Advisen

Reducing the risk of police misconduct: How can insurance help?

Advisen data show excessive force losses to be the highest costs for police

By Erin Ayers, Advisen

As protests over police brutality have continued in the United States and beyond, they have been accompanied by calls to either reform or dismantle the police system, as well as support for requirements for police officers to carry individual professional liability insurance.

In the city of Minneapolis, where the May 25 death of George Floyd sparked international protests over excessive force and racial injustice at the hands of law enforcement, community advocacy groups issued a report with over 40 recommendations for reforming the police force. These include a call for individual officer liability insurance.

“Under existing conditions, departments are incentivized to avoid disciplining officers because doing so is an admission of wrongdoing that could potentially increase the value of lawsuits over officer conduct. Officer conduct can cost taxpayers millions of dollars, yet the officer faces no consequences,” said the groups. The Minneapolis City Council also voted unanimously to disband the police department and form a community-led public safety program. Other cities have announced similar initiatives – the police unions of San Francisco, San Jose, and Los Angeles unveiled reforms to root racist individuals out of the profession. San Francisco also announced that police would no longer respond to calls over non-criminal disputes, reports on homeless people, and school discipline issues.

In recent weeks, broader attention has been paid to the ways in which insurers can impel good behavior on the part of police officers by making the poorer risks uninsurable, in the same way that a particularly risky driver would be motivated to improve their record or a doctor with multiple malpractice claims could not practice.

In a Boston Globe editorial last week, Northeastern University law professor Deborah Ramirez advocated for mandatory liability coverage, noting that even with multi-million-dollar settlements, individual police officers don’t pay the financial price.

Currently, police officers have qualified immunity – they cannot be held personally liable for constitutional violations committed in the course of their work unless they violate clearly established precedents that they reasonably should have known. The immunity was intended to shield law enforcement officials from frivolous lawsuits.

The U.S. Supreme Court on June 15 opted not to take up a series of cases challenging qualified immunity, despite support from Justice Clarence Thomas to do so. Now, Congress is considering the Ending Qualified Immunity Act, co-sponsored by U.S. Reps. Ayanna Pressley (D-MA) and Justin Amash (L-MI). The bill states, “It shall not be a defense or immunity to any action brought under this section that the defendant was acting in good faith, or that the defendant believed, reasonably or otherwise, that his or her conduct was lawful at the time when it was committed.”

However, without mandatory liability insurance, according to Ramirez’s article, ending qualified immunity would be “meaningless.” Taxpayers already bear the brunt of settlements and judgments stemming from municipal liability, she explained.

Impelling change with the use of insurance is not a new concept, not even aimed at police forces. A 2016 study from University of Chicago law professor John Rappaport looked in-depth at the success of loss prevention programs, education, and risk-based underwriting at preventing police misconduct. Insurers could stand in as “surrogate regulators,” he hypothesized, because “their preferences substantially align with the public’s: less misconduct is generally a good thing.”

Most cities and towns either self-insure, buy private liability insurance, participate in governmental risk pools, or opt for multiple risk transfer solutions. Most larger cities self-insure, while smaller cities and towns rely on pools that, in Rappaport’s research, are less focused on loss prevention.

“Many sophisticated pools are actually self-insured cooperatives even though, in operation, they look much like commercial insurers.) Some self-insured municipalities, however, engage in little risk management and finance liability obligations on a pay-as-you-go basis,” Rappaport said.

Other public entities use private consultants to conduct risk reviews, usually retired law enforcement or administrators. “These consultants help bridge the cultural gap that separates insurers from police; they understand risk management but speak police vernacular,” he said in the study. Some resources from insurers show promise, according to the research, including virtual reality simulators that help officers develop better judgment in high-risk scenarios. Other training materials provide advice for managing on-the-job stress and reducing implicit racial bias. Insurers report positive responses to these incentive programs, according to the report.

Rappaport found no clear conclusion on whether carrying liability insurance definitively reduces the risk of police misconduct – some police departments view insurers as “bumblebees in the garden of law enforcement best practices.”

While police officials care about premiums rising, both for financial reasons and for reputational reasons – Rappaport noted that officials prefer “being seen as doing things ‘the right way’” – the research didn’t confirm that insurance would actually reduce misconduct instead of just reducing claims. He also questioned whether “good for risk management” and “good for society” converge enough to make a difference.

“If an insurer refuses to cover or renew a municipality because its police agency is a ‘bad risk’ — leaving the municipality bare — and the agency’s officers continue to commit misconduct, the insurance company has decreased its own liability but has not reduced social loss,” wrote Rappaport. “Or, as the point is sometimes put, there can be a gap between ‘liability prevention’ (what the insurer wants) and ‘loss prevention’ (what society wants).”

By the data

It’s also unclear whether the insurance industry would support calls for mandated liability insurance for officers. Advisen reached out to several industry groups and insurers but did not hear back.

A review of cases from Advisen’s loss database revealed that excessive force complaints represent the highest percentage of police losses at 20%, exceeding wage and hour complaints at 17%, civil rights violations at 16%, and malicious data breaches at 15% (Figure 1).

Excessive force cases are also far more costly losses than other types of complaints, at $700 million in losses for 450 complaints (Figure 2). And false arrest/false imprisonment cases occur less frequently in our database (9% of the overall total), they carry high price tags at $210 million for the 210 cases, second only to excessive force complaints.

Geographically, excessive force losses tend to occur in larger and more populous states. (Figure 3) In one case in the Advisen database, a federal jury awarded a man $44.7 million, finding that a Chicago police officer with a long history of complaints and settlements had shot him in the head while drunk. The case is being appealed – the city argues that it cannot be held responsible for off-duty behavior of officers, even when using a service weapon. However, the plaintiffs argued that the lax standards of the Chicago PD “emboldened” the officer. News reports indicate the city of Chicago paid $524 million over the last decade to settle lawsuits against police officers.

In another case, the Los Angeles City Council paid $15 million to settle a lawsuit after a police officer paralyzed a teen playing with a toy gun in a park. The teen had originally been awarded $24 million by a jury.

Editor Erin Ayers can be reached at eayers@advisen.com. Data journalist Rebecca Gainsburg contributed to this report.