County insurance pool warns civil‑rights claims and "nuclear verdicts" threaten solvency

Grace Phillips, risk management director for the New Mexico County Self Insurance Pool, told a state Senate committee that the pool has received "over, well, over 450 Civil Rights Act claims in the last 3 and a half years," and that total dollars paid out exceed $27 million with incurred liabilities above $65 million.

Phillips said the New Mexico Civil Rights Act, which went into effect in June 2021, is a major contributor to the shift in claims the pool is handling. "We have received over, well, over 450 Civil Rights Act claims in the last 3 and a half years," she said, and added that the pool is seeing fewer federal civil‑rights claims but many more state claims.

The nut graf: County risk pools exist to provide continuity of coverage where commercial carriers withdraw. Phillips said the pool differs from private insurers because it is funded by taxpayers and focuses on long‑term availability rather than profit. She warned that sharply rising jury awards and large settlements have eroded the pool’s net position and reduced available reinsurance.

Phillips described financial indicators showing the pool’s net position fell from about $60 million in the early 2020s to below $30 million as of the most recent year‑end. To shore up finances, counties began making "capital adequacy contributions" in 2024 targeted at $14 million over three years, Phillips said. She also explained that historical reinsurance that once provided $10 million of excess coverage has been reduced: today the most any county has, including large counties, is $5 million, and some jail claims are limited to $2 million.

Senators and other committee members pressed Phillips on the effectiveness of training and prevention programs. Phillips said the pool spends heavily on loss prevention: the board invested $1.3 million in Lexipol policies, runs mandatory training (including a 120‑hour detention officer course and a 40‑hour crisis intervention course), and hosted more than 1,800 training participants last year. "We created and administer accreditation programs for sheriffs and for detention," she said.

Committee members raised the question of whether training reduces claim volume and cost. Phillips answered that frequency of some claims—particularly detention claims—has declined, but the average and potential size of claims has risen. She called this trend "social inflation" and pointed to a handful of very large state jury awards that, taken together, total in the hundreds of millions of dollars in recent years.

Phillips said the pool relies on a captive reinsurer formed in Utah, New Mexico County Re, to provide coverage above the pool’s self‑insured retention (roughly $2 million). She warned that commercial reinsurers will not underwrite state civil‑rights claims in New Mexico and that the captive is currently small. When a recent settlement required a county to produce $2 million outside of coverage limits, Phillips said the county had to pay from its general fund, a step that can force cuts or tax increases.

Several senators urged careful consideration of any statutory changes that would reduce compensation for people who have been harmed. Senator Duhigg said he was mindful of avoiding solutions that would harm the most vulnerable. Phillips suggested two statutory changes she would support: removing the Consumer Price Index escalator built into the cap and changing the law so that the cap is per occurrence rather than per claimant.

Ending: Senators said the presentation underscored pressure on county finances and the complex tradeoffs between compensating harmed residents, preserving county services, and maintaining affordable coverage. The committee did not take formal action on policy during the hearing, but members said they expect further legislative and budget conversations on liability caps, reinsurance, and training efforts.