And the winners are.............. Reducing Your Risk Exposure.
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Transcript of And the winners are.............. Reducing Your Risk Exposure.
And the winners are..............
Reducing Your Risk Exposure
Reducing Your Risk Exposure
4th place
3rd place
2nd place
1ST PLACE
Valley Schools2011 Annual Report
forPeoria Unified School
District
PURPOSE OF RISK MANAGEMENT
o Educates all about Risk Managemento Risk Management is much more than simply
purchasing insurance coverage’s; it’s about:• Risk Identification• Loss Control• Loss Prevention• Safety Education/Training
o It can’t be done by just a few people, it must be done by the entire District to be successful; all District personnel must be involved to prevent and/or reduce losses and exposures.
o Numbers over a period of time “Tell a Story”
HISTORY OF VALLEY SCHOOLS
o Valley Schools Insurance Trust (VSIT) was formed in 1987, pursuant to A.R.S. 11-952, 11-952.01 and 15-382 by Deer Valley Unified School District, Paradise Valley Unified School District and the Peoria Unified School District. This trust provides property and liability coverage’s. In 1995 the same three school districts formed Valley Schools Workers’ Compensation Pool (VSWCP). This trust provides State mandated workers’ compensation coverage.
o Since its inception Trust members have seen their reserves grow each and every year. This has allowed the members to increase their self-retention levels and keep excess premiums very stable. When comparing our rates/costs against other school districts, our cost per student, is between two to four times lower.
RISK MANAGEMENT TODAY
o Risk has always been with us, but the demands on and concerns of today’s schools risk are very different than they were 10 years ago. Back then, risk management was centered on concerns such as fire drills, bad weather and whether 3rd party visitors might slip and fall while on the school premises. Today, given our litigious society, the economy and other factors, risks are much more significant and all of those involved must be aware of these issues and address them.
o Today you must assume that any injury on your premises will result in a claim against your district
CLAIMS MANAGEMENT
o VSIT does all investigations (with District assistance); this reduces or in some claims/incidents eliminates legal expenses)
o VSIT uses legal counsel only when necessary; i.e. when actual lawsuit filed (again this reduces or eliminates legal expenses)
o VSIT negotiates directly with the claimant or their legal counsel; again only using legal counsel when absolutely necessary (again reducing or eliminating your legal expenses)
o VSIT selects applicable legal counsel when necessary; VSIT negotiates attorney fees; to control your legal expenses
o Represents District at all mediations, arbitrations, trials, depositions; frees up District Administration from doing this
o VSIT represents the District in all juvenile courts hearings
LOSS FORECASTING
VSIT , on a bi-annual basis provides the actuarial company all loss data, which is used to determine District contribution (funding) levels; such data as:
Loss runs (Property, AL/GL/EPLI, WC)Student countsEmployee countsPayroll dataProperty valuationsNumber of vehiclesNumber of student participating in sportsClaims data on specified claims (i.e. in WC all
claims over $25,000)Etc.
INSURANCE MARKET OVERVIEW
o Property rates on average were down 6.9% (2nd quarter of 2010); increase same time
frame in 2009 most risk purchased same limits more than 90% of insured’s maintained deductible/retention levels no major changes in property coverage’s (policies)
o Casualty Insured’s with a good loss history, benign risk profile and limited exposure
changes will continue to experience flat to single digit rate decreases in most casualty lines.
