Welcome

Property and Liability

Insurance Coverage Overview

2011

Department of Central ServicesRisk Management Division

(RM)

1

Introductory Remarks

Today’s presentation will be available for you on the DCS Risk Management Website

http://www.ok.gov/DCS/

4

Questions

• When the lines are opened, all participants will be able to hear your internal discussions;

• Please speak one at a time and state:o Your nameo Your positiono Your agency or higher education entityo Your question

5

Today’s Discussion Items

• Introductory Remarks

• Underwriting Surveys

• Premium Payments

• Purchase of Property and Liability Insurance Outside of RM Program

• To Avoid Problems and Reduce Costs

• MMSEA

• Liability Trends

• Liability (Self-insured)

o Tort

o Auto

2

Today’s Discussion ItemsMarsh Commercial Lines of Coverage

• Directors and Officers, Educators Legal Liability, Employment

Practices Liability (Commercial Insurance with Self-insured

Retention (SIR))

• Insurance Policy Coverage Issues

• Employee Dishonesty (Commercial Insurance)

• Property Insurance

• Fine Arts Insurance

• Auto Physical Damage – Specialty/Passenger Vehicles

• Other lines: Aviation, Foreign Liability, Out of State

3

Underwriting Surveys

• Property• Fine Arts and Valuable Papers & Records• D&O / ELL• Vehicles• Out of State Travel• Foreign Travel• Employee Dishonesty

6

Premium Payments

• Budget for insurance costs

• Credit incentives offered if payment received within 45 days of invoice

• If it’s a budget issue, call RM

7

Purchase of Property and Liability Insurance Outside of the RM Program

• Call Risk Management

• Governmental Tort Claims Act (51 O.S. § 158 (C). “If a policy or contract of insurance . . . is applicable, the terms of the policy govern the rights and obligations of the state . . .”

• “Other Insurance” (You may have bought nothing but trouble.)

8

To Avoid Problems and Reduce Costs

• Need additional Property & Casualty coverage?

• Call RM before purchasing (74 O.S. § 85.58A)

9

Medicare Secondary Payer Mandatory Reporting Provisions

Update

Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of

2007

See 42 U.S.C. 1395y(b)(7) & (8)(MMSEA)

10

Major Coverage Areas

State of Oklahoma Liability Trends

11

Tort Liability Trend

7/1/00-01 7/1/01-02 7/1/02-03 7/1/03-04 7/1/04-05 7/1/05-06 7/1/06-07 7/1/07-08 7/1/08-09 7/1/09-100

2

4

6

8

10

12

14

16

1816.317000000000116.8170000000001

14.241

11.679

12.28311.553

9.684

12.667

6.834

6.731

Frequency(Ultimate Claims/1000 FTE's)

As of 6/30/10

TORT Frequency

Linear (TORT Frequency)

Report Year

Freq

uenc

y

12

Vehicle Liability Trend

7/1/00-01 7/1/01-02 7/1/02-03 7/1/03-04 7/1/04-05 7/1/05-06 7/1/06-07 7/1/07-08 7/1/08-09 7/1/09-100

5

10

15

20

25

30

3533.2380000000001

22.705

24.889

21.4719.407

21.462

17.77415.042 14.803

11.86

Frequency(Ultimate Claims/1000 Vehicles)

As of 6/30/10

VEHICLE Frequency

Linear (VEHICLE Frequency)

Report Year

Freq

uenc

y

13

D&O, ELL, EPL Trend

11/1/00-01 11/1/01-02 11/1/02-03 11/1/03-04 11/1/04-05 11/1/05-06 11/1/06-07 11/1/07-08 11/1/08-09 11/1/09-100.000

0.100

0.200

0.300

0.400

0.500

0.600

0.700

0.800

0.409 0.395 0.4080.450

0.184

0.452

0.7030.647

0.585

0.578

Frequency(Ultimate Claims/1000 FTE's+Board)

As of 6/30/10

D&O/ELL Frequency

Linear (D&O/ELL Frequency)

Report Year

Freq

uenc

y

14

ELL - Higher Education

11/1/00-01 11/1/01-02 11/1/02-03 11/1/03-04 11/1/04-05 11/1/05-06 11/1/06-07 11/1/07-08 11/1/08-09 11/1/09-100.000

