Risk Management MASBO Institute Presented By: Tom Gallagher & Amy Diedrich 1

Risk Management: Financing of Risk Numerous methods available Terminology of insurance 2

Today’s Outline:  Property Coverage  Liability Coverage  Errors and Omission (School Leaders)  Workers’ Compensation 3

Property Coverage: Blanket Basis Statement Of Values ACV vs. Replacement Cost Coinsurance vs. Agreed Amount  80/90/100  Associated rates & credits 4

5 Property Statement of Values ISD #Sample SOV July 1, 2010 Loc.Bldg.AddressDescription City LimitsInterests Year BuiltConst. Total Area Prot. ClassPrivate Prot.BuildingContentsPIO Bus. Inc. Extra ExpenseTotal 11Premises 1High SchoolInsideOwner1968 & 1994 Masonry Non- comb. 94,9276Sprinklers, Fire & Burglar Alarms, Smoke Detectors 17,940,1581,791,00023,8421,000,00020,755,000 12Premises 1Storage Bldg. & Greenhouse InsideOwner1995Wood Frame 21006Fire Ext.71,00259, ,982 13Premises 1Concession Stand & Press Box InsideOwner1996Wood Frame 11526Fire Ext.62,6831,836064,519 14Premises 1Athletic Field, Fencing, Lighting, Bleachers, & Tennis Courts InsideOwner1995, 1971, 1971, 1998, 1990 Non- Comb. 6none00468, Premises 1Dugouts #1 & #2 InsideOwner1995Concrete Block 4806none14, Premises 1Storage ShedInsideOwner2006Post Frame 21606none17,4216,00023,421 21Premises 2Elementary School InsideOwner1964 & 1994 Masonry Non - Comb. 82,7316Sprinklers, Fire & Burglar Alarms, Smoke Detectors 12,742,0001,573,000014,315,000 22Premises 2Bus GarageInsideOwner1996Frame91506Fire Ext.309,4456, ,388 23Premises 2Outdoor Eqpt. & Poles InsideOwner1964Non- Comb. 6none00283, Premises 2Dugouts #1 & #2 InsideOwner1964Frame2406none5, Premises 2Tower On Bus Garage InsideOwnerNon- Comb. 64, Premises 2Storage Building InsideOwner1998Frame12006Fire Ext.26,89917,805044,704 31Premises 3Bus GarageInsideOwner2006Post Frame 37806none341,53416, ,449 Total31,535,6523,473,479775,3761,000,00036,784,507

Property Coverage Continued: Deductible  Credits for larger deductible  How much saved vs. risk accepted Equipment Breakdown Business Income (BI) / Extra Expense (EE) Flood Earthquake Builders Risk 6

Property Coverage Continued: Total Cost of Risk  Premium  Deductible or Retention  Legal Cost  Staff Cost/Time to Handle/Address Issues 7

Inland Marine Coverage: Musical Instruments and Band Uniforms Audio Visual Fiber Optic Misc Equipment Floater EDP - Equipment 8

Crime Coverage:  Employee Dishonesty – (Faithful Performance)  Signatures – 1 Or 2  Board members – Elected or Appointed  Credit Cards  Casinos  Money and Securities  Bank deposits daily  Limit inside/outside premises  Game receipts 9

Crime Coverage Continued: Additional Coverage  Forgery & Alteration  Computer Fraud  Funds Transfer 10

General Liability Coverage: Limits of Liability  Statue Limitations & Caps Employee Benefits Sexual Misconduct Innocent Party Defense Violent Event Med pay excludes students “Cyber” Issues 11

Automobile Coverage:  Driver background checks Procedures in place No 15 passenger vans UM / UIM Bus fleets 12

Umbrella Coverage: Excess over other liability coverage’s Statute Inexpensive form of protection True “Umbrella” or “Following Form” SIR $

Errors and Omissions (E&O) Coverage:  Non-Monetary Relief Defense  EEOC or IEP  No deductible  Claims made vs. Occurrence  Time limits for filing  Claim reporting on time  Attorney fees paid after reported  Defense in addition to judgment 14

Employment Practice Liability: 15  Sexual Harassment  Wrongful Termination  Discrimination

Workers’ Compensation & Certified Managed Care Expense or Benefit ?!?!?! 16

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Major Cost!!! 50% or more of total insurance costs in most districts Controllable expense  Return to Work programs  Loss Control (Proactive/Preventative)  Training (OSHA compliance; ie. Right to know or Bloodborne pathogens) 20

Experience Modifier: Based on three year history Incurred vs. Expected (Allowable) Split Point (large vs. small losses) Now $15,000 Drives premium (up or down)  1.00 = $100,000 .80 = $ 80,000  1.20 = $120,000 Controllable  Risk Management  Claims Management Medical Only Claims vs. Indemnity payments 21

MWCIA Website: 22

Impact on Premium: 23

Hidden Costs: Cost of Claim = Medical + Indemnity + Expenses What about:  Supervisors time to handle and/or investigate claim  Replacing injured employee (even if temporary substitute)  Training of replacement  Additional benefits for new employee (if new hire)  Damage to property or equipment at time of accident  Attitude (morale) of staff 24

Return to Work: Drives Exp. Mod. Up or Down Light duty positions Within Dr. restrictions Improves employee morale Helps prevent fraud Culture change/Employees Responsibilities 25

Occupational Clinics and Doctors: Contracted clinics that understand W.C. claims and Return to Work programs Have job descriptions for all positions Will return employee to work with restrictions; not give two weeks off Reduces the amount of indemnity payments to employee 26

Certified Managed Care: Ability to authorize or restrict care Ability to direct employees to specific providers and/or clinics 27

Volunteer Accident Coverage: Separate from WC Policy Prevent impact on mod Coverage Excess 28

What to know about renewals: Agent  3 – 4 months ahead  Know schools  Experience  Trust and knowledge 29

Current changes in industry: 30  In coverages  Advise and provide options  Review property values (appraisal)

Current or changes in industry continued : 31  Enrollments  Employee counts (type, numbers, payroll).  Auto coverage  Loss history (5 years)

QUESTIONS THANK YOU !!! 32