average rate decreases remained in low single digits insured’s maintaining limits purchased with a slight increase in those
purchasing higher limits more than 90% of insured’s maintained deductible/retention levels excess casualty capacity remains at record levels
o Workers Compensation Market availability is becoming more restrictive, and workers compensation
medical costs continue to increase significantly. severity (cost per claim) continues to rise engaging all employees (those injured and their supervisors) to reduce costs
is a critical piece in controlling the upward trend
DEDUCTIBLES
WC $750,000 (per claim)
AL/GL $1,000,000 (per claim)
& EPLI
Property $100,000 (per claim)
PUSD LOSS RUN
Property General/EPLI Auto Total
# Paid $Reser $ Recv $ Incur $ # Paid $ Reser $ Recv $ Incur $ # Paid $ Reser $ Recv $ Incur $ # Paid $ Reser $ Recv $ Incur $
PEORIA UNIFIED SCHOOL DISTRICT199
5 0 $0 $0 $0 $0 0 $0 $0 $0 $0 0 $0 $0 $0 $0 0 $0 $0 $0 $0199
6 72$105,73
7 $0 $0$105,73
7 10$196,95
4 $0 $0$196,95
4 30 $33,200 $0 $0 $33,200 112$335,89
1 $0 $0$335,89
1199
7 92$218,41
7 $0 $0$218,41
7 5 $64,017 $0 $193 $63,824 74 $75,735 $0 $0 $75,735 171$358,16
9 $0 $193$357,97
6199
8 123$229,40
0 $0 $0$229,40
0 10$250,35
1 $0 $7,231$243,12
0 47 $74,621 $0 $0 $74,621 180$554,37
2 $0 $7,231$547,14
1199
9 79$142,48
9 $0 $0$142,48
9 14$207,25
3 $0 $0$207,25
3 61 $86,372 $0 $8,428 $77,944 154$436,11
4 $0 $8,428$427,68
6200
0 109$419,84
4 $0 $0$419,84
4 7$161,79
2 $0 $9,056$152,73
6 67$113,78
4 $0 $0$113,78
4 183$695,42
0 $0 $9,056$686,36
4200
1 138$688,70
8 $0 $83,169$605,53
9 21$424,55
9 $0$61,12
4$363,43
5 82 $77,779 $0 $1,332 $76,447 241$1,191,0
46 $0$145,62
5$1,045,4
21200
2 122$399,11
0 $0 $63,030$336,08
0 13 $22,475 $0 $0 $22,475 73$101,56
8 $0 $7,490 $94,078 208$523,15
3 $0 $70,520$452,63
3200
3 51$311,31
0 $0 $48,230$263,08
0 8$160,44
8 $0 $0$160,44
8 15$219,16
5 $0$23,24
4$195,92
1 74$690,92
3 $0 $71,474$619,44
9200
4 5$110,24
9 $0 $15,659 $94,590 8 $18,668 $0 $0 $18,668 10 $24,836 $0 $1,333 $23,503 23$153,75
3 $0 $16,992$136,76
1200
5 6$233,38
1 $0$158,13
3 $75,248 15 $37,957 $0 $0 $37,957 17 $63,442 $0$10,28
8 $53,154 38$334,78
0 $0$168,42
1$166,35
9200
6 10$131,31
7 $0 $14,243$117,07
4 20$320,87
0 $0 $3,970$316,90
0 15 $24,812 $0 $9,136 $15,676 45$476,99
9 $0 $27,349$449,65
0200
7 7$138,90
1 $0 $0$138,90
1 17 $94,703 $0 $0 $94,703 15 $48,588 $0$18,16
1 $30,428 39$282,19
2 $0 $18,161$264,03
2200
8 10$130,32
3 $0 $1,631$128,69
2 23$148,55
3 $48,280 $575$196,25
8 19$114,87
2 $575 $9,926$105,52
1 52$393,74
8 $48,855 $12,132$430,47
1200
9 17$308,27
0 $0 $52,262$256,00
7 30 $71,584 $32,500 $0$104,08
4 19$158,85
3 $0 $6,526$152,32
7 66$538,70
7 $32,500 $58,788$512,41
8201
0 15$285,75
0 $0$147,48
8$138,26
2 19$1,258,
035$411,59
6 $0$1,669,
631 16 $53,198 $0$10,48
3 $42,714 50$1,596,9
83$411,59
6$157,97
1$1,850,6
07201
1 9 $88,653 $5,000 $1,568 $92,085 14 $1,148 $65,175 $0 $66,323 13 $31,889 $5,221 $6,219 $30,891 36$121,69
0 $75,396 $7,787$189,29
9
Ttl 896$4,765,
678 $5,000$585,41
3$2,416,
210234
$3,439,367
$557,551
$82,149
$3,914,769 573
$1,302,714 $5,796
$112,566
$1,195,944
1703
$9,507,759
$568,347
$780,128
$7,526,923
Avg 56$297,85
5 $313 $36,588$151,01
3 15$214,96
0 $34,847 $5,134$244,67
3 36 $81,420 $362 $7,035 $74,747 106$594,23
5 $35,522 $48,758$470,43
3
Cost of Risk
2010-11 2010-11 2009-10 2009-10 2008-09 2008-09 2007-08 2007-08 2006-07 2006-07
Risk Costsof Risk Costs Risk Costs
of Risk Costs
Risk Costs
of Risk Costs
Risk Costs
of Risk Costs
Risk Costs
of Risk Costs
Property Premiums $316,777 20.71% $317,192 8.12% $276,466 14.23% $271,815 13.58% $258,849 14.98%
