County insurance pool warns civil‑rights claims and "nuclear verdicts" have strained reserves

Grace Phillips, risk management director for the New Mexico County Self Insurance Pool, told the Senate Judiciary Committee on Friday that a sharp rise in civil‑rights claims and very large jury awards have materially strained the pool's finances and reduced available coverage for counties.

Phillips said the New Mexico Civil Rights Act, effective June 2021, has produced a large number of state civil‑rights claims. "We have received over, well, over 450 Civil Rights Act claims in the last 3 and a half years," Phillips said. "The total that's been paid has been over $27,000,000. Incurred is over $65,000,000." She told the committee the pool's net position has fallen from roughly $60 million in the early 2020s to below $30 million as of December.

The pool, a nonprofit self‑insurance arrangement that covers county property, auto, workers' compensation and law‑enforcement liability, was created when commercial carriers left parts of the market. Phillips said counties cannot opt out of coverage and that the pool differs from private carriers because it carries no profit line and spends more on loss prevention. "We invest substantially in loss prevention," she said, citing training and an investment of $1,300,000 in Lexipol to standardize law enforcement policies.

Why it matters: Counties rely on the pool to pay claims for routine events and catastrophic law‑enforcement exposures. Phillips said the combination of higher claim values and a shrinking reinsurance market has reduced the pool's ability to provide the same limits it once did.

Key figures and coverage changes Phillips described include: over 450 state civil‑rights claims vs. fewer than 200 federal civil‑rights claims in the same period; paid losses of about $27.2 million and incurred exposures over $65 million; a targeted three‑year capital adequacy contribution of $14 million from members; and reduced reinsurance limits that once were $10 million but now are commonly $5 million (some counties have $4 million; some jail claims have $2 million maximum).

Phillips told senators the market for commercial reinsurance "has really dissolved" for state civil‑rights claims and that the pool has formed a small captive reinsurer, New Mexico County Re, to buy reinsurance capacity. She said the decline in federal filings and the increase in state filings means fewer dispositive dismissals in state court, where she said judges have less staff capacity to resolve dispositive motions than federal courts.

On mitigation and training, Phillips said the pool runs mandatory and voluntary education programs, including a "100‑to‑120 hour mandatory" detention training curriculum and a 40‑hour crisis intervention course offered at no cost; she said last year the pool hosted about 1,800 participants for various trainings. She said prevention efforts have reduced claim frequency in detention but not claim severity: "we're actually experiencing something of a decline in the number of claims we're getting particularly out of our detention facilities, but the cost of those claims is skyrocketing."

Committee members asked about potential policy responses. Phillips urged the Legislature to revisit the automatic CPI escalator in the civil‑rights cap (House Bill 4) and to consider changing the law's per‑claimant multiplier. "When the bill was when, House Bill 4 was passed, which is the New Mexico Civil Rights Act, the legislature set a cap of $2,000,000 per occurrence per claimant. But the legislature put in an automatic escalator," Phillips told the committee. She said the escalator has increased the cap to about $2.4 million today and recommended eliminating the automatic escalator and removing the per‑claimant multiplication so coverage would be per occurrence, not per claimant.

Members raised equity and policy questions about shifting limits. Several senators cautioned against measures that would reduce compensation to people whose rights were violated. Others asked whether counties can pursue recoupment from employees and whether settlements or defense strategies affect costs. Phillips said the statutory recoupment possibilities have not proven effective in practice.

Phillips concluded by restating that counties face difficult tradeoffs: "How much should be allowed? If you want everybody to get to have their own cap, well, maybe the cap should be a lot smaller. Is what is worth, in this case, $2,000,000 or the escalating amount?"

Ending: The committee used the presentation to begin a broader conversation about the pool's solvency, state law limits and training investments. Phillips said she was available for follow‑up and offered to provide more detailed breakdowns of claims types and payouts.