Kentucky State Treasurer implements new insurance premium guidelines for public properties

House Bill 524, introduced in the Kentucky State Legislature on February 21, 2025, aims to reform the state’s approach to property and casualty insurance for public buildings and properties. This legislation seeks to address the financial management of insurance premiums and the associated risks faced by state agencies.

At the heart of House Bill 524 is a provision that mandates the State Treasurer to deduct insurance premiums from funds allocated to agencies responsible for the care and maintenance of public properties. The deducted amounts will be credited to a newly established Commonwealth's property and casualty insurance fund. This fund is designed to streamline the insurance process and ensure that adequate resources are available for managing risks associated with state-owned properties.

One of the key features of the bill is its stipulation regarding premium charges on high-value risks. For the next five years, no premiums will be charged on risks valued over $10 million unless the Office of the Controller has secured reinsurance to limit the fund's liability to that amount. After June 30, 2030, this threshold will drop to $1 million, reflecting a significant shift in how the state manages its insurance liabilities.

The bill has sparked discussions among lawmakers and stakeholders, particularly regarding its potential impact on state finances and risk management strategies. Supporters argue that the bill will provide greater financial stability and predictability for state agencies, while critics express concerns about the long-term sustainability of the insurance fund and the implications of reduced premium charges on high-value risks.

Economically, the bill could lead to cost savings for state agencies, allowing them to allocate more resources toward public services rather than insurance premiums. However, the shift in liability management raises questions about the adequacy of coverage for high-value properties, which could have significant implications in the event of a disaster.

As House Bill 524 moves through the legislative process, its outcomes will be closely monitored by community members and public officials alike. The bill represents a critical step in modernizing Kentucky's approach to public property insurance, with the potential to reshape how the state manages risk and finances in the coming years.