Covering your *%#: Insurance and Cost Reduction Strategies Applicable to Property … ·...

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© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM

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Covering your *%#:

Insurance and Cost Reduction Strategies Applicable to

Property and Casualty Insurance for Utilities

Heather Kinard | February 22, 2019

I would like to emphasize that the discussion set forth above is only an insurance/risk management perspective and is NOT legal advice. We do not provide legal advice as we are not qualified to do so. I highly recommend that you seek the advice of legal counsel in order to become fully apprised of the legal implications related to these issues.


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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM

SC Rural Water Association

1. Holistic Approach to Evaluating and Minimizing your TCOR

2. Market Update3. Auto premium increases4. General Liability Overview5. Management Liability

– Cyber– Crime / Employee theft– D&O– Environmental liability– Railroad Protective Coverage– UST

6. Emerging Risks7. IRF Coverages / Exclusions8. Contractors9. Evaluation/Options Timeline10. Covering Assets11. Limits and Deductibles12. Questions

AgendaWhat are we talking about today?


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The CORE360™ ApproachEvaluating and Minimizing Your Total Cost of Risk


Public Entity

1. Carrier Relationships With Experienced Markets

2. “Go to Market” Strategy

3. Property Schedule Data metrics

4. Quality Submissions

5. Program administration

6. Budget/TCOR Projections

7. Benchmarking and pricing knowledge

1. Risk Financing Options on the Control Continuum

2. Immunity Preservation

3. Pools & Captive Solutions

4. Optimize Limits and Deductibles

5. Loss Stratification Models/Tools

6. Umbrella Benchmarking Tool

7. Property CAT Modeling

8. Buffer layer and stop-loss features

1. Gallagher's Loss Control Services

2. Gallagher's Claims Advocacy Services

3. Public Sector Newsletters & White Papers

4. Online Risk control training platform

5. TPA Selection and Oversight

6. Cost reductions for ULAE and ALAE

7. Risk Management Services

1. Practice Group Collaboration

2. Violent and Malicious Acts Coverage

3. Terrorism Plus4. Tax Revenue

Exposures5. Fixed asset report

review6. TCOR Analysis7. ERM Risk

Assessment8. Crime9. Cyber10. Environmental/Po

llution Liability11. D&O / Public

Officials12. Weather insurance

products

1. Tenant User Liability Insurance Program (TULIP)

2. Certificate Issuance

3. Certificate Tracking

4. Contract Review

5. IGA Review6. Public-private

partnerships

1. Special Coverages for Public Sector

2. Risk assessment tools

3. Gallagher Policy Analysis (GPA)

4. Budget, CAFR, and Asset review

5. Gallagher Exclusive Products (Excess, Cyber, IMPACT, etc.)

An Overview of Tools & Resources aligned to your Cost Drivers

CORE360™ Resources


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Top Four Takeaways:I. The U.S. Insurance Marketplace has tightenedII. Individual risk profiles are dictating renewal

outcomes III. Auto is consistently seeing rate increases IV. Rate trading across lines of coverage has helped to

offset some potential increases in premium

Market Update2018 State of the Market


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WHY?• Distracted driving• Increased cost to repair

due to more technology• Improving economy =

driving more frequently and longer distances

WHAT CAN YOU DO?• MVR checks initially /

annually• Minimum guidelines• Defensive driver training• Telematics

Increasing Auto Premiums


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7SC Rural Water Association.

1. Automobile Liability *2. Employment Practices

Liability *3. Public Officials/Directors

& Officers Liability *4. Pollution Liability *

– Except sudden and accidental

General Liability CoverageA tort, in common law jurisdictions, is a civil wrong that causes a claimant to suffer loss or harm resulting in legal liability for the person who commits the tortious act.

