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And the winners are.............. Reducing Your Risk Exposure.

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Presentation on theme: "And the winners are.............. Reducing Your Risk Exposure."— Presentation transcript:

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2 And the winners are Reducing Your Risk Exposure

3 4th place

4 3rd place

5 2nd place

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8 P URPOSE OF R ISK M ANAGEMENT o Educates all about Risk Management o Risk Management is much more than simply purchasing insurance coverage’s; it’s about: Risk Identification Risk Identification Loss Control Loss Control Loss Prevention Loss Prevention Safety Education/Training 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”

9 H ISTORY OF V ALLEY S CHOOLS o Valley Schools Insurance Trust (VSIT) was formed in 1987, pursuant to A.R.S , and 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.

10 R ISK R ISK M ANAGEMENT M ANAGEMENT T ODAY 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 3 rd 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

11 C LAIMS C LAIMS M ANAGEMENT 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

12 L OSS F ORECASTING 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 counts Employee counts Payroll data Property valuations Number of vehicles Number of student participating in sports Claims data on specified claims (i.e. in WC all claims over $25,000) Etc.

13 I NSURANCE M ARKET O VERVIEW o Property rates on average were down 6.9% (2 nd 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

14 D EDUCTIBLES WC$750,000 (per claim) AL/GL $1,000,000 (per claim) & EPLI Property$100,000 (per claim)

15 PUSD L OSS L OSS R UN PropertyGeneral/EPLIAutoTotal #Paid $Reser $Recv $Incur $#Paid $Reser $Recv $Incur $#Paid $Reser $Recv $Incur $#Paid $Reser $Recv $Incur $ PEORIA UNIFIED SCHOOL DISTRICT 19950$ $105,737$0 $105,73710$196,954$0 $196,95430$33,200$0 $33,200112$335,891$0 $335, $218,417$0 $218,4175$64,017$0$193$63,82474$75,735$0 $75,735171$358,169$0$193$357, $229,400$0 $229,40010$250,351$0$7,231$243,12047$74,621$0 $74,621180$554,372$0$7,231$547, $142,489$0 $142,48914$207,253$0 $207,25361$86,372$0$8,428$77,944154$436,114$0$8,428$427, $419,844$0 $419,8447$161,792$0$9,056$152,73667$113,784$0 $113,784183$695,420$0$9,056$686, $688,708$0$83,169$605,53921$424,559$0$61,124$363,43582$77,779$0$1,332$76,447241$1,191,046$0$145,625$1,045, $399,110$0$63,030$336,08013$22,475$0 $22,47573$101,568$0$7,490$94,078208$523,153$0$70,520$452, $311,310$0$48,230$263,0808$160,448$0 $160,44815$219,165$0$23,244$195,92174$690,923$0$71,474$619, $110,249$0$15,659$94,5908$18,668$0 $18,66810$24,836$0$1,333$23,50323$153,753$0$16,992$136, $233,381$0$158,133$75,24815$37,957$0 $37,95717$63,442$0$10,288$53,15438$334,780$0$168,421$166, $131,317$0$14,243$117,07420$320,870$0$3,970$316,90015$24,812$0$9,136$15,67645$476,999$0$27,349$449, $138,901$0 $138,90117$94,703$0 $94,70315$48,588$0$18,161$30,42839$282,192$0$18,161$264, $130,323$0$1,631$128,69223$148,553$48,280$575$196,25819$114,872$575$9,926$105,52152$393,748$48,855$12,132$430, $308,270$0$52,262$256,00730$71,584$32,500$0$104,08419$158,853$0$6,526$152,32766$538,707$32,500$58,788$512, $285,750$0$147,488$138,26219$1,258,035$411,596$0$1,669,63116$53,198$0$10,483$42,71450$1,596,983$411,596$157,971$1,850, $88,653$5,000$1,568$92,08514$1,148$65,175$0$66,32313$31,889$5,221$6,219$30,89136$121,690$75,396$7,787$189,299 Ttl896$4,765,678$5,000$585,413$2,416,210234$3,439,367$557,551$82,149$3,914,769573$1,302,714$5,796$112,566$1,195, $9,507,759$568,347$780,128$7,526,923 Avg56$297,855$313$36,588$151,01315$214,960$34,847$5,134$244,67336$81,420$362$7,035$74,747106$594,235$35,522$48,758$470,433

16 Cost of Risk Risk Costs of Risk CostsRisk Costs of Risk CostsRisk Costs of Risk CostsRisk Costs of Risk CostsRisk Costs of Risk Costs Property Premiums$316, %$317, %$276, %$271, %$258, % Liability Premiums$178, %$161, %$161, %$159, %$173, % Excess Liability$191, %$162, %$142, %$148, %$153, % Boiler & Machinery$00.00%$10, %$10, %$10, %$8, % Crime Premiums$6, %$6, %$6, %$6, %$6, % WC Premiums$33, %$31, %$27, %$26, %$22, % Broker Fee$23, %$23, %$16, %$13, %$13, % Self-Insured Property$92, %$138, %$256, %$128, %$138, % Self-Insured Liability$66, %$1,669, %$104, %$196, %$94, % Self-Insured Auto$30, %$42, %$152, %$105, %$30, % Pay Only's (property)$103, %$104, %$62, %$195, %$84, % Prop/Gl Claims Administration$00.00%$00.00%$00.00%$00.00%$00.00% WC Claims Administration$00.00%$00.00%$00.00%$13, %$38, % Workers Compensation$487, %$1,239, %$726, %$726, %$704, % 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

