An Alabama city, long plagued with budget shortfalls, charges of corruption and a dwindling tax base, has lost its liability insurance coverage amid an ongoing financial and leadership crisis.
Local and state news sites reported that the Alabama Municipal Insurance Corp. did not renew coverage for Prichard, a city of about 18,000 next to Mobile in the southern end of the state. Policies expired Aug. 1.
The insurer, a Montgomery-based mutual insurance company owned by member cities, cited too many claims and a lack of response from city officials to inquiries from adjusters, WALA news reported.
No bids for coverage were received from other insurance carriers, news sites reported. The drop in coverage affects first responders and most city workers and services.
Prichard, which has sought bankruptcy protection twice in recent years, is embroiled in a lawsuit between city council members and the mayor. The council has alleged that the mayor has failed to provide clear financial solvency information and has abused her power by contracting for services without council approval, AL.com has noted.
The mayor, Carletta Davis, has countered that she has been denied accurate information because of software and other problems.
The council last week voted to recall all city vehicles, except emergency response vehicles, that have been driven by city employees.
Multiple establishments, including some favorite watering holes and concert arenas across the state, have chosen the latter route and have closed down permanently.
An investment manager-turned-insurance executive and a group of like-minded people in the hospitality industry believe they’ve finally come up with at least a partial solution: A captive insurance company that can provide coverage at one-third to one-half of the price that traditional insurance companies have offered for the state-mandated coverage.
“State lawmakers didn’t want to do anything, so we took things into our own hands,” said Christopher Smith, executive director of the South Carolina Bar & Tavern Association.
The association is led in part by Andrew Reina, a former New Yorker and now a Charleston wealth manager who decided to launch Ragnar Hospitality Insurance two years ago. He believes the captive approach, authorized by 2025 state legislation, can fill the gap and provide affordable liability insurance by doing something most insurance carriers don’t—intense, hands-on vetting of establishments, partly through surprise inspections and secret-shopper visits to prospective clients.