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© Copyright Arthur J. Gallagher & Co. 2013
Arthur J. Gallagher Risk Management Services, Inc.
National Public Entity & Scholastic Division
State of KansasState of KansasProperty/Casualty Property/Casualty
Pooling PresentationPooling Presentation
Presented by:Byron Given, Robert McWeeney
Charlie Herr
2
Why Arthur J. Gallagher?• Expertise in pools, associations,
and risk purchasing groups –
Gallagher administers over 25% of
the nations pooled programs
• Staff dedicated entirely to
Scholastic Insurance
• Conduct training and speaking
sessions for various Local, State,
National and International
Associations
3
AJG Public Entity Team Experience
• AJG’s Public Sector Practice serves more than 3,500 school districts, including 40% of the largest 100 school districts in the nation
• Gallagher is associated with 135+ public entity pools throughout the country (estimated 11,000 individual entities)
• Our Team Operates school pools in IL, MN, VT, IN, IA, PA, SD, WY, MI, OH
Local Service…
…Global Resources
4
5
Sample Claim -Loss FundPayment Structure
*Based on data from current scholastic pools of similar demographics
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$1,000 Maintenance Deductible
SIR
$35,000 Per Occurrence
Property
$1,000,000Per Occurrence
Excess Property
$400,000,000Per Occ.
$10,000,000
Earthquake SublimitPer Occ./Agg.
$10,000,000Flood SublimitPer Occ./Agg.
LOSS FUND$385,000
Property, Business Income,Extra Expense, MobileEquipment, Auto PD
.
-$35,000$350,000
Claim #1 – Bus Runs into School - $3,500,000 claim
Total Cost to School District:
$1,000
Aggregate Stop Loss Protection
Excess of theLoss Fund
7
Benefits of Protected Self-Insurance (Pool)
• Retain a portion of the predictable losses
• Transfer a portion of the catastrophic risk
• Broaden your insurance program coverage
• Control your costs in the hard market
• Budget a known maximum cost
• Input in the claims process
• Provide long-term stability
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Spectrum of Insurance
ConventionalInsuranceProgram
SafetyDividendProgram
LargeDeductibleRetro-Plan
SecuredSelf-Insurance(w/ Stop Loss
Protection)
SpecificExcess
Insurance
Reinsurance Captive or
RRG
PureSelf-Insurance
Less Control Greater Control
Insurance Company Controls Program
Insured Controls Program
KS PoolXX
Less Insurance Company Profits
9
Estimated Expiring
2013-2014 Total
Expected 2013-2014
Maximum Costs1. Package Policy
(includes Property, General Liability, Automobile Liability and Physical Damage, Garage Liability, Inland Marine, EDP, SBLL and Crime)
$1,212,677 $301,184 $301,184
2. Student Accident Included $60,095 $60,095
3. Excess Property Included $207,060 $207,060
4. Boiler & Machinery Included $34,304 $34,304
5. Excess Liability – Included $80,000 $80,0006. Administration Fee – Arthur J. Gallagher Risk
Management Services, Inc. FeesIncluded $80,000 $80,000
7. Claims Administration Fee Included $20,000 $20,0008. Loss Control Services Fee Included $7,000 $7,000
Total Fixed Costs $1,212,677 $789,643 $789,643
Variable CostEstimated Expiring
2013-2014 Expected Cost
2013-2014 Maximum Cost
Loss Fund – Premium N/A $196,714 $385,000
Total Premium Contribution $1,212,677 $986,357 $1,174,643
Line of Coverage
•Under the Property/Casualty Program the school districts on a fixed costs basis will see a savings of $423,034, or a 35% reduction over expiring, while improving coverages and limits.
