Put simply, a public risk pool is a group of public agencies that form a partnership to manage their shared risk management goals and responsibilities. Of course, there are variations in how pools are formed, structured, and operated, but the essence of public pooling is self-governed partnership.
In California, the Government Code allows public agencies to form risk pools under the Joint Exercise of Powers Act. This is why pools are also known as Joint Powers Authorities (JPA), although risk pools are a unique type of JPA.
Public entities created risk pools beginning in the early 1970s after most commercial insurers abandoned the public entity market. At that time, and again in the mid-1980s, commercial insurers responded to changing risks facing local governments by limiting coverage or withdrawing from the market entirely. Pools emerged as the stabilizing force the public sector needed.
Today, risk pools are a source of both stability and innovation, helping public entities to address continuing challenges in risk management, even as the insurance crisis has calmed. The collaborative and self-governing nature of pooling is embodied in the Swedish proverb: The best place to find a helping hand is often at the end of your own arm.
There are an estimated 450 risk pools serving municipalities, school districts, special districts and other public agencies in the United States and Canada. Around one-third of these pools are in California. The vast majority of California public agencies participate in one or more risk pools.