Liability Premiums $178,770 11.69% $161,006 4.12% $161,006 8.29% $159,364 7.96% $173,979 10.07%
Excess Liability $191,596 12.53% $162,955 4.17% $142,720 7.35% $148,092 7.40% $153,080 8.86%
Boiler & Machinery $0 0.00% $10,553 0.27% $10,553 0.54% $10,377 0.52% $8,491 0.49%
Crime Premiums $6,022 0.39% $6,056 0.15% $6,182 0.32% $6,169 0.31% $6,193 0.36%
WC Premiums $33,475 2.19% $31,546 0.81% $27,918 1.44% $26,823 1.34% $22,309 1.29%
Broker Fee $23,333 1.53% $23,333 0.60% $16,666 0.86% $13,333 0.67% $13,333 0.77%
Self-Insured Property $92,085 6.02% $138,262 3.54% $256,007 13.18% $128,692 6.43% $138,901 8.04%
Self-Insured Liability $66,323 4.34%$1,669,63
1 42.73% $104,084 5.36% $196,258 9.80% $94,703 5.48%
Self-Insured Auto $30,891 2.02% $42,714 1.09% $152,327 7.84% $105,521 5.27% $30,428 1.76%
Pay Only's (property) $103,051 6.74% $104,739 2.68% $62,349 3.21% $195,483 9.77% $84,234 4.88%Prop/Gl Claims Administration $0 0.00% $0 0.00% $0 0.00% $0 0.00% $0 0.00%WC Claims Administration $0 0.00% $0 0.00% $0 0.00% $13,195 0.66% $38,246 2.21%
Workers Compensation $487,290 31.86%$1,239,37
3 31.72% $726,065 37.38% $726,526 36.30% $704,936 40.80%
Total $1,529,613 $ 3,907,360
$1,942,343
$2,001,648
$1,727,682 Cost of Risk = Excess Insurance Premiums + Self Insured Losses + Claim
Expenses + Broker Fees
PREVENTABLE LOSSES
GATE CLAIMS
COMPUTER THEFT
WATER LOSSES
CONTRACTUAL RISK TRANSFER
Indemnification and Hold Harmless Agreements To indemnify is to “make safe from loss or harm... to reimburse or compensate for loss... to make whole.” In contracts, this normally means that one party will bear financial responsibility for losses that fall under the agreement. Seldom will you encounter the obligation to indemnify specified in a contract without the companion term “hold harmless.” A hold harmless agreement dovetails neatly with the commitment to indemnify, and obliges one party to take responsibility for responding to and defending a claim on behalf of the other. An agreement wherein another party agrees to indemnify and hold you harmless provides broad protection, as the indemnitor generally assumes responsibility for defense and court costs of every kind, expert witness and other allocated expenses, premiums on appeal bonds and all judgments and settlements. In the event you receive a claim or demand that you believe is the responsibility of the other party, you should tender it to that entity’s attention without delay.
Example: PVUSD v. Weltman ($75,000 savings)
OCTOBER 5, 2010 HAIL DAMAGE INSPECTIONS
VALLEY SCHOOLS TOTAL SITES INSPECTED
138VALLEY SCHOOLS TOTAL SITES
WITH HAIL DAMAGE92
PUSD SITES INSPECTED43
PUSD SITES WITH HAIL DAMAGE
29
OCTOBER 5, 2010 HAIL DAMAGE
VALLEY SCHOOLS TOTAL LOSS AS OF JUNE 30, 2011$4,076,110.21
PUSD PROPERTY DAMAGE$1,823,131.43
PUSD AUTO DAMAGE$196,931.12
PUSD’S PORTION OF LOSS 49.56%
LIMITING EXPOSUREo PE, Athletics & Activitieso Preserve Evidenceo Teacher-Student Sporting Events o Student Supervisiono Visitors & Volunteerso Field Tripso Preventative Maintenanceo Eliminate left hand turns in bus routeso Playground Maintenanceo End of the School Year Events
WORKERS’ COMPENSATION
o Workers’ Compensation is “mandated” coverage insuring employees for bodily injury by accident caused by conditions of employment (work related injuries)
o WC is “not” a benefit; many organizations incorrectly portray WC as a benefit
Coverage’s:Limits: Deductible: $750,000Statutory$1M per accident$1M per employee
2010-11 IMPORTANT POINTS
o PUSD had their lowest numbers ever! Why is this so important?
