SDPAA Property Coverage And the Benefits of Risk Pooling

For thirty-one years the South Dakota Public Assurance Alliance (SDPAA) has consistently provided its Members with a broad range of coverages at affordable and stable rates.

One of the distinct advantages of being a Member of a risk-sharing pool of local governments is that 428 Members can collectively purchase more coverage at more affordable rates than any one Member could on its own. For liability and property coverages, Members collectively provide their membership with coverage up to a certain amount, then volume-purchase additional coverage called reinsurance to provide the remaining coverage. Reinsurance rates are influenced by the loss history of our Members and by other marketplace factors.

For liability coverage, Members have enjoyed stable rates for many years despite increasing premium rates for liability reinsurance across the country. SDPAA Members have had a relatively low loss history for liability claims thanks in part to our Members’ diligence in providing essential governmental services to their communities in a safe and productive manner that has mostly avoided the large losses that have occurred elsewhere. Members have wisely utilized the services provided as part of their membership and followed the recommendations received from those services, such as Loss Control surveys and Employment Practices Hotline calls.

For property coverage, Members have also enjoyed stable rates for many years, despite significant increases for property reinsurance across the country. The average premium for property reinsurance increased 20% nationally in the last year, following several years of increases due in large part to increased losses for floods and hurricanes. In South Dakota, we have experienced more frequent and severe hail and wind storms the last five years. Our own increased storm activity, when combined with other catastrophic losses affecting the national marketplace, affects the premium price the SDPAA pays for property reinsurance, which in turn affects the contribution rates that Members will pay for property coverage.

The SDPAA Board of Directors (Board) is made up of Member representatives and acts in best interests of the entire membership. Other public entity pools and private insurance companies across the country have been raising their rates for property coverage for several years. The SDPAA has been able to maintain stable property coverage rates during the same time frame. However, our recent increase in hail and wind storms has resulted in the SDPAA being no longer able to purchase property reinsurance at the same low rates.

Any increase in contribution rates is implemented by the Board only after considerable efforts are made to secure the most affordable coverage possible. As fellow public officials, the Board uniquely appreciates the importance of providing stable, affordable rates for Members. The Board seeks to maintain consistent and affordable rates in all its lines of coverage. Overall, the SDPAA Members contribution rates for 2019 remained stable. However, the contribution rates for all of the SDPAA’s available coverages saw an overall or composite rate increase of 2.25%.

As you are considering coverage for your public entity, consider the unique benefits and services that come only from SDPAA membership and are not available from any private insurer. SDPAA Members enjoy free Loss Control Surveys where certified experts conduct risk surveys to identify and suggest measures that help prevent issues for possible claims now or in the future. Members enjoy access to policy and procedure samples specifically tailored for use by Public Entity Members. Member employees can enroll in thousands of hours of training opportunities each year and also have numerous options for online training on-demand at their convenience. Members can contact the SDPAA Employment Practices Hotline that provides free expert legal advice on employment matters. The SDPAA is also launching an expanded hotline called the Government Practices Hotline that will provide expert legal advice on any matters related to governmental functions.

The SDPAA staff is comprised of public employees who share your public service mission. We look forward to working with you to continue providing broad coverage and great services at stable, competitive rates. Looking to become a Member so you can enjoy access to the wide variety of services and benefits? Please call the SDPAA at 800-658-3633 Option 2, or visit us online at

Dave Pfeifle, SDPAA Executive Director