Risk Management The BIG Picture

1
Risk ManagementThe BIG Picture

• Rollie Boeding
• Director of State Risk Management
• State of Wisconsin
• 66th Annual Wisconsin Health
• And Safety Congress
• April 29, 2008

2
Goal of this Session

• Provide you with the big picture of Risk
  Management
• Critical role of Safety and Risk Control
• Overview of State of Wisconsin Risk Management
  program

3
Risk Management

• The practice of identifying and analyzing loss
  exposures by fortuitous or accidental means and
  taking steps to minimize the financial impact of
  risks.
• The ultimate goal
• Sustain the organization

4
Risk Management Process

• Identification and analysis of risk
• Selection of appropriate risk management
  techniques
• Implementation of chosen techniques
• Monitor the results
• Start all over again!

5
Risk Management Techniques

• Retention
• Contractual or non-insurance transfer
• Loss Control
• Prevention and Reduction
• Avoidance
• Insurance transfer

6
Insurance Transfer

• Reality just sharing risks with other insureds
• Goal of insurance company make a profit
• In the long term insurance companies will make a
  profit
• Self fund what you can to avoid the insurance
  company profit cost

7
The Critical Component

• Control
• the
• Losses!
• Risk Control Rules!

8
The State of Wisconsin

• 68,000 state and university employees
• 20 billion insured values
• Buildings and contents no roads or bridges
• 13 four year campuses 170,000 students
• 25 major correctional facilities 22,000 guests
• 3 mental health institutions
• 2 retirement homes / acute care
• Parks, historical sites, fire towers, ECB towers
• State Troopers, DNR wardens, health professionals
• 6,300 licensed vehicles
• Everything else!

9
Major Loss Exposures

• Employee Death or Injuries
• 3rd Party Bodily Injury or Property Damage
• Damage to Property

10
Number of Workers Compensation ClaimsMedical
Only Lost Time/Hazardous DutyFY93 - FY07
11
Workers Compensation Claims Cost FY93-07
12
Workers Compensation CostsIndemnity, Medical
ExpensesFY93 - FY07
13
Workers Compensation

• The State of Wisconsin
• Is Completely Self-funded
• No Excess or Reinsurance

14
Property Claims Cost FY93-FY07
15

• Excess Property Insurance
• Have 2.5 M. per occurrence SIR and 2.7 M
  annual aggregate SIR
• Limits of 300 million per occurrence
• Includes both international (TRIA) and domestic
  (non-TRIA) terrorism
• Includes Builders Risk
• All risk policy
• Blanket Coverage for Contents

16
Fine Arts Policy

• 300 million limits on five largest exposures
• 80 million at locations owned, occupied or
  controlled by the state
• 50 million at any location
• 50,000 deductible
• No deductible for transit or away from normal
  repository

17
Excess Property Premium FY08 Premium (Fine
Arts) 1,594,000 FY07 Premium (Fine
Arts) 1,645,519 FY06 Premium (Fine
Arts) 1,469,981 FY 05 premium
1,652,000 FY04 Premium
2,037,773 FY03 Premium 2,281.635 FY02
Premium 746,701 PRIOR TO 911
18
(No Transcript)
19
(No Transcript)
20
(No Transcript)
21
(No Transcript)
22
Property Program Costs FY07

• Losses 3,828,000 63
• Excess Insurance 1,685,000 27
• Program Adm. 605,000 10
• Totals 6,118,000 100

23
Property Program Costs FY93-95

• Losses 2,855,000 82
• Excess Insurance 636,000 18
• Program Adm. 197,000 10
• Totals 3,492,000 100

24
FY95 / FY07 Comparison

• Losses increased 34
• Excess insurance increased 164
• Program Adm increased 207
• Driven by Loss Control Costs

25
Liability Claims Cost FY93-FY07
26
Excess Liability Insurance 4 M SIR
(Increased from 3 M July 1, 2006) 49 M in
limits Excludes Medical Malpractice Terrorism
Fiduciary Liability
27
Excess Liability Premium FY08
Premium 753,000 -12 FY07 Premium 856,250 53
(SIR from 3M to 4M) FY06
Premium 559,066 3 FY05 Premium 540,500 6 F
Y04 Premium 511,500 9 FY03 Premium 469,100 3
8 FY02 Premium 338,100
28
(No Transcript)
29
Total Claims CostFY93 - FY07
30

• Cost Drivers
• Liability Claim Costs
• FY97-02 Average 4.4 million
• FY03-04 Average 6.8 million
• FY05 4.8 million
• FY06 3.6 million
• Workers Comp Medical Costs FY00
  5,039,000
• FY05 8,326,361
• 65 Increase

31

• Cost Drivers (cont)
• Excess Property Premiums
• Increased 120 since 2001
• Excess Liability Premiums
• Increased 153 since 2001
• Large Weather Related Property Losses Statewide
  May/June 2004
• UW Madison Flood 2006

32
Program Fund BalancesFY93 - FY07
33
Total Agency Premiums FY93 - FY07
34
Risk Control Drives Results
Health Safety Programs OSHA Compliance Liabili
ty - Drivers Risk Control Property Loss Control
Program
35
Program AssessmentPropaganda Portion of Program

• Risk Cost Survey for FY05
• 11 Other States
• Reviewed All Areas
• Established Comparable Benchmarks
• Percent of Operating Budget
• Per 100 Employees
• Per Auto

36
Number of Work Comp Claimsper 100 Employees
37
Work Comp Costs per 100 of Payroll
38
Property Costs per 100 of Property Values
39
?s
Thank you!