State Risk Management (SRM) Welcome Insurance Coverage Overview 2010
Today’s Discussion Items • General Discussion • Liability (Self-insured) • Tort • Auto • Directors and Officers, Educators Legal Liability, Employment Practices Liability (Commercial Insurance with SIR) • Employee Dishonesty (Commercial Insurance) • Physical Damage/Specialty Vehicle • Physical Damage/Passenger Vehicles • Property Insurance (Commercial Insurance with SIR) • Other lines: Aviation, Foreign Liability, Out of State • Fine Arts
UNDERWRITING SURVEYS • Property • Flood Zones • Terrorism • Fine Arts and Valuable Papers & Records • D&O / ELL • Vehicles • Out of State Travel • Foreign Travel • Employee Dishonesty
Insurance costs should be included in your annual budget, and premiums need to be paid in a timely manner. Commercial insurance premiums the State pays must be paid within 30 days of binding or coverage is canceled for non-payment of premiums. SRM pays all commercial premiums in advance of collections of premiums from State entities. While we recognize the budget situation, it remains important that you pay your premiums promptly. Beginning this year, premiums are due upon receipt of your invoice; any entity failing to pay within 45 days of the due date will be considered delinquent in its payments, and SRM may be forced to take statutory measures to collect overdue premiums. (Refer to 74 O.S. § 85.58M (C) ) PREMIUM PAYMENTS
To Avoid Problems and Reduce Costs Additional Property & Casualty coverage? Please recall 74 O.S. § 85.58A: “Prior to purchase of property and casualty insurance . . . details of the . . . purchase shall be submitted to . . . .” SRM. (And OAC 580-25-5-1 (a) (1) and (7))
Purchase of Property and Liability Insurance Outside of the SRM Program • 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 . . .” • Also, every policy of insurance contains a section entitled “Other Insurance.” This may negate coverage under all policies or create serious administrative issues that delay claim payments or recoveries.
Medicare Secondary Payer Mandatory Reporting Provisions in Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 See 42 U.S.C. 1395y(b)(7) & (8)(MMSEA)
MMSEA • Lines of Coverage • Health Benefits • Workers’ Compensation • Liability • Whether insured or self-insured • Responsible Reporting Entity (RRE)
Liability Discussion:Tort Liability and Auto Liability (Similar to Commercial General Liability and Business Auto Liability Insurance In the Private Sector)
Self-Insured Programs: Tort Liability including Auto Liability (Governed by 51 O.S. § 151, et seq. the Governmental Tort Claims Act (GTCA) and SRM Promulgated Rules, OAC 580:25-1-1, et seq.) No policy of insurance applies/No deductibles apply
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 SRM • Exclusive remedy for tortious conduct of State employees • Specifies how recovery may be made • Broad exemptions from liability
State Tort Subactivity 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 (Per GTCA State employees can be held personally responsible for damage) • If there are no GTCA exemptions
D&O, ELL, EPL • All lines insured • Self-insured retention applies • Essentially protects against U.S. Constitutional violations per exclusionary endorsement to all policies
D&O, ELL, EPL • Directors & Officers (Public Officials form) including Employment Practices Liability • Educators Legal Liability including Employment Practices Liability (Separate policies sharing an annual aggregate limit)
EPL? Employment Practices Liability (sexual harassment, discrimination, wrongful termination, etc.)
D&O, ELL, EPLPolicy Limits • $5,000,000 each occurrence • $35,000,000 annual aggregate
D&O, ELL, EPLSelf-insured Retention Levels (SIR) • State: $500,000 • State Entity: As selected by entity up to $150,000 • RM: Difference between entity selected deductible and State SIR
Tort Claims With D&O Allegations • Claim filed under GTCA • Claim alleges Tort issues covered by GTCA • Claim alleges U.S. Constitutional Issues or possibly other allegations outside of GTCA • Possible coverage under both GTCA and D&O, ELL, EPL policies
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.
GTCA Claims vs. D&O, EPL &ELL Claims • Why should you care about the difference between GTCA and D&O, EPL & ELL? • There are claims which are mixed – part GTCA and part D&O, EPL or ELL • Agency still has obligation to pay $150,000 retention on a D&O claim even if Risk Management pays $175,000 from the Tort Fund.
GTCA Claims vs. D&O, EPL &ELL Claims • Why should you care about the difference between GTCA and D&O, EPL & ELL? • If a covered claim has been properly made under the GTCA and alleges a covered claim under the D&O policy, and all claims (state and federal) are settled for $1 million, payment would be made as follows: • Risk Tort Fund $175,000 • Agency $150,000 • Risk D&O Fund $350,000 • D&O Insurance $325,000 $1 million
To Avoid Problemsand Maximize Recovery of Losses • Coordinate all property and liability claims through SRM. • Report all claims to SRM immediately • Do not delay reporting • Delays may inhibit your ability to recover losses
Insurance Policy Coverage Issues • Do not attempt to interpret insurance coverage. • Do not allow others to interpret coverage. Call SRM.
Our AbilityTo Protect Your AssetsDepends Upon You Communication Reporting Timeliness