Kentucky Begins Self-Insuring State Vehicles

by Devin Katayama on October 7, 2011

Kentucky expects to save around $750,000 dollars by self-insuring state vehicles.

The decision stems from Gov. Steve Beshear’s Smart Government Initiative, said Lori Flannery, secretary for the Finance and Administration Cabinet. The cabinet is responsible for looking at ways government can be more efficient and cost effective. It has made 37 recommendations since February this year. The most recent was the decision for the state to pull its contract from Travelers Insurance. Kentucky has always contracted with private insurers, said Flannery.

“The money that we would have paid for premiums that agencies submit to the Finance Cabinet is put into the pool and as that pool accumulates we will make claims out of that pool whenever there is an accident or a claim,” said Flannery.

The state has signed its contract for one year, but she expects the program to be permanent, she said.

“It’s not a trial year. We actually have a contract in place; it’s a one year contract with up to four one year renewals. If it is not successful we’ll have to able to evaluate that and we would make that decision at the time but right now our intention is for it to be something permanent going forward,” Flannery said.

Louisville management group Gab Robins is helping the state kick-start its new program. Costs of transitioning to self-insurance were built in to the expected savings, said Flannery.

On average the state reports 400 claims per year.

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