And the winners are..............

Reducing Your Risk Exposure

Reducing Your Risk Exposure

4th place

3rd place

2nd place

1ST PLACE

Valley Schools2011 Annual Report

forPeoria Unified School

District

PURPOSE OF RISK MANAGEMENT

o Educates all about Risk Managemento Risk Management is much more than simply

purchasing insurance coverage’s; it’s about:• Risk Identification• Loss Control• Loss Prevention• 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”

HISTORY OF VALLEY SCHOOLS

o Valley Schools Insurance Trust (VSIT) was formed in 1987, pursuant to A.R.S. 11-952, 11-952.01 and 15-382 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.

RISK MANAGEMENT TODAY

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 3rd 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

CLAIMS MANAGEMENT

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

LOSS FORECASTING

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 countsEmployee countsPayroll dataProperty valuationsNumber of vehiclesNumber of student participating in sportsClaims data on specified claims (i.e. in WC all

claims over $25,000)Etc.

INSURANCE MARKET OVERVIEW

o Property rates on average were down 6.9% (2nd 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

DEDUCTIBLES

WC $750,000 (per claim)

AL/GL $1,000,000 (per claim)

& EPLI

Property $100,000 (per claim)

PUSD LOSS RUN

Property General/EPLI Auto Total

  # Paid $Reser $ Recv $ Incur $ # Paid $ Reser $ Recv $ Incur $ # Paid $ Reser $ Recv $ Incur $ # Paid $ Reser $ Recv $ Incur $

PEORIA UNIFIED SCHOOL DISTRICT199

5 0 $0 $0 $0 $0 0 $0 $0 $0 $0 0 $0 $0 $0 $0 0 $0 $0 $0 $0199

6 72$105,73

7 $0 $0$105,73

7 10$196,95

4 $0 $0$196,95

4 30 $33,200 $0 $0 $33,200 112$335,89

1 $0 $0$335,89

1199

7 92$218,41

7 $0 $0$218,41

7 5 $64,017 $0 $193 $63,824 74 $75,735 $0 $0 $75,735 171$358,16

9 $0 $193$357,97

6199

8 123$229,40

0 $0 $0$229,40

0 10$250,35

1 $0 $7,231$243,12

0 47 $74,621 $0 $0 $74,621 180$554,37

2 $0 $7,231$547,14

1199

9 79$142,48

9 $0 $0$142,48

9 14$207,25

3 $0 $0$207,25

3 61 $86,372 $0 $8,428 $77,944 154$436,11

4 $0 $8,428$427,68

6200

0 109$419,84

4 $0 $0$419,84

4 7$161,79

2 $0 $9,056$152,73

6 67$113,78

4 $0 $0$113,78

4 183$695,42

0 $0 $9,056$686,36

4200

1 138$688,70

8 $0 $83,169$605,53

9 21$424,55

9 $0$61,12

4$363,43

5 82 $77,779 $0 $1,332 $76,447 241$1,191,0

46 $0$145,62

5$1,045,4

21200

2 122$399,11

0 $0 $63,030$336,08

0 13 $22,475 $0 $0 $22,475 73$101,56

8 $0 $7,490 $94,078 208$523,15

3 $0 $70,520$452,63

3200

3 51$311,31

0 $0 $48,230$263,08

0 8$160,44

8 $0 $0$160,44

8 15$219,16

5 $0$23,24

4$195,92

1 74$690,92

3 $0 $71,474$619,44

9200

4 5$110,24

9 $0 $15,659 $94,590 8 $18,668 $0 $0 $18,668 10 $24,836 $0 $1,333 $23,503 23$153,75

3 $0 $16,992$136,76

1200

5 6$233,38

1 $0$158,13

3 $75,248 15 $37,957 $0 $0 $37,957 17 $63,442 $0$10,28

8 $53,154 38$334,78

0 $0$168,42

1$166,35

9200

6 10$131,31

7 $0 $14,243$117,07

4 20$320,87

0 $0 $3,970$316,90

0 15 $24,812 $0 $9,136 $15,676 45$476,99

9 $0 $27,349$449,65

0200

7 7$138,90

1 $0 $0$138,90

1 17 $94,703 $0 $0 $94,703 15 $48,588 $0$18,16

1 $30,428 39$282,19

2 $0 $18,161$264,03

2200

8 10$130,32

3 $0 $1,631$128,69

2 23$148,55

3 $48,280 $575$196,25

8 19$114,87

2 $575 $9,926$105,52

1 52$393,74

8 $48,855 $12,132$430,47

1200

9 17$308,27

0 $0 $52,262$256,00

7 30 $71,584 $32,500 $0$104,08

4 19$158,85

3 $0 $6,526$152,32

7 66$538,70

7 $32,500 $58,788$512,41

8201

0 15$285,75

0 $0$147,48

8$138,26

2 19$1,258,

035$411,59

6 $0$1,669,

631 16 $53,198 $0$10,48

3 $42,714 50$1,596,9

83$411,59

6$157,97

1$1,850,6

07201

1 9 $88,653 $5,000 $1,568 $92,085 14 $1,148 $65,175 $0 $66,323 13 $31,889 $5,221 $6,219 $30,891 36$121,69

