Presenter warns private child-placing agencies face an insurance crisis; recommends contract and funding changes

Jill May, executive director of the Washington Association for Children and Families, told the Torch Study Committee that private child-placing agencies and qualified residential treatment programs (QRTPs) face a growing insurance crisis that threatens their ability to operate.

May summarized a December insurance market study and said a shrinking number of insurers are willing to underwrite community-based child placement and group-home providers; existing carriers increasingly limit prior-claims lookbacks to five to ten years. She said agencies are experiencing dramatic cost increases — ‘‘one of our agencies' insurance has gone up 166% in the last couple of years’’ — and that some insurers have withdrawn from the market entirely.

May highlighted three policy levers the association favors: removing contract identification language that insurers interpret as expanding agency liability when the state is the principal actor; increasing the DCYF reimbursement rate for liability insurance embedded in provider contracts (many agencies receive only a small portion of premium costs); and studying a settlement fund to cover uninsured exposure. She said the Insurance Commission recommended a JUA feasibility study but found a JUA unlikely to be viable unless other policy changes reduced exposure first.

Committee members asked for more claims-level data. Elizabeth Hanley asked whether year-by-year claim counts and claim-type breakdowns are available; May said that the Commission report contains summary data but that granular historic claims datasets are limited or not accessible to her association. Tina Eck clarified that DCYF provides reimbursements directly to agencies under contract; May confirmed reimbursements are paid directly to providers.

Julie Watts (DCYF) described how the department’s rate model accounts for insurance and said DCYF is open to clarifying indemnification language in its contracts to reduce insurer misinterpretation. May said the indemnification wording used across states is often similar and that carriers are interpreting those clauses conservatively, increasing litigation risk and legal costs for providers.

May offered to share the Insurance Commission market-study slides and a national report tracking parallel challenges in other states. She said some states have tried funding pools (California created a $32 million pool which depleted quickly) and other states are pursuing contract rewrites and joint-underwriting approaches.

The committee did not adopt any new policy at the meeting but asked presenters to share source reports and data for follow-up analysis.