Insurance Risk Managementfor K-12 Schools

Jerry D. Loghry MS, ARM, CSP, CPP

What is Risk?

The possibility for loss!

Frequency x Severity

Accepting certain Risk can also result in opportunity / gain / profit.

Risk Management

The process of identifying, assessing, controlling, eliminating, and minimizing unforeseen events that may affect resources or profits.

Risk Management Technique - Insurance

Major insurance coverages for schools.

−Property

−Inland Marine

−General Liability

−Commercial Auto

−Workers’ Compensation

−Linebacker (D&O)

−Crime

−Data Compromise

−Equipment Breakdown

−Violent Acts

−Health

−Disability

−Dental

−Vision

Loss Control

Understanding where losses occur is a key to preventing and mitigating the human and financial costs.

Loss Review

12,000 claims per year / 70 million dollars8 claims per school per year / 47 thousand dollars

60% Workers’ Compensation22% Commercial Auto10% Liability8% Property

Data= July 2011 - July 2014

2012 2013 2014$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

$90,000,000

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Claims Trend - All Lines (policy year)

Total Incurred # Claims

Tota

l Inc

urre

d

# Cl

aim

s

Loss Review

Severity ($) of claims is different

43%

35%

11%

10%

Total Incurred By Line

WORK COMPPROPERTYLIABILITYAUTOBOND

Workers’ Compensation - $90M

FALL-SLIP

PHYS ATTACKED

OVEREXERTION

CUT/PUNCTURE

STRUCK BY

FALL-ELEVATED

OTHER NOC

STRUCK AGNST

CAUGHT IN

TEMPERATURE

CUMUL TRAUMA

- 1,000 2,000 3,000 4,000 5,000 6,000 7,000

Work Comp - Claims Frequency

Workers’ Compensation - $90M

FALL-SLIP

OVEREXERTION

FALL-ELEVATED

PHYS ATTACKED

STRUCK BY

OTHER NOC

MOTOR VEHICLE

CUMUL TRAUMA

CAUGHT IN

CUT/PUNCTURE

STRUCK AGNST

$0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000

Work Comp - Total Incurred

Workers’ Compensation - $90M

53%37%

11%

Frequency

Zero Dollar ClaimsMedical Only ClaimsIndemnity Claims

12%

88%

Severity

Medical Only ClaimsIndemnity Claims

41%59%

Indemnity Claims

Indemnity costMedical cost

Property - $74M

HAIL

WIND

FIRE

WATER DMG

LIGHTNING

BOILER/MACH

SPRINKLER

FREEZING

CRIME

PROP MISC

SEWER BCKUP

PERS PROP

VANDALISM

VEHICLE

$0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000

Property - Total Incurred

Liability - $24M

EMPLOYMENT

SLIP/FALL

WRONG ACTS

UMB AUTO

ATTACKED

SPORT EVENT

STRUCK BY

GL MISC

PLAYGROUND

VEH ACC

PROP DAMAGE

CAUGHT IN

$0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000

Liability - Total Incurred

Liability (Employment)- $6M

Employ Practices-Wrongful Term/ Employment

Employ Practices-Discrimination

Employ Practices-All Other

Employ Practices-Libel/Slander/Defamation

Employ Practices-Invasion of Privacy

Employ Practices-Harassment

Employ Practices-Wrongful Hiring/Refusal

Employ Practices-Wrongful Demotion/Promotion

Dmg -Employment Issues

$0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000

Employment Claims - Total Incurred

Liability (Wrongful Acts)- $4M

Pub/Sch Wrongful Acts-Educational Method

Pub/Sch Wrongful Acts-Breach of Contract

Pub/Sch Wrongful Acts-Civil Rights

Pub/Sch Wrongful Acts-All Other

Pub/Sch Wrongful Acts-Harassment

Pub/Sch Wrongful Acts-Abuse/Molestation

Pub/Sch Wrongful Acts-Zoning and Permits

Linebacker-Pub/Sch Off Wrong Acts-Open Mtg La

Pub/Sch Wrongful Acts-Invasion of Privacy

$0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000

Wrong Acts Claims - Total Incurred

Commercial Auto - $22M

INTERSECTN

OFF ROAD

REAR-END

HAIL

AUTO MISC

ANIMAL

BACKING

PEDESTRIAN

FIXED OBJ

WINDSHIELD

SIDESWIPE

CROSSED CL

$0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000

Auto - Total Incurred

Prevention / Mitigation

Workers’ Compensation –

• Slip and Fall Assessments− Sidewalk / Parking lot maintenance− Winter weather procedures− Floor cleaning− Matting− Footwear− Elevations & Ladders

• Ergonomic Assessments− Food service− Custodial− Bus maintenance− Office workstations

Prevention / Mitigation

Property –

• Roof Maintenance− Gutters and scuppers− Planned replacements− Flashing− Timely repairs

• Fire Prevention− Automated sprinklers− Flammable storage− Fire doors− Housekeeping− Electrical overload

Prevention / MitigationLiability –

• Slip and Fall Assessments• Accounts receivable & money handling• Employment Best Practices

− Hiring practices• Background and reference checks• MVR checks• Interviewing

− Harassment prevention program− Abuse prevention program− Employment law− Job descriptions− Pre & Post job offer testing

• Functional capacity• Drug screening• Psychological

− Employee Handbook• Policies and procedures

Prevention / Mitigation

Commercial Auto –

• Driver selection− Proper licenses− MVR checks− Drug & alcohol testing

• Training− Backing & parking− Defensive driving

• Vehicle maintenance• Rules and regulations

− Distracted driving− Fatigue− Weather

• Accident reporting & investigation