0 $75,396 $7,787$189,29

9

Ttl 896$4,765,

678 $5,000$585,41

3$2,416,

210234

$3,439,367

$557,551

$82,149

$3,914,769 573

$1,302,714 $5,796

$112,566

$1,195,944

1703

$9,507,759

$568,347

$780,128

$7,526,923

Avg 56$297,85

5 $313 $36,588$151,01

3 15$214,96

0 $34,847 $5,134$244,67

3 36 $81,420 $362 $7,035 $74,747 106$594,23

5 $35,522 $48,758$470,43

3

Cost of Risk

2010-11 2010-11 2009-10 2009-10 2008-09 2008-09 2007-08 2007-08 2006-07 2006-07

Risk Costsof Risk Costs Risk Costs

of Risk Costs

Risk Costs

of Risk Costs

Risk Costs

of Risk Costs

Risk Costs

of Risk Costs

Property Premiums $316,777 20.71% $317,192 8.12% $276,466 14.23% $271,815 13.58% $258,849 14.98%

Liability Premiums $178,770 11.69% $161,006 4.12% $161,006 8.29% $159,364 7.96% $173,979 10.07%

Excess Liability $191,596 12.53% $162,955 4.17% $142,720 7.35% $148,092 7.40% $153,080 8.86%

Boiler & Machinery $0 0.00% $10,553 0.27% $10,553 0.54% $10,377 0.52% $8,491 0.49%

Crime Premiums $6,022 0.39% $6,056 0.15% $6,182 0.32% $6,169 0.31% $6,193 0.36%

WC Premiums $33,475 2.19% $31,546 0.81% $27,918 1.44% $26,823 1.34% $22,309 1.29%

Broker Fee $23,333 1.53% $23,333 0.60% $16,666 0.86% $13,333 0.67% $13,333 0.77%

Self-Insured Property $92,085 6.02% $138,262 3.54% $256,007 13.18% $128,692 6.43% $138,901 8.04%

Self-Insured Liability $66,323 4.34%$1,669,63

1 42.73% $104,084 5.36% $196,258 9.80% $94,703 5.48%

Self-Insured Auto $30,891 2.02% $42,714 1.09% $152,327 7.84% $105,521 5.27% $30,428 1.76%

Pay Only's (property) $103,051 6.74% $104,739 2.68% $62,349 3.21% $195,483 9.77% $84,234 4.88%Prop/Gl Claims Administration $0 0.00% $0 0.00% $0 0.00% $0 0.00% $0 0.00%WC Claims Administration $0 0.00% $0 0.00% $0 0.00% $13,195 0.66% $38,246 2.21%

Workers Compensation $487,290 31.86%$1,239,37

3 31.72% $726,065 37.38% $726,526 36.30% $704,936 40.80%

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

PREVENTABLE LOSSES

GATE CLAIMS

COMPUTER THEFT

WATER LOSSES

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)

OCTOBER 5, 2010 HAIL DAMAGE INSPECTIONS

VALLEY SCHOOLS TOTAL SITES INSPECTED

138VALLEY SCHOOLS TOTAL SITES

WITH HAIL DAMAGE92

PUSD SITES INSPECTED43

PUSD SITES WITH HAIL DAMAGE

29

OCTOBER 5, 2010 HAIL DAMAGE

VALLEY SCHOOLS TOTAL LOSS AS OF JUNE 30, 2011$4,076,110.21

PUSD PROPERTY DAMAGE$1,823,131.43

PUSD AUTO DAMAGE$196,931.12

PUSD’S PORTION OF LOSS 49.56%

LIMITING EXPOSUREo PE, Athletics & Activitieso Preserve Evidenceo Teacher-Student Sporting Events o Student Supervisiono Visitors & Volunteerso Field Tripso Preventative Maintenanceo Eliminate left hand turns in bus routeso Playground Maintenanceo End of the School Year Events

WORKERS’ COMPENSATION

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: $750,000Statutory$1M per accident$1M per employee

2010-11 IMPORTANT POINTS

o PUSD had their lowest numbers ever! Why is this so important?

o The medical cost per claim is rising significantlyo Actuarial studies as previously mentioned use # of claims to

determine “future expected costs” frequency breeds severityo 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 2010-11 was $2,085, up 41.8% from 2009-10; 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 KEY POINT - total WC $$ payments were $2,531,699; only $894,783 was for actual 2010-11 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 $38,447.83 is for the 2011/12 school year.

