An Overlooked Tool in Police Reform? John Rappaport Examines Impact of Police Liability Insurance

John Rappaport

There’s a largely overlooked but potentially powerful tool in police reform, according to ongoing research by University of Chicago Law School Assistant Professor John Rappaport. It is municipal liability insurance, which essentially relies on market incentives to curb behavior that could lead to claims of excessive force and other types of police misconduct.

“Liability insurance is quite common among small and mid-sized municipalities,” said Rappaport, who began studying insurance effects on police behavior a couple of years ago. “Insurers influence the content of departmental policies on things like high-speed pursuits and the use of force. They have a hand in how officers are trained, and how much training they receive. They audit police departments, and they encourage agencies to obtain accreditation. On occasion, some insurers even intervene in personnel decisions.”

Although most big cities self-insure—meaning they either set aside funds to pay damages or simply find the money when the need arises—most small and mid-sized cities use private insurers or pool money with other municipalities. The insured cities have a financial incentive to comply with demands for certain policies or better training and hiring: those that don’t can face higher premiums and deductibles—and they can even lose their coverage.

It’s an intriguing model, Rappaport said, though it isn’t perfect and there is still much to explore. There’s the ever-present question of moral hazard: might insurance coverage provide a sense of protection that actually reduces the incentive to avoid risky behavior? Many insurers combat this through deductibles, policy limits, and other features that ensure that agencies still have some “skin in the game,” but it remains a concern.

And there are limits to the industry’s effectiveness in regulating behavior. Insurance solutions are likely to help shape only certain types of police behavior, Rappaport said. His most recent paper created a matrix of police misconduct based on the likely dollar value of a claim and the length of time it takes for the claim to arise.

“Some legal injuries manifest immediately; others manifest only after a significant delay,” Rappaport wrote. “These distinctions make it unlikely that any one solution, or any single remedial regime, will work best to reduce police misconduct across the board.” Although insurers’ demands might have success in curbing “high-dollar, short-tail” claims such as the use of excessive force, they are less likely to have an impact on “low-dollar, long-tail” claims like racial profiling or even “high-dollar, long-tail” claims like those alleging a wrongful conviction.

Liability insurance may have promise as part of a comprehensive approach, said Rappaport, noting that insurance regulation tends to remove moral judgment from reform efforts, making policy change a question of risk management rather than “good versus evil.”

“It’s very different from saying, ‘You guys are bad moral actors who are constantly violating people’s fundamental rights, and you need to stop it because what you’re doing is wrong,’” Rappaport said.

To learn more, read this Research Matters Q&A on Rappaport’s police liability insurance work.