MCIT warns of rising reinsurance costs, volatile cyber claims; urges counties to use training and risk services

Garrett Clabaugh, executive director of the Minnesota Counties Intergovernmental Trust (MCIT), told the Washington County Board on July 8 that rising reinsurance costs, higher insured property values and volatile cyber claims are increasing pressure on county insurance budgets and rate setting.

Clabaugh described MCIT as a public risk pool created in 1979. "Our total insured value across all of our members is now estimated at about $9,200,000,000," he said. He told the board reinsurance costs for property and liability have climbed since 2021 and that cyber claims are particularly volatile year to year.

MCIT staff highlighted several items relevant to county finance and risk management. Replacement and repair costs for buildings and infrastructure have risen, driving insured‑value increases. Reinsurance market pricing rose, in part because of large recent property losses and higher construction and labor costs. Clabaugh said dividends paid to members have been reduced in recent years as the trust conserves resources against unpredictable losses; the trust issued about $3.5 million in dividends in 2024 and approved a smaller workers’ compensation dividend of $1.5 million for 2025.

Clabaugh also discussed program design choices that affect member costs. The board recently moved the workers’ compensation retention limit higher — to $1,000,000 — and MCIT staff said they continue to monitor retention and reinsurance placements. On cyber coverage, Clabaugh said the trust has seen large swings in claim size and number, with ransomware the most active area. He said MCIT’s contracting with national experts and negotiation strategy can influence attacker demands in some cases; but he warned there are tradeoffs to increasing limits because higher limits can make an organization a more attractive ransomware target.

Board members asked about emerging liabilities, including medical‑practice exposures tied to social work and substance‑use treatment. Clabaugh said medical‑practice liability generally remains excluded from MCIT coverage but that the board has asked staff to study whether some social‑work practice liabilities warrant coverage under defined conditions and that research on that topic is underway.

Clabaugh urged counties to use MCIT’s free or low‑cost training and risk‑management resources. He named MCIT field staff and the Minnesota Safety Council as available resources and encouraged county staff to engage MCIT before adopting new programs or contracts to evaluate risk and coverage needs.

MCIT will present actuarial recommendations for 2026 rates at an upcoming board meeting, and Clabaugh said the trust plans further board discussions on cyber risk in September.