Frequency Of Claims

Severity of

Claims

Average

Experience

Premium Cost

KEEP YOUR NUMBERS LOW

Experience Modification Factor The Key to Your Premium Cost

RETURN TO WORK

Machinery

BENEFITS

Maintain Productivity

Red

uce

Cla

im C

ost

Recover FasterR

educe

Lit

igat

ion

REDUCTION STRATEGIES

EDUCATIONTRAINING

SAFETY PROGRAM

RECOGNITION MEASURE PERFORMANCE

PAY ACCORDING TO ICA SCHEDULE

Enforce

NUMBER OF CLAIMS

2006/07

PUSD VSWCP  

2007/08

PUSD VSWCP 

2008/09

PUSD

VSWCP  

2009/10 PUSD VSWCP   2010/11 PUSD VSWCP

July 7 17   July 7 14   July 7 18  July 8 13   July 6 18

Aug 22 58   Aug 22 58   Aug 19 52  Aug 30 69   Aug 11 44

Sept 28 56   Sept 17 53   Sept 16 64  Sept 17 55   Sept 19 60

Oct 21 50   Oct 23 66   Oct 35 68  Oct 19 48   Oct 8 34

Nov 18 36   Nov 32 64   Nov 8 45  Nov 5 45   Nov 17 37

Dec 13 34   Dec 15 35   Dec 15 37  Dec 12 25   Dec 8 23

Jan 21 60   Jan 20 44   Jan 22 49  Jan 17 46   Jan 19 49

Feb 20 45   Feb 11 42   Feb 12 44  Feb 16 54   Feb 11 35

March 21 47   March 21 58   March 15 39  March 21 65   March 12 34

April 15 51   April 23 50   April 16 48  April 36 76   April 14 34

May 27 63   May 13 36   May 20 49  May 17 42   May 6 37

June 7 16   June 10 29   June 8 22  June 8 34   June 7 15

YTD 220 533   YTD 214 549   YTD 193 535  YTD 206 572   YTD 138 420

DENIED CLAIMS

School Year # of Claims Denied

# of Claims Protested

2009/10 12 2

2010/11 38 2

2011/12 13 1

VSWCP PREMIUM VS. SCF PREMIUM

PUSD

2011 2010 2009

Rate   Rate   Rate  

Class: Code: Payroll:per

$100 Premium Class: Code: Payroll:per

$100 Premium Class: Code: Payroll:per

$100 Premium

Prof/Teacher 8868 $131,209,470 $0.50 $656,047.35 Prof/Teacher 8868 $152,491,455 $0.50 $762,457.28 Prof/Teacher 8868 $148,436,987 $0.46 $682,810.14

     

Schools/all others 9101 $17,853,494 $4.18 $746,276.05

Schools/all others 9101 $19,500,860 $4.10 $799,535.26

Schools/all others 9101 $19,650,780 $3.78 $742,799.48

Totals: $1,402,323.40 Totals: $1,561,992.54 Totals: $1,425,609.62

     

Employer Liability 0.01 $14,023.23 Employer Liability 0.01 $15,619.93 Employer Liability 0.01 $14,256.10

Add $1,416,346.63 Add $1,577,612.46 Add $1,439,865.72

Exp Mod 1.33 $1,883,741.02 Exp Mod 1.29 $2,035,120.07 Exp Mod 1.41 $2,030,210.67

Deviated Premium 0.9 $1,695,366.92 Deviated Premium 0.9 $1,831,608.07 Deviated Premium 0.9 $1,827,189.60

Discounted premium 0.9096 $1,542,105.75 Discounted premium 0.9096 $1,666,030.70 Discounted premium 0.9096 $1,662,011.66

Total SCF Premium $1,542,105.75 Total SCF Premium $1,666,030.70 Total SCF Premium $1,662,011.66

VSWCP Contribution $1,000,000.00VSWCP Contribution $1,000,000.00VSWCP Contribution $800,000.00Savings $542,105.75 Savings $666,030.70 Savings $862,011.66

SAFETY PRINCIPALS

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

COST REDUCTION & THE BOTTOM LINE

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

1st 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

CONGRATULATIONS!

ADMIN. CHOLLA ANNEXOASIS ELEMENTARY

SCHOOLWAREHOUSE

YOUR SITE WAS ACCIDENT FREE FOR THE 2010/11 SCHOOL YEAR!

SITES WITH NO INJURIES