o The medical cost per claim is rising significantlyo Actuarial studies as previously mentioned use # of claims to
determine “future expected costs” frequency breeds severityo PUSD had the lowest number of indemnity claims ever (11); this is
critical as average cost per indemnity claim is at $21,291 v. $1,192 for a medical only claim (getting injured employees light duty immediately pays off)
o Average cost of claims is increasing (as expected with healthcare costs rising); medical only claim in 2010-11 was $2,085, up 41.8% from 2009-10; up 132% over past 5 years!
o WC premiums increased by 21.65%, again while total numbers decreased significantly, our past history of high numbers is still haunting us with carriers
o KEY POINT - total WC $$ payments were $2,531,699; only $894,783 was for actual 2010-11 claims; had there been “0” claims, VSWCP still would have paid $1,636,916!
A SIDE NOTE : As of September 30, 2011 VSWCP has paid $562,635.50, only $38,447.83 is for the 2011/12 school year.
Frequency Of Claims
Severity of
Claims
Average
Experience
Premium Cost
KEEP YOUR NUMBERS LOW
Experience Modification Factor The Key to Your Premium Cost
RETURN TO WORK
Machinery
BENEFITS
Maintain Productivity
Red
uce
Cla
im C
ost
Recover FasterR
educe
Lit
igat
ion
REDUCTION STRATEGIES
EDUCATIONTRAINING
SAFETY PROGRAM
RECOGNITION MEASURE PERFORMANCE
PAY ACCORDING TO ICA SCHEDULE
Enforce
NUMBER OF CLAIMS
2006/07
PUSD VSWCP
2007/08
PUSD VSWCP
2008/09
PUSD
VSWCP
2009/10 PUSD VSWCP 2010/11 PUSD VSWCP
July 7 17 July 7 14 July 7 18 July 8 13 July 6 18
Aug 22 58 Aug 22 58 Aug 19 52 Aug 30 69 Aug 11 44
Sept 28 56 Sept 17 53 Sept 16 64 Sept 17 55 Sept 19 60
Oct 21 50 Oct 23 66 Oct 35 68 Oct 19 48 Oct 8 34
Nov 18 36 Nov 32 64 Nov 8 45 Nov 5 45 Nov 17 37
Dec 13 34 Dec 15 35 Dec 15 37 Dec 12 25 Dec 8 23
Jan 21 60 Jan 20 44 Jan 22 49 Jan 17 46 Jan 19 49
Feb 20 45 Feb 11 42 Feb 12 44 Feb 16 54 Feb 11 35
March 21 47 March 21 58 March 15 39 March 21 65 March 12 34
April 15 51 April 23 50 April 16 48 April 36 76 April 14 34
May 27 63 May 13 36 May 20 49 May 17 42 May 6 37
June 7 16 June 10 29 June 8 22 June 8 34 June 7 15
YTD 220 533 YTD 214 549 YTD 193 535 YTD 206 572 YTD 138 420
DENIED CLAIMS
School Year # of Claims Denied
# of Claims Protested
2009/10 12 2
2010/11 38 2
2011/12 13 1
VSWCP PREMIUM VS. SCF PREMIUM
PUSD
2011 2010 2009
Rate Rate Rate
Class: Code: Payroll:per
$100 Premium Class: Code: Payroll:per
$100 Premium Class: Code: Payroll:per
$100 Premium
Prof/Teacher 8868 $131,209,470 $0.50 $656,047.35 Prof/Teacher 8868 $152,491,455 $0.50 $762,457.28 Prof/Teacher 8868 $148,436,987 $0.46 $682,810.14
Schools/all others 9101 $17,853,494 $4.18 $746,276.05
Schools/all others 9101 $19,500,860 $4.10 $799,535.26
Schools/all others 9101 $19,650,780 $3.78 $742,799.48
Totals: $1,402,323.40 Totals: $1,561,992.54 Totals: $1,425,609.62
Employer Liability 0.01 $14,023.23 Employer Liability 0.01 $15,619.93 Employer Liability 0.01 $14,256.10
Add $1,416,346.63 Add $1,577,612.46 Add $1,439,865.72
