Creation of the TNRMT Pool

The commercial insurance industry has experienced "soft" and "hard" market cycles since its beginning. A cycle starts with a period during which the industry enjoys underwriting gains, resulting in a period of intense competition between carriers, lower premiums and coverage availability. The lowering of premiums and underwriting standards lead to increased losses. As losses increase, the insurance market tightens up with price increases. The increased premiums, underwriting standards, and availability of coverage aid in the recovery of the market and underwriting profits for the carriers, starting the next cycle. These cycles may be caused by a change in insurance laws passed by the legislature, competitive objectives of various companies, terrorism, oil prices, etc. Insurance consumers have no choice but to endure the unpredictability of the insurance market.

With the enactment of the Tennessee Governmental Tort Liability Act, in 1973, the availability of liability coverage, in the traditional insurance market for governmental entities and school systems, was greatly decreased. A stable insurance market was needed for these entities. One of the most important provisions of the Act granted total immunity to governmental entities with exceptions for certain negligent acts. The Act, also, allows local governments to join together to form a pool for their insurance needs.

Insurance Pool

The TNRMT pool was created in 1987 to meet the various insurance needs of TN school systems. TNRMT expanded to offer coverage to other governmental entities in 2001. While the pool acts much the same as an insurance carrier by collecting premiums, providing coverage, providing loss control, and paying claims, it is not an insurance company. In fact, the pool itself is a governmental entity whose existence is based on the welfare of its members, not profits.

The pool allows school systems and governmental entities to come together, as one, sharing risk and losses. In return, the members profit from customized coverage, rates and services based on their own unique exposures, avoidance of underwriting cycles experienced with the traditional carriers and relationships with other members. The stability and effectiveness of a pool is determined by the long-term participation of its members.

Governance and Administration

The Risk Management Trust is governed by a nine member Board of Trustees. Each trustee represents one of the nine districts in the state and is elected by all member boards in that district. Trustee terms are for three years. Trustee terms are staggered so that one trustee is elected from each of the three grand divisions of the state each year.

The Trustees employ a Trust Administrator who is the chief executive officer of the Trust.

The Trust Administrator employs a Director of Finance and Administration and is responsible for the claims and loss control operations of the Trust including supervision of the claims and loss control staff. The Trustees and staff take great pride in providing the highest quality handling of claims and a unique program of loss control which is among the best in the nation. The Trust claims staff has developed a reputation for courteous, prompt and fair handling of every claim while the loss control staff has built an impressive record of decreasing injuries to employees and reducing the loss of property.

The Director of Finance and Administration is responsible for the financial management of trust funds as well as administrative records and other business functions of the Trust. The Trust has experienced steady growth in member equity which is the heart of the financial stability of the Trust.