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Statewide Property Insurance Program Presented by: Sally Becker, CPCU, ARM SORM Risk Management Specialist
Todays Agenda State Property Myths Myth Busters Property Program Details Advantages of Program Enrollment Process Contact Information
State Property Myths Myth #1 –The State is self-insured for property losses Myth #2 –State agencies cannot purchase insurance Why??
State Property Myths continued Senate Concurrent Resolution No. 3 of 1921 –State shall carry its own insurance upon State buildings and contents… –…State hereafter at the end of each two years period to set aside approximately one per cent of the value of all public buildings owned by the State, as a sinking fund…
A Resolution is not a Law or Statute The following are Laws…
Myth Busters continued Government Code § –Property damage insurance covering state facilities may be purchased by agencies of the state if necessary to qualify for federal disaster assistance funds.
Myth Busters continued Education Code § –(a) The governing board of an institution of higher education may purchase insurance insuring the institution and its employees against any liability, risk, or exposure and covering the losses of any institutional property.
Myth Busters continued Labor Code § –The office (SORM) shall: (c)(2) purchase insurance coverage for a state agency…under any line of insurance other than health or life insurance… –(e) A state agency…may not purchase property, casualty, or liability insurance coverage without the approval of the board.
Property Program Details Purpose –Establish a state of the art property coverage program –Develop consistent property coverage across all state agencies –Offer a mechanism to insure previously uninsured property –Use the collective buying power of state agencies to obtain competitive policy terms and conditions
Property Program Details continued Development –RFP was issued by SORM –Thirteen agents and insurers attended Pre- proposal conference –Fourteen agents requested market assignments –Ten markets were assigned –SORM received three proposals –Palmer & Cay and The Jenkins Agency awarded program for presenting the program in the best interest of the state
Property Program Details continued Parties Involved:
Property Covered Buildings Contents Fine Arts Boiler & Machinery EDP (computers & software) Time Element (business interruption) Mobile Equipment
Limits, Deductibles, Rates Limits – Up to $1,000,000,000 Deductibles – Beginning at $5,000 Statewide Premium Rates – –Based on Building Construction Credits for higher deductibles Credits for sprinkler systems Small Debits for Windstorm and Flood Prone Areas
Advantages of the Program Coverage from a top-rated admitted carrier –National Union Fire Insurance Co of Pittsburgh (AIG) –Best Rating A+ XV Broad terms and conditions Competitive pricing Common expiration date Opportunity to transfer risk of currently uninsured properties
Enrollment Process 90 days prior to renewal, SORM will contact agencies to complete application and provide underwriting information SORM forwards materials to Palmer & Cay who sends to AIG for quote SORM evaluates AIGs quote proposal
Enrollment Process continued SORM with Palmer & Cay presents quote to Agency Agency accepts proposal Palmer & Cay issues binders and invoices to each individual agency Agency remits premium directly to Palmer & Cay
Information Needed Completed Application including property schedule Loss History – 3 to 5 years –If currently insured, insurers loss run –If not insured, agency listing of losses Date Cause – Fire, Hail, Windstorm, Flood, etc. Location Damage amount
Lessons Learned From Hurricanes Rita & Katrina Presented by: Sam Stone & Sam Arant SORM Risk Management Specialists
Relief Efforts Responses from State Agencies Twenty-four (24) responses received from state agencies Sixteen (16) state agencies provided assistance following Hurricane Katrina Eight (8) state agencies provided assistance following Hurricane Rita Twelve (12) state agencies provided assistance following Hurricanes Katrina and Rita
Relief Responses from State Agencies continued Over 550 state employees provided assistance following Hurricanes Katrina and Rita –Emergency rescue –Law enforcement –Evacuation assistance –Financial information –Unemployment assistance –Medical services –Provided shelters for evacuees –Emergency equipment and supplies –Chaplain services –Environmental assistance –Delivering emergency supplies –Job counseling –Animal health assistance
Workers Compensation Claims Involving Hurricane Relief Efforts (State Employees) Twelve (12) claims to date involving Hurricane Katrina relief efforts. Five (5) claims to date involving Hurricane Rita relief efforts. Eight (8) workers compensation claims involved Department of Public Safety employees. Next highest number of claims (4) involved Texas Parks and Wildlife Department employees. State Agencies that reported workers compensation claims: Texas Parks and Wildlife Department, Texas Department of Public Safety, Texas Health and Human Services Commission, Governors Task Force (TEEX), and the University of Houston.
Workers Compensation Claims (State Employees) continued Causes of Workers Compensation Claims –Possible contaminated water (2 claims) –Possible contaminated air (5) –Wind from storm (closing door on DPS Troopers hand) (1) –Putting up tents (1) –Lifting activities at evacuation center (1) –Clearing debris (1) –Providing medical care (1) –Evacuation activities (3)
Workers Compensation Claims (State Employees) continued Workers Compensation Injuries –Upper respiratory infections (5 claims) –Contact dermatitis (2 ) –Twisted ankle (1) –Low back strain (1) –Needle stick (1) –Fracture of hand (1) –Tendonitis of hands (1) –Abrasions of leg (1) –Insect bites (1) –Heat exhaustion (1) –Shoulder strain (1)
Workers Compensation Claims (Volunteers) Five (5) claims All at evacuation centers in Texas Two (2) claims due to possible contaminated air Three (3) claims due to evacuation center activities Resulting injuries: –Upper respiratory infections (2 claims) –Injured finger (1 claim) –Shoulder strain (1 claim) –Back strain (1 claim)
Issues and Recommendations Issue 1: Many emergency responders were not properly immunized before the emergency event. Recommendation 1: The state should strongly consider providing inoculations to all state employee responders. Pre-disaster inoculations should include diphtheria and tetanus toxoid (DPT), and hepatitis B. Post-disaster inoculations, if warranted, include hepatitis A, typhoid, cholera, meningococcal, and, if indicated, rabies vaccines. Recommendation 2: Each state agency that participates in emergency response activities should track the status of inoculations for all potential employee responders, and assure that all potential responders are up to date on their inoculations.
