Government Risk‐Financing Pools: An Assessment of Current Practices

Abstract

Since 1970, state and local governments have experienced two “insurance crises;” the first occurred in the mid‐ to late‐1970s and the second in the mid‐80s. The result has been a twenty‐year period of time in which state and local governments have been able to afford insurance only intermittently‐if insurance has been available at all. In response to this problem, local governments, government associations, and state governments created alternative risk‐finartcing mechanisms to provide coverage for themselves. These mechanisms, commonly referred to as self‐insurance pools, enable local governments within a state to pool together risks and resources to finance the costs of fortuitous losses. In 1988, the first comprehensive examination of pooling practices was undertaken through a nationwide survey. This article reports the findings from the first follow‐up study since the 1988 survey and further extends knowledge of pooling and pooling practices. Copyright © 1995, Wiley Blackwell. All rights reserved