10 Urb. St. & Loc. L. Newsl. 1 (1986-1987)

handle is hein.journals/stlolane25 and id is 1 raw text is: 

Section of Urban, State and Local Government Law     Vol. 10, No. I, Fall 1986


URBAN, STATE


d OCAL LAW


           N E W S L E T                                                  ER



                            Risk Management H:

             Legislative Relief for Municipalities
                           By Stephen Rubin and Stephen ahapp-

Editor's note: Risk Management is a hot topic in local government law circles in light of ever-expanding
liability of municipalities and their officers. This is the second in a series of articles which identify and discuss
distinct elements of risk management. Your ideas for topics and authors will be much appreciated.


  During the past two years, sweeping changes in tort
liability principles and insurance underwriting prac-
tices have converged to create an explosion of tort
litigation at a time of crisis in liability insurance
availability and affordability. Municipalities were
among the first to experience the effects of these
changes and continue to grapple with issues that in
some cases are unique to public institutions. Local
governments must provide services, such as police and
fire protection, which are high-risk undertakings, must
treat all citizens equally, and cannot escape liability
judgments by the expedient of dissolution or bank-
ruptcy.
  These problems are well-known. Local govern-
ments are finding themselves sued more often, for more
damages, under more theories of liability, without an
adequate or affordable means to insure against cata-
strophic claims or even to pay the high fees and other
transaction costs of the tort system. No longer bound
by traditional conventions of fault and causation,
plaintiffs find the municipality's proverbial deep
pocket an inducement to add local government to the
roster of defendants if public facilities or services can
in any way be implicated. The expanded availability
of punitive damages for
non-economic injury and                 In   this
the doctrine of joint and     Scholar's Column .....
several liability may then    Message from the Cha
combine to expose the gov-    Labyrinthine Ways...
ernmental entity to the full
weight of judgment, even      Taxation of Bonds?..
when its contribution to      Annual Meeting High
the plaintiff's injury is     Section News .........
slight.                       ABA Dues Waiver ...
   Few public entities have


escaped the impact of this formula. In some instances,
enormous jury verdicts or settlements threaten to over-
whelm governmental finances. Moreover, state and
local governments run a double gauntlet of state tort
liability and federal civil rights liability, increasing fur-
ther their exposure to costly litigation and large dam-
age awards.
   The liability insurance industry, weakened by its
 own past underwriting practices, has been of little help.
 Municipalities and other political entities report that
 it continues to be difficult to obtain liability insurance
 at an affordable price and, in some instances, at any
 price. Local governments complain that although lia-
 bility insurance is once again becoming available, it
 costs significantly more for substantially less coverage.
   The magnitude of the problem confronting local
 government is disclosed in Municipal Liability Con-
 cerns: A 145 City Survey, released by the United States
 Conference of Mayors in July, 1986. Service cutbacks,
 contracting out services, and budgetary problems are
 the most frequently reported consequences of increased
 municipal liability exposure. Further service reduc-
 tions are anticipated by a majority of the Survey cities
 if the current situation does not improve. Several cities
                         reported that tax increases
issue                    and the resignation of pub-
.2                       lic officials have also been
irman........    3       by-products of the in-
                        creased cost or unavailabil-
                        ity of liability insurance.
................... 7      Eighteen cities in the
lights ........ 11       Conference  of Mayors
.................. 16    Survey report that they are
                21       bare and are operating
                           (continued on page 17)


Vol. 10, No. 1, Fall 1986


Section of Urban, State and Local Government Law

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