Exp Mod 1.33 $1,883,741.02 Exp Mod 1.29 $2,035,120.07 Exp Mod 1.41 $2,030,210.67
Deviated Premium 0.9 $1,695,366.92 Deviated Premium 0.9 $1,831,608.07 Deviated Premium 0.9 $1,827,189.60
Discounted premium 0.9096 $1,542,105.75 Discounted premium 0.9096 $1,666,030.70 Discounted premium 0.9096 $1,662,011.66
Total SCF Premium $1,542,105.75 Total SCF Premium $1,666,030.70 Total SCF Premium $1,662,011.66
VSWCP Contribution $1,000,000.00VSWCP Contribution $1,000,000.00VSWCP Contribution $800,000.00Savings $542,105.75 Savings $666,030.70 Savings $862,011.66
SAFETY PRINCIPALS
PRINCIPLE 1: AN UNSAFE ACT, AN UNSAFE CONDITION, AND AN ACCIDENT ARE ALL SYMPTOMS OF SOMETHING WRONG IN THE MANAGEMENT SYSTEM
PRINCIPLE 2 : WE CAN PREDICT THAT CERTAIN SETS OF CIRCUMSTANCES WILL
PRODUCE SEVERE INJURIES PRINCIPLE 3: SAFETY SHOULD BE MANAGED LIKE ANY OTHER BUSINESS FUNCTION PRINCIPLE 4 : THE FUNCTION OF SAFETY IS TO LOCATE AND DEFINE THE OPERATION
ERRORS THAT ALLOW ACCIDENTS TO OCCUR PRINCIPLE 5: THE CAUSES OF UNSAFE BEHAVIOR CAN BE IDENTIFIED AND CLASSIFIED PRINCIPAL 6: IN MOST CASES, UNSAFE BEHAVIOR IS NORMAL HUMAN BEHAVIOR; IT IS
THE RESULT OF NORMAL PEOPLE REACTING TO THEIR ENVIRONMENT PRINCIPLE 7: THE SAFETY SYSTEM SHOULD FIT THE CULTURE OF THE ORGANIZATION PRINCIPLE 8 : THERE IS NO ONE RIGHT WAY TO ACHIEVE SAFETY IN AN ORGANIZATION
COST REDUCTION & THE BOTTOM LINE
How to Reduce Your WC Costs/Expenses Have a tough/firm WC policy (in employee handbook; not in benefits section) Implement a Return to Work (RTW) program Pre-employment and Post Accident drug testing (at very least, post-accident testing) Make managers and employees accountable for safety (part of job performance) Post employment offer physicals or ability tests (make sure hired employees can actually
perform the job duties) Review job descriptions and duties; as employees age can they still perform the duties Hire the right people (i.e. drug testing, they go where they know there is no testing) Enforce a dress code (many slip and fall incidents are simply due to employees not wearing
proper footwear; also a good example for students and portrays a more professional image). Develop safety committees to review all injuries
WC Bottom Line Supervisors should play an important role in workers’ compensation. Whether it’s: a) being the
1st contact when an accident occurs, b) accident investigation, c) constant contact with the injured employee, overseeing return to work programs, managing work schedules to adjust for loss of injured employees, etc.
Five key points supervisors should make with employees: The district pays for the cost of workers’ compensation The district values its employees and is committed to the returning injured employees to work as
quickly as safely possible Workers’ compensation is income protection for the short term Employees have responsibility District will pursue fraud
CONGRATULATIONS!
ADMIN. CHOLLA ANNEXOASIS ELEMENTARY
SCHOOLWAREHOUSE
YOUR SITE WAS ACCIDENT FREE FOR THE 2010/11 SCHOOL YEAR!
SITES WITH NO INJURIES