NOT included in GL:5. Cyber Liability/Breach *6. Railroad Protective

Liability *7. Crime *8. Coverage for owned

property *

*Coverage available under separate coverage form


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Management Liability


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I. First Party Breach Response Costs– Legal expenses– Notification expense– Credit monitoring expense– Forensic Investigations– Public Relations

II. First Party Operational Cost– Cyber extortion– Data Recovery– Business Interruption

III. Third Party liability– Organization being held liable as a result of lawsuit or

demand for injunctive relief

How strict is MY state regarding Data Breach Laws?

Most Strict: AL, CA, IL, NJ, NY, OH, OR, SC, TX, UT

Very Strict: AK,CT,FL, IN, LA, ME, MD, MI, MT, NV, NH, NM, VT, VA, WV

Moderate: AZ, CO, DE, HI, ID, IA, MN, MO, NE, NC, ND, OK, RI, TN, WA

Less Strict: AR, GA, KS, MA, PA, WI, WY, DC

Least Strict: KY, MS

Cyber Liability


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I. Fraudulent acts by specified individuals– Dishonest acts of

employeesII. Coverage for

– Theft of cash– Assets– Merchandise– Other property loss from

fraud, embezzlement, forgery, misrepresentation, robbery or theft

CrimeFidelity bond / Employee Dishonesty / Crime Policy


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Director & Officers / Public OfficialsLiability coverage for the errors and omissions of Public Officials

In effect, such policies serve the same function for elected/ appointed officials of state and local government as directors and officers (D&O) insurance serves for the directors and officers of corporations.


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Environmental (Pollution) Liability

• Third-party and/or first party coverage for: • Bodily injury• Property damage• Cleanup • Related defense

costs as a result of pollution conditions.


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Required by railroads • Protects the railroad

from liability it incurs because of the work done by others

• Contractors, utility co., etc.

• On or near a railroad right of way.

Railroad Protective Coverage

Coverage is available from:• The railroad can provide

RRP to you. • Request a quote from the

railroad PRIOR to work being performed.

• Best option!• Call your agent/broker to get

a separate quote from the standard insurance market.


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I. Wastewater treatment tank systems regulated under Section 402 or 307(b) of the Clean Water Act and are not subject to UST regulation by the EPA

II. Other underground tanks –petroleum, other regulated substances. Subject to EPA regulation and must be registered and must evidence financial responsibility.

III. Financial responsibility can be evidenced through the SUPERB fund (South Carolina only) or purchasing a UST liability policy.

IV. UST liability policy provides coverage for third-party bodily injury and property damage from pollutionconditions emanating from scheduled underground and aboveground storage tanks

Underground Storage Tank Liability


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1. Terrorism – Sabotage related to water system contamination

2. Active Shooters3. Drones4. Public Private Ventures5. #MeToo6. Erosion of Sovereign

Immunity7. Tort Cap increase

legislation

Emerging RisksGrowing in media coverage, claims, and lawsuits


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16SC Rural Water Association

I. Tort LiabilityII. Pre-Paid Legal (used to

pay the costs to defend legal suits that are not covered under the tort liability policy from the IRF. Examples-– Breach of Contract suits

(employment contracts, vendor contracts, etc.)

– Suits seeking injunctive relief– Suits seeking return of property

III. Auto LiabilityIV. Professional Liability

IRF - Liability Coverages


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IRF - Liability Exclusions

• One party assumes the liabilities of another party, or the financial responsibility for those liabilities by means of a contract. – Hold harmless clauses– Indemnification wording

• SC Attorney General’s Office

– “…state agencies do not have the authority to enter into indemnification agreements. As stated in an opinion dated September 29, 2004 determining that indemnification agreements "are without legal authority".

Contractual Liability

• Remove any clause that clearly creates any obligation for the government to indemnify anyone. Likewise, remove any language that expresses an intention by the government to reimburse or pay the other party for any loss, damage, liability, or judgment.

• Take the same approach to language that requires you to provide a defense against claims, or to save harmless from costs, or attorney’s fees, or expenses of suit.

