Department of Central Services Risk Management Division (RM)

1. Department of Central ServicesRisk Management Division (RM) Welcome Property and Liability Insurance Coverage Overview 2011 1

2. Introductory Remarks Today’s presentation will be available for you on the DCS Risk Management Website http://www.ok.gov/DCS/ 4

3. Questions • When the lines are opened, all participants will be able to hear your internal discussions; • Please speak one at a time and state: • Your name • Your position • Your agency or higher education entity • Your question 5

4. 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) • Tort • Auto 2

5. 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

6. Underwriting Surveys • Property • Fine Arts and Valuable Papers & Records • D&O / ELL • Vehicles • Out of State Travel • Foreign Travel • Employee Dishonesty 6

7. 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

8. 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

9. To Avoid Problems and Reduce Costs • Need additional Property & Casualty coverage? • Call RM before purchasing (74 O.S. § 85.58A) 9

10. 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

11. State of Oklahoma Liability Trends Major Coverage Areas 11

12. Tort Liability Trend 12

13. Vehicle Liability Trend 13

14. D&O, ELL, EPL Trend 14

15. ELL - Higher Education 15

16. D&O – State Agencies 16

17. Liability Discussion:Tort Liability and Auto Liability Similar to Commercial General Liability and Business Auto Liability Insurance In the Private Sector 17

18. 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

19. Strict Adherence to GTCA • Limits: • Maximum of $25,000 Property Damage • Maximum of $175,000 each claimant (other than property) • 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

20. 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

21. Claims Outside of GTCA Protection(U.S. Constitutional and OK Constitutional) Public Officials Liability (D&O) Educators Legal Liability (ELL) Employment Practices Liability (EPL) 21

22. 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

23. Tort Claims With D&O or ELL Allegations • Claim filed under GTCA • Claim alleges Tort issues covered by GTCA • 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

24. GTCA Claims vs. D&O, EPL &ELL Claims 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. 24

25. Why should you care about the difference between GTCA and D&O, EPL & ELL? 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 25

26. GTCA Claims vs. D&O, EPL &ELL Claims 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: Risk Tort Fund (GTCA) $175,000 Agency $150,000 (or agency selected deductible) Risk D&O Fund $100,000 D&O Insurance $575,000 Total $1 million 26

27. To Avoid Problemsand Maximize Recovery of Losses • Coordinate all property and liability claims through RM. • Report all claims to RM immediately • Do not delay reporting • Delays may inhibit your ability to recover losses 27

28. Insurance Policy Coverage Issues • Do not attempt to interpret insurance coverage. • Do not allow others to interpret coverage. Call RM 28

29. Our Ability To Protect Your AssetsDepends Upon You Communication Reporting Timeliness 29

30. MARSH COMMERICIAL LINES OF COVERAGE 30s