Safety, Health, Environment & Risk Management

Risk Finance Summary for Workforce & Property Exposures: FY09 Experience and FY10 Projections

UTHSC-H Employee Injury Reports and Workers’ Compensation Insurance Premium Trends, FY03 to 09

Note: insurance premium influenced predominantly by market conditions, employee census, employee payroll, and injury frequency and severity Oversight by SHERM 173 fewer reported injury events compared to FY 03 101 fewer injuries requiring medical compared to FY 03 - $123,753 - $293,331 - $348,718 - $568,998 - $558,772 $1,893,572 in total premium savings since FY03

$227,000 in RAP reduction in FY09 as compared to peak of $436,100 in FY07

UTHSC-H Residents’ Injury Reports and Workers’ Compensation Insurance Premium Trends, FY03 to 10

Note: insurance premium influenced predominantly by market conditions, employee census, employee payroll, and injury frequency and severity Oversight by SHERM Increase due predominantly to needlesticks. Targeted investigation and interventions put in place in 2009 $80,000 in total premium savings since peak in FY06

Total of $172,405 in dividend payments since SHERM oversight

Workers’ Compensation Insurance Premium Adjustment for UTS Health Components Fiscal Years 2003 to 2010 (projected)

(premium rating as compared to a baseline of 1, three year rolling average adjusts rates for subsequent year) Oversight by SHERM

UT Southwestern Dallas (0.17) UT Medical Branch Galveston (0.16) UT HSC San Antonio (0.12) UT HSC Tyler (0.09) UT HSC Houston (0.08) UT MD Anderson Cancer Center (0.04)

*MHH Increase in BI coverage from FY08-FY09, $49MM to $75MM

FY09 Property Losses

- Losses Incurred but covered by UTS Comprehensive Property Protection Program

FY09 did not experience any losses above the $250,000 CPPP deductible that were not covered by a third party

- Losses incurred but covered by third party

MSB Basement, Contractor left conduit exposed to exterior; basement impacted by rain event $25,000 Hurricane Ike property damage $1,108,974, qualified for FEMA reimbursement

- Retained Losses

Freezer Loss at SRB $125,000 MSB fire behind a refrigerator $50,000 Hurricane Ike property damage of $36,550 did not qualify for FEMA reimbursement Theft** Retained Property Loss Summary By Peril (Total FY09 losses by cause and amount in dollars, Total Loss~$414,656)* Water Related Fire Loss of Power Burglary, Vandalism, Forgery Loss of Temperature *Not inclusive of any recorded Capitol Assets inventory irregularities. For additional information contact UTHSC-H Capitol Assets Management **Estimate based on replacement cost of damaged property

Enhanced Risk Assessment & Control Services Services Provided

– Institutional exposures objectively ranked by (1)value exposed to loss, (2)revenue, (3)expenses, and (4)total asset value – Targeted analysis on specific risk exposures and the development of risk control techniques to mitigate loss, provide assistance with installation, and implementation

Gulf Coast Hemophilia

Verified backup power Verified access control Surveyed physical vulnerability to products from breech of building envelope Performed financial analysis for consideration of purchase of additional insurance to reduce the CPPP $250,000 deductible

Core Laboratories Microbiology and Molecular Genetics

Ensured fire suppression system would not be inadvertently activated by high heat load generating equipment Assessed potential water damage due to ice machines and Millipore units Potential sources of water intrusion identified impacting high energy robotics Provided contract for and tour of hardened offsite temperature sensitive sample storage vendor Performed financial analysis for consideration of purchase of additional insurance to reduce the CPPP $250,000 deductible Performed financial analysis for consideration of purchase of additional insurance to reduce the CPPP $250,000 deductible

Gauge Your Level of “Informed Risk”

In an attempt to gauge the level of informed risk across campus, an online survey was circulated to manager and supervisory-level personnel via various institutional e-mail list servs for the period August 24 to September 9, 2009.

Summarized below are the collective responses by percent from 138 respondents. The results indicate that certain opportunities to enhance community education and awareness exist, and will be pursed in FY10 to help further reduce the amount of retained losses experienced by the institution.

Did you know that…..

When measured by dollar value of property loss, the most significant cause of property damage at the UTHSC-H is water?

Response Yes No 63% 37% The most common source of the water damage is not from hurricanes or discharges from sprinkler heads, but rather from overflowed sinks, drainage leaks, and leaks in water supply lines?

The deductible for the UTHSC-H property insurance policy is $250,000?

Personal property stolen or damaged while on UTHSC-H property is not covered by the UTHSC-H property insurance policy?

