By: Roundtable Staff
Public Entity Partners is the newest member of the Tennessee Business Roundtable, and its president and chief encouragement officer, Michael G. Fann, recently sat down with the Roundtable staff to learn more about him, his firm and his views on the state’s current business climate.
Fann has served as president and CEO of the Franklin-based not-for-profit group for nearly the past three years. Prior to his leadership role in Public Entity Partners, he worked as the firm’s director of loss control for 34 and a half years.
Public Entity Partners’ origin story
Fann explained that Public Entity Partners was created from a 1978 General Assembly act that gave governmental entities the ability to pool their resources and form their own self-insurance groups.
“Some might call it a co-op or certainly an entity that is owned by our members. So, [we serve] the cities and towns of Tennessee, about 310 of those, and then another 185-190 other municipal agencies such as housing authorities, a small number of school boards, a few human resource agencies, really any local governmental entity that has representation on their governing board from municipalities, we're authorized to work with,” Fann said. “And so, in 1979, initially the cities of Athens and Hendersonville signed an interlocal agreement that brought us into being, and we grew largely out of that.”
Fann said the state legislature in the late 1970s gave municipal, county and other forms of local government the ability to create a more stable insurance option for themselves.
“As we have seen, the financial markets can be quite dramatic and cyclical and sometimes crazy,” Fann said. “Well, the insurance industry is one of those financial markets. So, that cycle tends to hit and waver between what is known as a hard and soft market. In a hard market, that means prices are going up, capital availability to insure things is going down, and one of the first markets historically that commercial insurance companies would leave was local government.
“Basically, Athens and Hendersonville initially and now almost 500 entities in the state of Tennessee have said, ‘Well, instead of relying totally on the commercial insurance market, we're going to form our own insurance organization as authorized by the General Assembly and form this group.’ Our board of directors is made up of a group of mayors and city managers from across the state, and they set our policy, and then our job here at Public Entity Partners is to carry out that policy for the benefit of our cities and ultimately our taxpayers.”
Fann explained Public Entity Partners in one sentence.
“Our vision statement, I think, captures it pretty well. It says, ‘Our vision is making a difference in the lives of Tennessee public entity employees and the citizens they serve.’ So ultimately, we're here to serve the taxpayers,” he said.
Trends in risk management and insurance
Fann was quick to point out that Public Entity Partners is not an insurance company, rather it’s more focused on managing risk.
“If a city has a program that they want to do and want to insure, then we do everything we can to try to get to yes, if that makes sense,” he said. “In other words, we want to help them do that if that's what their local board has decided to do, but you have to manage that risk. And so, we have a team of risk control consultants that help cities put in risk management programs to make sure we're taking care of our people.”
Fann highlighted government employees, property and the public as a whole as three key general areas of focus for risk management.
“In terms of trends, I'd say the big three, I'll just kind of give you the big three from our perspective for public entities, obviously law enforcement liability and the development of a segment of our culture that really is somewhat anti-law enforcement, anti-law and order. And that has made insuring police departments and police officers expensive and costly,” he said. “And when you're dealing with, whether it's law enforcement liability risk or even employment practices liability, those areas get kind of out of state jurisdiction and put you more into a federal civil rights arena.
“So, law enforcement is going to be the first. Auto liability is the second. And that's not only auto liability, but also auto physical damage, damage to our vehicles that we have to repair. And as we have seen over the last three years, especially supply chain issues, just getting replacement vehicles in, getting replacement parts to get vehicles that we can repair back out on the street has been delayed and become very costly.
“That discussion leads me into the third area, and that is property coverage in general, because of construction inflation, where all of our insurance, whether it's professional or personal, has some impact from an international perspective. Any of the coastal storms, hurricanes – obviously we have our own convective storms and wind events even here in Tennessee. But as those things have occurred – ice storms, floods – those things have occurred during a time when it's hard to even repair a building to get construction materials. And if you can get them, it's very expensive. It's much more expensive than it was four years ago.”
Fann gave examples of a natural disaster and an event likely thought to be completely irrelevant that both significantly affected his firm recently.
“Many in Tennessee will remember the Waverly flood from just a short period of time ago,” Fann said. “We insure their property, and it's very expensive. And as a result of that, to make sure they have adequate coverage, we provide appraisals every four years for our members that have property coverage with us, which means their appraisals are going up. And then therefore their premiums are going up.
“Even the Russia-Ukraine war has impacted supply chain issues here and caused some raw materials that the Ukraine tended to provide around the world. They're not available in any quantity for those things.
Tennessee’s business climate today, the future
Fann said he believes the business climate in general in Tennessee is quite favorable. He sees local government as a partner to help businesses develop.
“When I was approached by a number of the Roundtable members, and in the discussions we've had, what appealed to me is the dedication to the workforce and the education of our workforce in Tennessee,” he said. “That is definitely of deep interest to me. And I think it should be deep interest to every community.
“We see cities and towns as partners in helping continue to Tennessee to have a positive business climate. But you know, there are obviously all kinds of threats. You know, we spend a lot of time trying to guess what the next Black Swan event is going to be. And it's that we rarely get it right, because that's why it's a Black Swan event when it hits.
Fann explained the recent changes to Tennessee’s workers compensation laws were favorable toward drawing business to the state and making it more competitive.
“We have always – as it relates to our city employees – been committed that if they're legitimately injured on the job, we want to get them the best medical care that they can have. We just want to make sure that it's a legitimate, compensable claim,” he said. “I think the legislature has done a great job – the state of Tennessee, the workers comp bureau – of redefining some of those things to make Tennessee more competitive while we're taking care of our injured workers.
“Whether it's legislative issues, judicial issues, changes in some of the statutory requirements that not only local government has to comply with, but all business has to comply with, we look at those things and we try to develop resources for our membership, so that they can train their people to avoid liability. You know, the more you can avoid liability and reduce your property losses, then the more competitive you are. In other words, you're not spending taxpayer money on things that may have been preventable.
Roundtable policy areas
Fann said of the four Roundtable major policy focus areas – competitiveness, health, education and workforce – two interested him the most.
“I guess, since we're directly involved in in the workers comp end, I would probably have to rank health pretty, pretty high,” he said. “Also, the workforce in general and keeping them both healthy and educated, so that we remain competitive, is very important as we compare the work the workforce here in Tennessee to other states, particularly those that that are around us.”
Turns out, Fann’s a superfan
In discussing his personal life, Fann admitted he’s a big sports fan but a self-proclaimed baseball “lunatic.”
“I've been to a Major League Baseball game in all 31 major league cities, counting Montreal, which doesn't even have a team anymore,” he said. “I'm also a Titans’ season ticket guy, so I like football as well. I play some golf, typically not very well, but I do enjoy the game. I love music.”
He admitted he’s a people person and loves to share stories.
“I just love travel and basically love people. I always enjoy the social side of things and talking to people, meeting new people and learning new things,” he said.
Fann is also an accomplished consultant, speaker and presenter on public risk management and risk control best practices. He is a two-time past president and founding member of the Tennessee Public Risk Management Association.
In addition, he is an associate member, contributor and trainer with the Tennessee Association of Chiefs of Police and an adjunct faculty instructor with the Tennessee Law Enforcement Training Academy.