0.050

0.100

0.150

0.200

0.250

0.300

0.350

0.400

0.450

0.500

0.259

0.367

0.108

0.248

0.099

0.401

0.324

0.448

0.258

0.099

Frequency(Ultimate Claims/1000 FTE's+Board)

As of 6/30/10

ELL Frequency

Linear (ELL Frequency)

Report Year

Freq

uenc

y

15

D&O – State Agencies

11/1/00-01 11/1/01-02 11/1/02-03 11/1/03-04 11/1/04-05 11/1/05-06 11/1/06-07 11/1/07-08 11/1/08-09 11/1/09-100

0.2

0.4

0.6

0.8

1

1.2

0.514

0.414

0.6230000000000020.597

0.247

0.491

0.993

0.8020.845000000000001

0.970000000000001

Frequency(Ultimate Claims/1000 FTE's+Board)

As of 6/30/10

D&O Frequency

Linear (D&O Frequency)

Report Year

Freq

uenc

y

16

Similar to Commercial General Liability and Business Auto

Liability Insurance In the Private Sector

Liability Discussion:Tort Liability and Auto Liability

17

Self-Insured Programs:

• Tort Liability including Auto Liability

• Governed by 51 O.S. § 151, et seq. the Governmental Tort Claims Act (GTCA) and RM Promulgated Rules, OAC 580:25-1-1, et seq.

• No policy of insurance applies/No deductibles apply

18

Strict Adherence to GTCA

• Limits:o Maximum of $25,000 Property Damageo Maximum of $175,000 each claimant (other than property)o Maximum of $1,000,000 all claimants arising out of single

occurrence or accident• Claimant has 1 year from date of loss to file a claim• Claim shall be filed with RM• Exclusive remedy for tortious conduct of State employees• Specifies how recovery may be made• Broad exemptions from liability

19

State Tort Sub-activity FundWill Only Respond

• If claim filed in accordance with GTCA• If the State or its employee is negligent• If the State employee is within the Scope of

Employment as defined by the GTCA• State employees may be held personally

responsible per GTCA • If there are no GTCA exemptions

20

Public Officials Liability (D&O)

Educators Legal Liability (ELL)

Employment Practices Liability (EPL)

Claims Outside of GTCA Protection(U.S. Constitutional and OK

Constitutional)

21

D&O, ELL, EPL

• All lines insured

• Self-insured retention applies

• Essentially protects against U.S. Constitutional and Oklahoma Constitutional violations per exclusionary endorsement to all policies

22

Tort Claims With D&O or ELL Allegations

• Claim filed under GTCAo Claim alleges Tort issues covered by GTCAo Claim alleges U.S. Constitutional and Oklahoma

Constitutional Issues or possibly other allegations outside of GTCA

• Possible coverage under both GTCA and D&O, ELL, EPL policies

23

Why should you care about the difference

between

GTCA and D&O, EPL & ELL?

Before a claim can be paid out of the Tort fund, a tort

claim must be filed pursuant to the terms of the GTCA.

GTCA Claims vs. D&O, EPL &ELL Claims

24

Some claims allege both GTCA violations as well as constitutional violations

Deductibles come into play: $0 for GTCA allegations; agency selected deductible for other allegations

Why should you care about the difference between GTCA and

D&O, EPL & ELL?

25

Sample of claim with mixed allegations:

Claim properly made under the GTCA but also alleges a claim covered D&O or ELL--all claims (state and federal) settle for $1 million:

Payment allocated as follows:

o Risk Tort Fund (GTCA) $175,000

o Agency $150,000 (or agency selected deductible)

o Risk D&O Fund $100,000

o D&O Insurance $575,000

o Total $1 million

GTCA Claims vs. D&O, EPL &ELL Claims

26

To Avoid Problemsand Maximize Recovery of Losses

• Coordinate all property and liability claims through RM.

• Report all claims to RM immediatelyo Do not delay reportingo Delays may inhibit your ability to recover losses

27

Insurance Policy Coverage Issues

• Do not attempt to interpret insurance coverage.

• Do not allow others to interpret coverage.

Call RM

28

Communication

Reporting

Timeliness

Our Ability To Protect Your AssetsDepends Upon You

29

MARSH COMMERICIAL LINES OF COVERAGE

30s