74% 26% 37% 63% 89% 11% The insurance for UTHSC-H includes some amount of coverage for “business interruption” but only if the loss event is due to property damage at UTHSC-H?

When contracting with a firm to move furniture and equipment that the standard coverage for anything damaged in the course of the move is $0.60/lb?

“Special events” such as parties, catered gatherings and graduations are not covered by the standard UTHSC-H insurance policy, and require the purchase of a “Special Events Policy”?

If you are injured on the job and cannot work, Worker’s Compensation Insurance will likely not cover your full salary during the period you are unable to work?

If you drive your personal vehicle for work purposes and are involved in an accident, the primary insurance coverage is your personal auto insurance?

If something is stolen from your workplace you would report it to UT Police. But if property is damaged or lost in some other way, did you know you need to report that type of loss to Risk Management & insurance?

63% 37% 16% 84% 32% 68% 84% 16% 79% 21% 47% 53%

Other Insurance Policies Managed by SHERM

FY05 FY06 FY07 FY08 FY09 FY10 FY05 FY06 FY07 FY08 FY09 FY10 Liability $234 $230 $230 $252 $252 $252

Fleet Insurance

(385 Drivers and 75 Vehicles) Comp/Coll Losses Premium $434 $412 $418 $459 $459 $459 $1,830 $28,697 $10,349 $17,582 $9,854 $9,854 $40,443 $38,202 $42,234 $37,181 $38,178 $38,178

Equipment Floater

(5,916 Scheduled Items) Rate (per $100 of insured value) Total Insured Value $0.42* $0.46* $0.54* $0.54* $0.54* $0.54* $4,017,404 $3,581,709 $3,983,875 $3,487,380 $5,118,381 $5,118,381 Annual Premium $16,870 $18,474 $23,414 $19,782 $26,950 $26,950 *Not Inclusive of current SHERM administrative processing fee of $0.46

Other Insurance Policies Managed by SHERM

FY06 FY07* FY08 FY09 FY10

Endowment Policy

(Property and Liability) Total Insured Value Losses $0 $53,254 $53,254 $53,254 $53,254 $0 $0 $0 $0 $0 Annual Premium $0 $2,746 $7,129 $10,549 $10,549 FY06 FY07 FY08 FY09 FY10

Fine Arts

(5 Scheduled Items, TIV $150,000) Limit based Premium Losses Annual Premium $500,000 $500,000 $500,000 $500,000 $500,000 $0 $0 $0 $0 $0 $200 $215 $906 $906 $906 *For Liability only at 1133 John Freeman Boulevard - The property was added 06/01/2006 premium pro-rata

Projected Change in Cost of Risk Transfer

POLICY

Employee Workers’ Compensation Resident Workers’ Compensation Fine Arts Mobile Diagnostic Equipment Auto (Fleet) CPPP Fire & AOP Premium CPPP Named Windstorm & 100-Yr Flood Commercial Named Windstorm & 100-Yr Flood Equipment Policy

POLICY PREMIUM TOTAL

FY09 Paid $335,710 $161,927 $906 $5,566 $38,178 $256,234 $268,375 $810,064 $26,950 $1,903,910 FY10 Estimated or Paid $302,139 $163,000 $906 $5,301 $38,178 $256,234 $268,375 $810,064 $0 $1,844,197 Net Change -$33,571 (-10%) $1,073 (1%) $0 (0%) -$265 (-5%) $0 (0%) $0 (0%) $0 (0%) $0 (0%) -$543 (-2%) -$33,306 (-2%)

Discussion Items

1.

3.

Despite continual reductions in WCI losses, rebate amounts continue to diminish. The Employee Health program is dependent upon these funds and will require an additional $70,000/yr to continue to operate.

2.

1.

The Informed Risk Survey highlighted three educational opportunities. The UTHSC-H community requires education regarding the property insurance deductible of $250,000 to help increase loss prevention awareness.

2.

3.

Typical insurance provided by moving companies ($0.60/lb) is insufficient for research and clinical assets.

The importance of reporting all retained losses to RMI needs to be reinforced.

4.

Since RMI began actively tracking and communicating loss mitigation strategies, in 2006, retained losses have slowly decreased. Since SHERM began managing specific insurance lines in 2004, the UTHSC-H has experienced $4.1MM in total savings or an average of $820,000 per annum. Do other such opportunities exist within the other insurance lines? E.g. would UTHSC H be better served if SHERM’s RMI program assumed more of an enterprise risk management posture?

Appendix A