City of Kent’s liability insurance rate jumps 21% in 2023

Jury verdicts against local governments and settlements in the millions of dollars continue to hike liability insurance rates for Kent and other cities.

Kent’s annual premium will jump 21% in 2023 to $1.37 million from $1.14 million in 2022, city risk manager Chris Hills told the Kent City Council last month. That’s an increase of $230,000 in the annual payment to Safety National, a St. Louis, Missouri-based insurance company.

The policy covers the city for up to $25 million. Kent would pay the first $1.25 million toward any total amount of settlements or jury verdicts this year with insurance picking up the rest. That’s the same price as the 2022 rate.

“We’re dealing with inflation, economic and also social inflation, which is jury verdicts of multi-million dollars and we are seeing multi-million dollar settlements,” Hills said in a Jan. 17 report to the council’s Operations and Public Safety Committee. “It affects insurance rates because that’s where the money comes from. There’s more of these lawsuits and the settlements get bigger.”

Councilmember Zandria Michaud asked how the city’s policy ended up at $25 million coverage.

“We have never had a loss greater than $5 million,” Hills said. “We are paying for possible catastrophic loss. Once every every 20 years maybe you’ll have a loss up in that stratosphere, but ours are staying in the $5 million layer.”

The annual premiums paid by Kent have jumped dramatically over the last few years. The city paid an annual premium of $947,000 in 2021 and $677,000 in 2020. Out-of-pocket payments also have greatly increased. The city paid the first $750,000 in 2021 toward its settlement and jury verdict total and the first $500,000 in 2020.

“Local governments have been hit hard by verdicts and rate increases,” Hills said. “It’s about a 40% jump for the average city in insurance rates.”

A Spokane jury earlier this year awarded a $19.5 million verdict against Spokane County after it ruled the Spokane County Sheriff’s Office wrongly fired a deputy and that the sheriff defamed him. In 2022, a Spokane jury awarded nearly $27 million to be paid to the estate of a woman who died in the county jail, with most of that amount to be paid by the jail’s health care provider.

“It’s significant stuff,” said Hills, who added Spokane County’s annual premium increased to $3.4 million. “And the cost to defend trials continues to go up.”

Hills confirmed with the city’s finance department staff that Kent has never paid out more than $5 million in a jury verdict or settlement. He said in an email that the city had no multi-million dollar payments in 2022.

In 2021, the city paid a $4.4 million settlement to the family of Giovonn Joseph-McDade, the 20-year-old who died in June 2017 from shots fired by a Kent Police officer. The officer claimed Joseph-McDade tried to run him over with his vehicle after a short pursuit.

In 2021, Kent city leaders moved $4.4 million from the city’s general fund to the liability insurance fund to cover a negative fund balance caused by claims paid and higher rates across the nation.

While liability insurance rates jumped again, the city’s premium for excess workers’ compensation increased just 1.5% in 2023, a jump of $2,311, Hills said. Last year the premium jumped 25% or about $50,000. The insurance is for claims exceeding a designated dollar amount.

“I’m super happy about that,” Hills said. “This is really great news.”

The city’s premium is $152,357 for 2023 compared to $150,046 in 2022, Hills said. The city’s self-insured retention (similar to a deductible) for 2022 and 2023 are $1 million for police officers and $600,000 for all other employees. Those premium amounts are still a big increase from the annual premium of $80,184 paid by the city in 2019.