Sample All District Pricing Example (Iowa School Pool; 7 members) – Property/Casualty
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Sample Small District Pricing – Property/Casualty
Fixed Costs2012-2013 Expiring
2013-2014 Maximum Cost
Proposed
2013-2014 Expected Cost
Program Self-Insured Package Premium (includes Property, General Liability, Garage Liability, Auto Liability and Physical Damage, Inland Marine, EDP, SBLL and Crime
$32,235 $9,000 $9,000
Student Accident 1,500 1,159 1,159
Excess Property N/A 3,556 3,556
Boiler & Machinery Included 711 711
Excess Liability 5,000 1,543 1,543
Gallagher/Local Agent Fee Included 3,500 3,500
Claims Administration Fee Included 1,120 1,120
Loss Control Services Fee Included 1,000 1,000
Total Fixed Costs $38,735 $21,589 $21,589
% of Increase/Decrease -44% -44%
Variable Costs2012-2013 Expiring
2013-2014 Maximum Cost
Proposed
2013-2014 Expected Cost
Program Loss Fund – Premium N/A $9,000 $4,500
Total Premium Contributions on a Maximum Cost Basis $38,735 $30,589 $26,089
% of Increase/Decrease -21% -33%
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Sample Large District Pricing– Property/Casualty
Fixed Costs2012-2013 Expiring
2013-2014 Maximum Cost
Proposed
2013-2014 Expected Cost
Program Self-Insured Package Premium (includes Property, General Liability, Garage Liability, Auto Liability and Physical Damage, Inland Marine, EDP, SBLL and Crime
$323,619 $96,000 $96,000
Student Accident 8,119 19,774 19,774
Excess Property N/A 57,097 57,097
Boiler & Machinery Included 10,061 10,061
Excess Liability 56,874 26,324 26,324
Gallagher/Local Agent Fee Included 19,743 19,743
Claims Administration Fee Included 4,167 4,167
Loss Control Services Fee Included 1,000 1,000
Total Fixed Costs $388,612 $234,166 $234,166
% of Increase/Decrease -40% -40%
Variable Costs2012-2013 Expiring
2013-2014 Maximum Cost
Proposed
2013-2014 Expected Cost
Program Loss Fund – Premium N/A $122,663 $51,397
Total Premium Contributions on a Maximum Cost Basis $388,612 $356,829 $285,563
% of Increase/Decrease -8% -27%
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KERMP District Savings – Property/Casualty
District EXPECT COST SAVE/EXPR MAX COST SAVE/EXPR
District 1 -46.48% -36.04%
District 2 -37.75% -27.92%
District 3 -45.49% -27.38%
District 4 -56.16% -49.53%
District 5 -49.98% -32.01%
District 6 -32.97% -22.57%
District 7 -27.92% -20.28%
District 8 -31.19% -17.74%
District 9 -34.26% -15.47%
District 10 -55.72% -42.92%
Average-38.73% -25.85%
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What the First Dollars Markets are going to Say (EMC/WSI)…
• “Too many meetings and too much of a time commitment.”
• “The pool has the ability to be assessed.”
• “The price you see is NOT the price you will pay!”
• “These pools make use of the E&S Markets. The carriers used are not AM Best Rated.”
• “To get the program started the insurance companies will undercut
premiums in the first year. The carriers will jack up the premiums/rates in
year two of the program.”
• “If you decide to leave the Pool, you have to take your Claims with you.”
14
• July 2015: Creation of design study for Western Kansas Scholastic Program
• September - November 2015: Pooling design study is displayed for School Districts throughout Western Kansas and
applications are administered to prospective School Districts
• September - November 2015: Phone calls to discuss the applications and information gathering process
• October 30, 2015: All applications are due to Gallagher for charter member prospective school districts
• December 31, 2015: Quotations from Gallagher’s market partners expected
• January, 2016: Proposal Meetings with prospective districts
• February 2016: Prospective members present the program option to your respective school boards
• March 4, 2016: Kansas Department of Insurance Presentation
• March 4, 2016: Kansas Attorney General and Kansas State Department of Education Applications due
• June 1, 2016: Approval Decision Deadline for various State entities due per KS State Statue 12.2618
• July 1, 2016 – Program Inception Date!▪ Please see the packet of information on how to obtain the required information that we will need to
quote the insurance.
Kansas Pooling Sample Timeline