And over what I assume is a large pool of municipalities and agencies.
Not necessarily. I’ve seen the types of policies to which you’re referring.
If a sovereign has a large number of claims, these insurance companies can drop the sovereign or increase the rates. The insurance companies aren’t stupid - they look at the number of claims filed, for *what* (that’s a very important thing - things like corruption and graft run up premiums) and the credit rating of the sovereign when computing the premiums they charge.
There’s nothing like an “assigned risk” pool going on in this market. I’ll wager anything that LA’s premiums went up after the LAPD hosed down those two women in a pickup delivering papers, because it wasn’t a case of a single stupid cop - there were “at least” seven cops in on that stupidity. That’s a showing of huge failures in training and judgement - the likes of which we see in only major cities like NYC and Chicago.
Sometimes, the insurance companies settle cases to limit their exposure, too. That’s a pretty funny coin flip from what we’re talking about above. I know of one case in a rural NV county where the county sheriff got a little zealous in taking in a couple of good ol’ boys on a noise complaint. The old codgers made bail, dialed up a lawyer and filed suit in about three days’ time, saying that a noise complaint in no way merits and arrest and booking, excessive force, depravation of civil rights under color of law, etc.
The insurance company could see a big loss coming their way if they allowed this to go to a trial with a jury, so they paid the codgers off, ex-parte from the DA’s charges on the two old codgers. Codgers dropped their lawsuit, with the condition that the insurance company go to work on the county government to drop the misdemeanor charges of excessive noise, disturbing the peace, etc.
The DA, county commissioners, and sheriff were all very PO’ed that the insurance company paid a five-digit amount. The insurance company responded with a couple of their lawyers, telling the county “You were going to lose, period, end of story. We paid them off to limit our financial exposure to your actions, now we suggest you drop the criminal case...”
Case dropped. Taxpayers relieved, because the judgement would have increased taxes to pay the increased premiums or the settlement if it went to trial. Big settlements in small population counties kinda bring these financial situations up to the surface rather quickly.