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UTSA Financing Risk Management

UTSA Financing Risk Management. John DeLaHunt, MBA, ARM UTSA Risk & Life Safety Manager April 2, 2009. Policies in Place for People. Workers Compensation (WCI) * Unemployment Compensation (UCI) * Directors & Officers (D&O) * Commercial Crime *.

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UTSA Financing Risk Management

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  1. UTSAFinancing Risk Management John DeLaHunt, MBA, ARM UTSA Risk & Life Safety Manager April 2, 2009

  2. Policies in Place for People • Workers Compensation (WCI) * • Unemployment Compensation (UCI) * • Directors & Officers (D&O) * • Commercial Crime * * Offered through UT System to all UT institutions

  3. Policies in Place for Property • Real Property (CPPP)* • Vehicles (liability, physical damage, etc)* • Scheduled equipment* • Fine Arts* • Mobile equipment * Offered through UT System to all UT institutions

  4. Policies in Place for Events • Supplemental Excess General Liability • Festivals (Texas Folklife, Asian) • Tenant User Liability Insurance Program • Joint Sponsored events • Sports Camp Insurance • CoA Design/Build Accident Policy

  5. UTSA Insurance Premiums

  6. UTSA Cost of Risk

  7. Unfunded DeductiblesCPPP - Fire/AOP and W&F • Exposure • Property loss >$250k • Deductible if UTSA suffers the loss • $250k per occurrence, both programs • Fire/AOP Replenishment over 5 years • $475k per year if UTSA suffers the loss • ~$25k per year if another campus suffers the loss • W&F Debt Service • $20 M if UTSA suffers the loss • $30M if another system campus suffers the loss

  8. Unfunded DeductiblesEmployment Practices • Exposures • Wrongful Termination • Harassment/Retribution • Denial of Tenure • Civil rights actions • Other federal causes • Deductibles • $100,000 individual per occurrence • $300,000 institution per occurrence

  9. Unfunded RetentionTort Liability • Exposures • Premises defect • Tangible personal property • Motor-driven equipment • Limit of Liability – fully retained • $250,000 individual, per occurrence • $500,000 limit to individuals, per occurrence • $100,000 property damage • $600,000 total

  10. Unfunded Exposures Summary

  11. CPPP Fire/AOP Structure

  12. UTSA Fire/AOP Cash Flows Following Catastrophic Property Loss (thousands of dollars) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 $0 -$25 -$25 -$25 -$25 -$25 -$250 -$475 -$475 -$475 -$475 -$475 UTSA suffers the loss Any sister institution suffers the loss

  13. CPPP Wind & Flood Structure

  14. UTSA Scheduled Equipment Coverage

  15. Ideas • Build catastrophic property loss reserve • Immediately fund $725K to avoid disruptions for one budget cycle • Fully fund $2.625M to avoid all disruption due to property loss • Premium and reserve sharing analysis

  16. Ideas • Build liability reserve • Tort liability: $600k cap • D&O deductible: $100k/$300k • Target: $600k before the loss (1 loss per year) • Premium and reserve sharing analysis

  17. Ideas • Build hybrid equipment protection program • Insure high-value, unique, exposed assets • Insure fee-funded assets • Immediately: ↑ insurance coverage • Immediately: $50k loss retention pool • Target: $100k premium cost • Target: $300k loss retention pool • Premium and retention sharing

  18. Ideas • Combine retention pools • Short Term target: $725K • Long Term target: $3M • Add retention pool to insurance budgets • Centralize management of risk retention (losses) and risk transfer (insurance)

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