In exchange for coverage, insurers can demand that police departments implement new policies and training, and dismiss problem officers.
The problems with the police force were not just troubling—they were existential. In August 2013, the city’s insurer, the California Joint Powers Insurance Authority, had threatened to revoke Irwindale’s liability insurance unless City Hall and the police department took substantive steps to tackle internal corruption, the likes of which had led to nearly $2 million in settlements paid out over a five-year period.
Loss of insurance would have been the death knell for the local police force: In recent years, cities in Illinois, Pennsylvania, Ohio, Tennessee, Louisiana, and elsewhere in California have had to disband their police departments after losing coverage. A big claim—like the $2.75 million settlement later awarded to the victim in the “explorer scout” case—could bankrupt a municipality with a small budget and tax base, like Irwindale. The city has only 1,400 people.
While much attention has been paid to the issue of police misconduct —with 14 cities pursuing consent decrees with the Department of Justice—what is less well known is how liability insurers can put a private-sector spin on reform, by demanding structural changes in the police departments that they cover. In April, a paper by the University of Chicago law professor John Rappaport detailed the effects these companies have had on police forces across America.