© Copyright Arthur J. Gallagher & Co Arthur J. Gallagher Risk Management Services, Inc. National Public Entity & Scholastic Division State of Kansas Property/Casualty Pooling Presentation Presented by: Byron Given, Robert McWeeney Charlie Herr

2 Why Arthur J. Gallagher? Expertise in pools, associations, and risk purchasing groups – Gallagher administers over 25% of the nations pooled programs Staff dedicated entirely to Scholastic Insurance Conduct training and speaking sessions for various Local, State, National and International Associations

3 AJG Public Entity Team Experience AJG’s Public Sector Practice serves more than 3,500 school districts, including 40% of the largest 100 school districts in the nation Gallagher is associated with 135+ public entity pools throughout the country (estimated 11,000 individual entities) Our Team Operates school pools in IL, MN, VT, IN, IA, PA, SD, WY, MI, OH Local Service… …Global Resources

4

5 Sample Claim - Loss Fund Payment Structure *Based on data from current scholastic pools of similar demographics

6 $1,000 Maintenance Deductible SIR $35,000 Per Occurrence Property $1,000,000 Per Occurrence Excess Property $400,000,000 Per Occ. $10,000,000 Earthquake Sublimit Per Occ./Agg. $10,000,000 Flood Sublimit Per Occ./Agg. LOSS FUND $385,000 Property, Business Income, Extra Expense, Mobile Equipment, Auto PD. -$35,000 $350,000 Claim #1 – Bus Runs into School - $3,500,000 claim Total Cost to School District: $1,000 Aggregate Stop Loss Protection Excess of the Loss Fund

7 Benefits of Protected Self-Insurance (Pool) Retain a portion of the predictable losses Transfer a portion of the catastrophic risk Broaden your insurance program coverage Control your costs in the hard market Budget a known maximum cost Input in the claims process Provide long-term stability

8 Spectrum of Insurance Conventional Insurance Program Safety Dividend Program Large Deductible Retro-Plan Secured Self-Insurance (w/ Stop Loss Protection) Specific Excess Insurance ReinsuranceCaptive or RRG Pure Self-Insurance Less ControlGreater Control Insurance Company Controls Program Insured Controls Program KS Pool X Less Insurance Company Profits 

9 Under the Property/Casualty Program the school districts on a fixed costs basis will see a savings of $423,034, or a 35% reduction over expiring, while improving coverages and limits. Sample All District Pricing Example (Iowa School Pool; 7 members) – Property/Casualty

10 Sample Small District Pricing – Property/Casualty

11 Sample Large District Pricing– Property/Casualty

12 KERMP District Savings – Property/Casualty DistrictEXPECT COST SAVE/EXPRMAX COST SAVE/EXPR District %-36.04% District %-27.92% District %-27.38% District %-49.53% District %-32.01% District %-22.57% District %-20.28% District %-17.74% District %-15.47% District %-42.92% Average %-25.85%

13 What the First Dollars Markets are going to Say (EMC/WSI)… “Too many meetings and too much of a time commitment.” “The pool has the ability to be assessed.” “The price you see is NOT the price you will pay!” “These pools make use of the E&S Markets. The carriers used are not AM Best Rated.” “To get the program started the insurance companies will undercut premiums in the first year. The carriers will jack up the premiums/rates in year two of the program.” “If you decide to leave the Pool, you have to take your Claims with you.”

14 July 2015: Creation of design study for Western Kansas Scholastic Program September - November 2015: Pooling design study is displayed for School Districts throughout Western Kansas and applications are administered to prospective School Districts September - November 2015: Phone calls to discuss the applications and information gathering process October 30, 2015: All applications are due to Gallagher for charter member prospective school districts December 31, 2015: Quotations from Gallagher’s market partners expected January, 2016: Proposal Meetings with prospective districts February 2016: Prospective members present the program option to your respective school boards March 4, 2016: Kansas Department of Insurance Presentation March 4, 2016: Kansas Attorney General and Kansas State Department of Education Applications due June 1, 2016: Approval Decision Deadline for various State entities due per KS State Statue July 1, 2016 – Program Inception Date! ▪ Please see the packet of information on how to obtain the required information that we will need to quote the insurance. Kansas Pooling Sample Timeline