UTSA Financing Risk Management
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Transcript of UTSA Financing Risk Management
UTSAFinancing 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 *
2008 Premiums $326,632
2009 Premiums (estimated) $449,347
* Offered through UT System to all UT institutions
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
2008 Premiums $235,366
2009 Premiums (estimated) $242,682
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
2008 Premiums $35,540
2009 Premiums (estimated) $35,540
UTSA Insurance Premiums
2008 2009(estimated)
People(WCI, UCI, D&O, Crime)
$326,632 $449,347
Property(CPPP, Auto, Mobile Equipment, Equipment)
$235,366 $242,682
Liability(Festivals, TULIP, Camps, D/B)
$35,540 $35,540
Total $558,848 $688,928
UTSA Cost of Risk
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
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
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
Unfunded Exposures Summary
Problem Insurance ExposureProperty Loss to UTSA - Fire/AOP
CPPP$250k Deductible$475k Fund Replenishment for 5 yrs
Property Loss to UTSA - Wind and Flood
CPPP$250k Deductible20-30 yrs debt service on $20M
Property Loss in system - Fire/AOP
CPPP ~$25k Fund Replenishment for 5 yrs
Property Loss in system - Wind and Flood
CPPP20-30 yrs debt service on ~$1.5M Deferred Capitalization
Employment Practices D&O$100k individual$300k institution
Tort Liability$250k Per person$500k Per occurrence$100k Property Damage
CPPP Fire/AOP Structure
Loss Financingup
$1BNo Coverage
$1B
$5MCommercial Insurance
$5M
$250k
50% institution
w/loss
(5 yr amort.)
50% all other institutions
(5 yr amort.)
$250k
$0Deductible – institution w/loss
UTSA Fire/AOP Cash Flows
$0Year 0
-$250
Year 2Year 1 Year 4Year 3 Year 5
Following Catastrophic Property Loss (thousands of dollars)
-$475
-$25
UTSA suffers the loss
Any sister institution suffers the loss
-$25 -$25 -$25 -$25
-$475 -$475 -$475 -$475
CPPP Wind & Flood StructureLoss Financing
Up$150M
No Coverage
$150M$50M
Commercial Insurance
$50M
$250k
40% Debt Svc Institution w/loss (20-30 yr amort.)
60% Debt ServiceAll other institutionsDeferred Capitalization on property fund
$250k$0
Deductible
UTSA Scheduled Equipment Coverage
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
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
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
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)