the new line item was another major factor in rising expenses. Horak said the money covered growing legal expenses.

“There’s been a lot of jail and law enforcement liability claim and some of the awards have gotten pretty high,” he said. “ICAP needed to do something to recover that.”

Supervisor Jack Seward Jr., who is a member of the ICAP board, said the organization was taking steps to get those costs under control.

“ICAP has recently hired a person to specifically do risk control with jails,” he said. “The ones that we’re focusing on to start with are the jails that seem to have a history of problems … we’re doing all we can.”

Horak said he didn’t blame the organization for the changes.

“I do feel confident that ICAP is taking the right steps to remain a viable solution for the entities that they serve,” he said. “You can’t just sit there and do nothing … that’s happened to several insurance companies, or they just decided to get out of the market.”

Seward said the trends were not specific to Washington County or the state of Iowa, but reflected national economic realities.

“The insurance industry as a whole is all experiencing all of these,” he said. “ICAP has an investment pool to draw on, and part of this investment pool is invested in various stocks, bonds … good performance in the stock market and stuff has allowed us to accumulate a cushion. But with the things Paul has described and the rotten economy, we don’t have the cushion.”

There are some positive trends for county insurance. Horak said workers’ compensation rates were under control.

“Compensation rates are set by the state of Iowa, everybody gets the same initial rate, then they apply what’s called a modification factor,” he said. “That has to do with your own record regarding claims … the county has a 0.7 mod, that’s a very good mod, that means you only pay 70% of the bureau rates.”

Comments: Kalen.McCain@southeastiowaunion.com