Built to Last: Celebrating Municipal Insurance Pools’ Anniversaries

When we think about insurance today, it's easy to take for granted that reliable and affordable coverage will be there when it's needed. But four decades ago, that certainty didn't exist for municipal governments.

This year marks two important milestones for North Carolina municipalities: the 40th anniversary of the Property & Casualty Trust and the 45th anniversary of the Workers' Compensation Trust, two risk- sharing pools administered by the League that have helped its members navigate and recover from disasters, manage and prevent risk, and protect public resources.

Born From a Crisis
The trusts were created during one of the most turbulent periods in the history of the insurance industry. 

In the mid-1980s, the commercial insurance market entered what became known as the liability insurance crisis. After years of underwriting losses, insurers dramatically increased premiums, raised deductibles, reduced policy limits, and, in many cases, stopped writing coverage for local governments altogether.

Commercial insurance carriers viewed local governments as unpredictable and unprofitable, leaving cities and towns across the country unable to purchase liability insurance at a reasonable price.

Part of the reason that commercial carriers began viewing municipalities this way was the unprecedented number of lawsuits and costly settlements involving local governments. Court decisions increasingly held local governments liable for constitutional violations. Without affordable insurance to keep municipalities protected, communities were forced to scale back or eliminate essential public services because the financial risk had become too great.

The traditional insurance market was no longer meeting the unique needs of local governments.

A Different Approach
State municipal leagues responded by creating intergovernmental risk pools—a collaborative system that allowed municipalities to share risk while maintaining local control. North Carolina joined that movement by establishing the Property & Casualty Trust in 1981, followed by the Workers' Compensation Trust in 1986.

Today, the Property & Casualty Trust serves approximately 440 member municipalities, while the Workers' Compensation Trust protects 477 member municipalities. Together, they insure the vast majority of North Carolina's cities and towns and maintain a 99% annual member retention rate.

"The mission from the beginning was to provide cities and towns with stable insurance coverage while allowing them to realize the benefits of being self-insured without assuming all of the risks," said Bryan Leaird, deputy executive director of the North Carolina League of Municipalities.

Recognizing the unique nature of municipal insurance, the pools were designed specifically for local governments and are governed by boards of trustees made up of municipal officials. Their coverages are tailored by local government experts to address the unique risks municipalities face, from law enforcement and human resources liability to public infrastructure and workplace safety.

Risk Management Services Director Michael Pittman uniquely understands the difference between commercial coverage and intergovernmental risk pools. Before joining the League in 2018, Pittman worked for commercial insurance carriers, giving him a unique perspective on both models.

"Commercial carriers are generalists," Pittman said. "We specialize. This is all that we do. We are the experts in municipal insurance."

More Than Insurance
The pools provide far more than insurance coverage. Members receive access to an extensive network of risk management services that would often come at a significant additional cost in the commercial market.

“Each year we look to add a new coverage or a new service for our members," Pittman said. "We've been able to become the guide and light for many, if not all, of our members—not only through the insurance policy itself, but through member services, policy reviews, risk control training, risk mitigation and claims handling."

Over the decades, the trusts have continually evolved to meet changing municipal needs. Coverage has expanded alongside emerging risks. The League’s Risk Management Services have grown to include specialized police and fire training, workplace safety programs, human resources guidance, safe driving initiatives and grant opportunities that help members reduce risk before claims occur.

One of the most significant milestones in that evolution has been the creation of the League's Shield Services. What began in 2013 with the formation of a Police Chiefs Advisory Committee has grown into a program that provides specialized consulting, policy guidance and training for municipal police departments across North Carolina.

"What makes our program unique is that claims, underwriting, risk control and member services are handled in-house by League employees," Leaird said. "When a member has a question, they're talking to someone who understands municipalities—not a third-party vendor."

Whether it's our claims adjuster responding after a storm, our risk management consultants visiting a town hall, or our business services representatives answering questions
about coverage, municipalities work directly with League staff who understand the challenges of local government.

One of the defining characteristics of the trusts is that they exist solely to serve North Carolina municipalities. The focus is not on quarterly profits, but on long-term sustainability, financial stewardship and providing value to members.

According to Pittman, one of the greatest advantages of the pooling model is its ability to provide predictable costs during volatile insurance cycles.

"Many of our cities and towns operate under tight financial constraints," Pittman said. "We try our best to maintain rate stability so there's not a significant financial impact on our members while keeping our product competitive and attractively priced." 

That stability is possible because municipalities share risk. Member premiums are pooled to create a self-fund program that pays covered claims, while reinsurance provides an additional financial backstop during catastrophic events. Pittman points to Hurricane Helene as an example of how the model works: because risk is shared across hundreds of municipalities and supported by substantial reinsurance protection, even a major disaster does not jeopardize the long-term health of the pools.

Looking Ahead
As the Property & Casualty Trust celebrates 45 years and the Workers' Compensation Trust marks 40 years, the anniversaries are more than a reflection on history—they are a reminder of the power of collaboration.

The Trusts were created to provide stable, affordable insurance during a time of crisis. Forty-five years later for the Property & Casualty Trust and 40 years later for the Workers' Compensation Trust, they have become something more: a partnership built on shared responsibility, specialized expertise and a commitment to helping North Carolina's municipalities succeed.

"The members are our family, and we are their family," Pittman said.