State funding clears way for study of rising childcare liability costs as providers report cancelled policies

The Department of Children, Youth, and Families and the state Office of the Insurance Commissioner will support an independent study into childcare liability insurance after providers around Washington reported rising premiums and some policies becoming unavailable.

The study was funded in the 2025 budget with a $350,000 proviso to the Office of the Insurance Commissioner (OIC). OIC issued a request for proposals to hire a contractor; the office expects to select a bidder quickly and asked the contractor to deliver a report by November so legislators and state agencies can consider options in the next legislative cycle.

Why it matters: childcare providers and family homes told DCYF staff that some insurers have canceled coverage after reading inspection reports on the public childcare-check website or that policies were being quoted at premiums providers said they could not afford. Without affordable liability coverage, some providers reported they could not operate or could not meet contracting requirements.

Emily Arneson, DCYF's regulatory legal administrator, told the meeting the problem reflects a broader insurance market "hardening" that has affected other sectors and states. "The only way to reduce costs in this market is to reduce the cost of claims," Arneson said, adding that changes in state law and a rise in large, unpredictable losses have strained insurer capital and prompted pullbacks.

The OIC study will examine claims history and several policy options, including the possibility of a joint underwriting association (JUA). A JUA is a state-authorized mechanism that operates like a risk pool for high-risk lines of business and can compel private insurers to contribute to the pool if capital is depleted. OIC staff characterized a JUA as an "extreme" or "break-glass" tool because it could be viewed by insurers as an assessment on doing business in Washington.

DCYF staff said the agency is limited in what it can require or fund directly: statute and court precedent prevent the department from indemnifying or guaranteeing coverage for nonstate contractors. Arneson described stopgap measures like subsidizing premiums as addressing symptoms rather than the market drivers.

Providers at the meeting shared experiences. Sandra, a family home provider, said she shopped nationally for months before finding a policy quoted at about $4,000 a year after other companies declined or demanded prohibitive premiums. "I wasn't getting any luck until I found this one that was able to give me a quote the same day," she said.

What happens next: OIC's RFP was open at the time of the meeting and closes soon; the commissioned study is due in November, and OIC will submit findings to the legislature so lawmakers can weigh options, including the JUA concept. DCYF said it will help OIC identify providers and collect stories and data for the study.

Provider guidance: DCYF staff recommended that providers keep documentation of any disputes they file in the WA Compass provider portal and that they share insurance-impact stories with DCYF contacts so OIC's contractor can include them in the study.

Funding and limits: DCYF officials stressed the study will outline options and trade-offs for lawmakers; it will not itself create insurance products or change insurer behavior. Any state-backed program or subsidy would require separate legislative approval and funding.

The OIC contact and the RFP link were placed in the meeting chat; DCYF also offered a contact email for providers who want to share details of insurance cancellations or pricing problems.

Ending: Officials said they will return to provider groups with study timelines and to solicit examples of insurance actions that have affected operations, and they urged providers to retain inspection and dispute records to help the study reflect real-world effects.