With public entities making major cutbacks, insurers are growing weary of the increasing risks found in state prisons

Commercial InsuranceThe effects of 2008’s economic recession are still being felt today, even as the economy shows modest signs of recovery. The lingering impact of economic turmoil is now being felt by public entities that are making major cutbacks to personnel and services. The insurance industry is keeping a keen eye on these government-backed entities as they are becoming increasingly exposed to risk. State prisons, in particular, have insurers worried due to the rampant overcrowding seen in such facilities throughout the U.S.

The Professional Liability and Underwriting Society, a risk analysis firm comprised of over 1,700 insurance professionals, has raised concerned regarding the growing risk associated with insuring state prisons. During a recent conference, risk modelers suggested that insurance companies may soon stop writing policies to cover state prisons for fear of losing millions in the event of a lawsuit or medical disaster associated with overpopulation.

With state governments still struggling to recover from 2008’s recession, legislators have been making sharp cutbacks to the funding that prisons receive in the hopes of lightening the financial burden associated with recovery. These cutbacks have translated into reductions in personnel as well as services provided to inmates including health care. Due to the overpopulation seen in many prisons throughout the nation, illness can spread quickly through a prison population. This problem is compounded by the volatile and violent environment of prisons, which itself presents several insurance risks.

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