• If you suspect that a clause imposes an indemnity obligation on the government and you cannot get the contractor to remove the language, add clarifying language to the offending sentence. Use a phrase like this one: “provided that nothing in this section creates any obligation for the State to hold contractor harmless from, or defend contractor against, such claims.”

Hold Harmless / Indemnification Tips


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I. Verify Workers Comp II. Certificates of Insurance

– Before work begins– Periodically– Change in contract/project

III. Audit / Time of claimIV. Same primary liability limits

as entity

ContractorsWorkers Comp / Liability


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Client Experience Renewal Timeline | Meetings | Documents

45–0 DaysRenewal Prep Go To Market Propose & Bind

90–45 Days150–90 Days

CORE360™ Strategic Review CORE360™ Market Submission

Report

CORE360™ Executive SummaryStewardship

Details our work in the past year to reduce the Client’s

total cost of risk

StrategyIdentify opportunities to

improve results, and provide strategic options for next

policy year

Savings in past year Go to Market Strategy Transparency of competition, target pricing, list of exposures, claims summary Go to Market Strategy and results

Changes made in past year Options for this year Requested limits and deductible options, request for other program options with analytics to support

Strategy (limit and deductible options) and results

Coverage improvements in past year

Coverage improvements for this year Gallagher policy specifications by line of coverage Comparison of expiring versus renewal

program structure

Additional lines considered/ purchased in past year

Additional lines to consider this year (new and new to Gallagher)

Quotes for additional lines of coverage (include exposure and claims information)

Strategy (additional lines) and results (options and recommendations)

Results achieved with pre-and post-loss activities Service plan for this year Carrier loss control and claims parameters/services,

client loss control and safety efforts Strategy and results

Quantify certificates issued/ tracked and contracts

reviewed

Changes/improvements needed for this year

List of certificate holders, coverage specifications based on assumed contractual liability Strategy and results


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Submission Info / Timeline

Task Date Assigned toComplete Renewal Strategy Worksheet April 4, 2019 GallagherCORE360TM Strategic Review* - Gallagher April 4, 2019 GallagherCORE360TM Strategic Review* - with Client May 4, 2019 Gallagher and ClientRequest Renewal Information (RES) May 4, 2019 GallagherDeliver FINAL CORE360 Strategic Review to Client May 19, 2019 GallagherReceive Renewal Information (RES) from Client June 3, 2019 ClientSubmission to Markets including CORE360 Market Submission Report** June 13, 2019 Gallagher and ClientMarket Meetings June 26, 2019 Gallagher and ClientQuotations from Markets July 23, 2019 Gallagher

CORE360TM Executive Summary & Proposal to Client August 11, 2019 GallagherBind Policies (sign required forms) August 18, 2019 ClientCerts/ID Cards/Binders to Client August 25, 2019 GallagherRenewal Date September 1, 2019Policies from Markets October 1, 2019 GallagherPolicies to Client*** October 31, 2019 Gallagher

• Current Valued Loss Runs*• Insurance Carriers/Policies*• Payroll by class code*• Current policy

- Limits/deductibles by LOC

*Last 5 years plus current year

• Schedules• FEIN• Other underwriting questions /

applications• Don’t Forget to send Notice of Intent


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• Statement of Values (SOV)• Scheduled or a blanket

limit• Review and update

• When property is added• Annually at renewal

Assets Fully Covered?


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Recommended limits and deductibles

Program Structure

Review your evolving risk appetite for the most optimal program structure:


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Coverage GapsAnalyze current policies, offering the broadest available coverage specifications

Uninsured & Uninsurable Losses

Renewal Strategy

Loss Prevention & Claims

Contractual Liability

Review your uninsured risks both insurable and uninsurable

Take a strategic approach to your risk control procedures

Review contracts for proper coverage from an insurance standpoint

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Questions?

1301 Gervais Street, Suite 400Columbia, SC 29201803.451.3009

Heather KinardAccount Executive

Covering your *%#: Insurance and Cost Reduction Strategies Applicable to Property … ·...

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