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In 1984 a number of factors converged to create the insurance equivalent of the perfect storm. Insurance capacity drastically diminished while insurance premiums skyrocketed. In California, runaway joint and several liability laws further exacerbated the situation and it became virtually impossible for public entity risks to purchase primary liability insurance at all.
When this municipal insurance crisis began to develop, and no conventional solutions were available, Metro/Risk chairman Mike Enfield assembled leaders from the legal and investment banking communities to pioneer a technology to capitalize Municipal Pools and Joint Powers Authorities (JPA’s). Using municipal bonds and certificates of participation to raise a surplus fund, these pools and JPA’s became de facto insurance companies able to provide primary liability insurance for their members and, by virtue of their surplus funds, qualify for excess reinsurance in the global market. Cities, counties, and school districts in California, Montana and Wisconsin still rely on this technology.
In California, Mike Enfield was the only member of the insurance industry to actively lobby for Proposition 51, a proposition designed to address the joint and several liability problem faced by municipalities in that state. He publicly debated with members of the Trial Lawyers Association (an organization opposed to this proposition for obvious reasons) and was the only person quoted in the voter handbook. Proposition 51 passed by a landslide, carrying a majority of the vote in every one of California's 52 counties, further easing the insurance problems faced by public entities in California.
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