Issues and Recommendations continued Recommendation 3: Agencies who allow employees to volunteer in emergencies should track and monitor their volunteers inoculation status and arrange for post-event inoculations as necessary.
Issues and Recommendations continued Issue 2: The state has no consistent means to assure that state emergency responders have adequate inoculations against illness and disease. Recommendation 1: The State of Texas should assure that all responders are properly inoculated prior to an emergency response activity. The costs of inoculations could be significantly reduced by procuring and providing inoculation services through the Texas Department of State Health Services.
Issues and Recommendations continued Issue 3: Personal protective equipment was often non- existent or inadequate to safeguard employee health and safety. Recommendation 1: All state agencies providing emergency responders should, at a minimum, assure that their response employees have disposable nitrile or chemical resistant gloves; disposable N-95 particulate masks, or disposable half-mask respirators; goggles; protective clothing; and/or protective footwear. Recommendation 2: State responder agencies should establish and implement procedures to inspect and replace, if necessary, personal protective equipment during an emergency response activity.
Issues and Recommendations continued Issue 4: There was no means available to assess chemical and airborne hazards prior to exposing state employees. Recommendation 1: An advance team should be deployed first to identify exposures; identify personal protective equipment that is needed; and do sampling of air, water, liquids, or soil for the presence of hazardous materials prior to dispatching responders. Recommendation 2: TPWD Game Warden and DPS Trooper emergency kits should include sampling and testing equipment.
Issues and Recommendations continued Issue 5: There was not a process in place for decontamination of state equipment after its use. Recommendation 1: Decontamination procedures of emergency response equipment, and decontamination of emergency response personnel should be documented. Agency risk management should get copies of all decontamination reports.
Issues and Recommendations continued Issue 6: As a result of flooding and/or rain, affected state buildings may now pose a hazard for mold exposure to returning state employees. Recommendation 1: State buildings that experienced flooding or water damage should be tested for mold prior to re- occupancy.
Issues and Recommendations continued Issue 7: Many of the state buildings that were damaged during Hurricane Rita were not covered by property insurance. Recommendation 1: State agencies with facilities in high risk areas should be required to maintain current replacement costs for building and contents; and should periodically conduct cost benefit analysis in order to determine the effectiveness of transferring the risk of loss through the purchase of property insurance.
Issues and Recommendations continued Issue 8: There was a lack of coordination for requesting, receiving, and returning state assets used for emergency response. Recommendation 1: Coordination for requests of state emergency assets, (equipment and personnel) by other states could be handled better if all requests are done through the Governors Division of Emergency Management.
Loss Frequency & Severity Measures Presented by: Benny Vanden Avond SORM Risk Management Specialist
Risk Management Process Step 1: Mission Identification Step 2: Risk Identification Step 3: Risk Analysis Step 4: Consider Alternatives –Risk Control –Risk Finance Step 5: Implement and Monitor
Risk Analysis Process by which previously identified risks are measured and evaluated –Judge relative significance of each risk –Prioritize for future risk management action Key Analysis Ratios –Frequency –Severity
Key Risk Analysis Ratios Frequency –The number of times an event occurs during a given period of time –# Losses / # of Exposures
Frequency Example Data –15,000 Vehicles –600 Collisions Frequency: 600 / 15,000 =.04
Frequency in REPS Five frequency levels available –Extremely unlikely to occur –Possible, but unlikely to occur –Moderate risk of occurrence –Likely to occur –Likely to occur in the immediate future Example: –A major earthquake occurring in Austin, TX
Risk Analysis Ratios Severity –The amount of harm caused by a loss –$ Losses / # Losses
Severity in REPS Five severity levels available –Slight: No impact to agency –Appreciable: Some impact to agency –Serious: Jeopardizes agency –Severe: Severely affects agency –Catastrophic: Shuts down agency Example: – A major earthquake occurring in Austin, TX
Concerns with Measuring Severity Very Difficult –Indirect Losses Example: Bank robbery –Contagion (Spread of the Problem) Example: Bil Mar Because it is hard to predict, we have to estimate
Loss Severity Measures Maximum Possible Loss –Size of loss at its absolute largest –Example: Christmas light factory has a fire that burns all its inventory on September 1 st Maximum Probable Loss –In all likelihood, the largest loss expected to occur –Example: The same fire is contained to only part of the factory by the its fire suppression equipment, i.e. firewalls, sprinklers Still very subjective!!
Maximum Possible and Maximum Probable Example
MPL Measures in REPS Text fields available for Maximum Possible and Maximum Probable Loss estimates Careful and structured analysis of identified risk issues WHAT??
Sources of Data SORM provided sources of information –Online Property & Casualty Claims Reporting System –Workers Compensation Claims Data –Lost, Damaged or Destroyed (LDD) Property Reports
Sources of Data continued Other sources of information –State Property Accounting (SPA) Database –Interactions with Internal & External Resources –Interactions with other State Agencies –On-Site Inspections
LUNCH REPS Training begins at 1:00
Risk Management User Group Thank you for attending Happy Holidays!!