17 P REVENTABLE L OSSES G ATE CLAIMS C OMPUTER THEFT WATER LOSSES

18 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)

19 O CTOBER 5, 2010 H AIL DAMAGE INSPECTIONS V ALLEY S CHOOLS T OTAL S ITES I NSPECTED 138 V ALLEY S CHOOLS TOTAL SITES WITH HAIL DAMAGE 92 P USD S ITES I NSPECTED 43 P USD SITES WITH HAIL DAMAGE 29

20 O CTOBER 5, 2010 H AIL D AMAGE V ALLEY SCHOOLS TOTAL LOSS AS OF J UNE 30, 2011 $4,076, PUSD P ROPERTY D AMAGE $1,823, PUSD A UTO DAMAGE $196, PUSD’ S PORTION OF LOSS 49.56%

21 L IMITING E XPOSURE oPoP E, Athletics & Activities oPoP reserve Evidence oToT eacher-Student Sporting Events oSoS tudent Supervision oVoV isitors & Volunteers oFoF ield Trips oPoP reventative Maintenance oEoE liminate left hand turns in bus routes oPoP layground Maintenance oEoE nd of the School Year Events

22 W ORKERS ’ C OMPENSATION 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: $750,000 Statutory $1M per accident $1M per employee

23 I MPORTANT P OINTS o PUSD had their lowest numbers ever! Why is this so important? o The medical cost per claim is rising significantly o Actuarial studies as previously mentioned use # of claims to determine “future expected costs” frequency breeds severity o 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 was $2,085, up 41.8% from ; 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 K EY POINT o K EY POINT - total WC $$ payments were $2,531,699; only $894,783 was for actual 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, is for the 2011/12 school year.

24 Frequency Of Claims Severity of Claims Average Experience Premium Cost K EEP K EEP Y OUR Y OUR N UMBERS N UMBERS L OW Experience Modification Factor The Key to Your Premium Cost

25 RETURN TO WORK Machinery

26 R EDUCTION S TRATEGIES

27 N UMBER OF C LAIMS 2006/07PUSDVSWCP 2007/08PUSDVSWCP 2008/09PUSDVSWCP 2009/10PUSDVSWCP 2010/11PUSDVSWCP July717 July714 July718 July813 July618 Aug2258 Aug2258 Aug1952 Aug3069 Aug1144 Sept2856 Sept1753 Sept1664 Sept1755 Sept1960 Oct2150 Oct2366 Oct3568 Oct1948 Oct834 Nov1836 Nov3264 Nov845 Nov545 Nov1737 Dec1334 Dec1535 Dec1537 Dec1225 Dec823 Jan2160 Jan2044 Jan2249 Jan1746 Jan1949 Feb2045 Feb1142 Feb1244 Feb1654 Feb1135 March2147 March2158 March1539 March2165 March1234 April1551 April2350 April1648 April3676 April1434 May2763 May1336 May2049 May1742 May637 June716 June1029 June822 June834 June715 YTD YTD YTD YTD YTD138420

28 D ENIED C LAIMS School Year# of Claims Denied# of Claims Protested 2009/ / /12131

29 VSWCP P REMIUM VS. SCF P REMIUM PUSD Rate Class:Code:Payroll: per $100PremiumClass:Code:Payroll: per $100PremiumClass:Code:Payroll: per $100Premium Prof/Teacher8868$131,209,470$0.50$656,047.35Prof/Teacher8868$152,491,455$0.50$762,457.28Prof/Teacher8868$148,436,987$0.46$682, Schools/all others9101$17,853,494$4.18$746, Schools/all others9101$19,500,860$4.10$799, Schools/all others9101$19,650,780$3.78$742, Totals:$1,402,323.40Totals:$1,561,992.54Totals:$1,425, Employer Liability0.01$14,023.23Employer Liability0.01$15,619.93Employer Liability0.01$14, Add$1,416,346.63Add$1,577,612.46Add$1,439, Exp Mod1.33$1,883,741.02Exp Mod1.29$2,035,120.07Exp Mod1.41$2,030, Deviated Premium0.9$1,695,366.92Deviated Premium0.9$1,831,608.07Deviated Premium0.9$1,827, Discounted premium0.9096$1,542,105.75Discounted premium0.9096$1,666,030.70Discounted premium0.9096$1,662, Total SCF Premium$1,542,105.75Total SCF Premium$1,666,030.70Total SCF Premium$1,662, VSWCP Contribution$1,000,000.00VSWCP Contribution$1,000,000.00VSWCP Contribution$800, Savings$542,105.75Savings$666,030.70Savings$862,011.66

30 S AFETY P RINCIPALS 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

31 C OST R EDUCTION & THE B OTTOM L INE 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 1 st 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

32 C ONGRATULATIONS ! A DMIN. C HOLLA A NNEX O ASIS E LEMENTARY S CHOOL W AREHOUSE Y OUR SITE WAS ACCIDENT FREE FOR THE 2010/11 S CHOOL Y EAR ! S ITES WITH N O I NJURIES


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