Total Cost of Risk vs. Price of Premium
Public entities face a unique environment regarding liability; the contrast between evolving exposures and litigation trends, and the acute pressure to reduce costs and align budgets to sometimes inadequate public funding. This creates a complicated web of choices for administrators in the public sector.
Proper risk management is a crucial factor in successful governance of public entities, and the specific type of coverage that is right for your organization depends on many factors, including your type of organization, nuances of your states relevant legislation and the way that your organization interacts with the public.
But perhaps the most important factor to consider when managing your property and liability coverage is the true cost of risk as opposed to the price of the premium. Under pressure to cut costs, public entities may be drawn to pay the lowest premium possible. However, immediate savings on a premium often leads to an elevated total cost due to uncovered claims or uninsured exposures related to specialty claims. It is unlikely that any risk management program will be able to eliminate all claims against an actively operating local government entity. Therefore, it's crucial to design a comprehensive plan in order to lower the total cost of risk to the public entity.
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