Cold Times The Story of Freezer Claims Harry Rosenthal, UNSW

1
Cold TimesThe Story of Freezer
ClaimsHarry Rosenthal, UNSW
2
The Challenge

• Affect the Total Cost of Risk of Organisation
• Reduce insurance costs
• Reduce below excess costs
• Affect Reputation/Customer Service of Unit
• Responsive to customers needs
• Demonstrate understanding of customers problems
  even if we can not solve them.
• Learn Something New Today
• Universitys are exciting places
• Not simply a collection of people with insurance
  problems.

3
Risk Topic

• ID Risk Which has high impact on Cost of Risk
  equation.
• Property Insurance is most expensive single
  insurance policy.
• Risk Which We Have Some Degree of Control Over.
• Property is more internal incident driven not
  always 3rd party driven
• Risk Which has high reputation impact.
• Assets are used to drive output reputation
• Something Interesting
• Research is interesting.

4
UNSW Snapshot

• 2004 Total Claims Experience
• 220 total claims (non-workers comp)
• Total Value - just under 500,000
• 2004 Break Down
• 10 claims were ISR (above 10K excess)
• Freezer Claims -2 claims reserved 280,000
  valued (140,000)
• Freezer Loss Impact on Cost of Risk
• Less than 1 of claims
• 50 of ISR payouts
• 18 of total claims costs
• Average claims cost 1,800
• Average freezer cost 70,000

5
UNSW Loss Snapshot

• 1 Expensive Loss for University
• Freezer Claims
• 60 of UNSW property loss costs since 2003 have
  been related to freezer/ temp controlled room
  failures.
• 2 Expensive Losses for University
• Storms
• 3 Expensive Losses for University
• Theft/Burglary

6
Perils Causing Loss

• Extended Power Failures
• Equipment / Mechanical Failures
• Actions of People
• Contractor disconnects freezer
• Vandalism
• Neglect of Freezer

7
Whats Inside a Typical Freezer?
Things we made organisms, plasmas, etc which we
have created ourselves, time consuming to
genetically modify, intangible, unique it is
an expression of money and time.
Things we bought tissue samples, plasma,
organisms which are standard . Can be sourced
from other institutions. Example American Type
Culture Collection (ATCC) - a set of standard
organisms which are widely used in research are
standard in genetic composition and are able to
be purchased
Things we collected tissue samples rocks
samples can be recollected, but again time is
again the problem
8
Freezer Stakeholders
Risk Professional
Broker
Dean
Loss Adjuster
Research Office
Claims Officer
Researcher/Faculty
Insurer
9
The Risk Manager Interest Pyramid
University
Insurers (Insurance Contract)
Faculty
The Researcher
Research Project
10
Insurance Expert Impact

• Do They Need to Be Involved?
• Excess Level Issues
• Loss Notification
• Annual losses
• Specific incident
• Investigation Lag Time
• Determine Whether under Excess

11
The Researcher Profile
Loss of Freezer is a highly emotive matter for
the Researcher. It affects his/her most
important drivers TIME SCHEDULING COMPETITION
12
The Researcher
Whats in His/Her Mind My professional
standing will be affected because I can not
publish. My access to future grants is in
jeopardy because of the interruption to my
research. My dreams of riches fame fortune are
in jeopardy Ill never meet Delta Goodrem
because of this
13
The Academic Interest Pyramid
Research Project
Members of their Discipline -Area
School
Faculty
University
14
The Academics Staff
Whats in His/Her Mind My PhD may be pushed back
another year and my scholarship wont fund the
extra year. I had hoped the research would
last at least 6 years, now extension is doubtful,
should I jump to a project which will help pay
my mortgage? Am I walking down a dead-end
street as this academic may not rebuild their
research profile in several years. Our
cutting edge work has just become blunt. Ill
never meet Delta Goodrem because of this.
15
Net Income Ripple Effect
Graduation/Award of students
Shut-down /serious interruption of a grant
generation machine
Progress of research project
Freezer Loss
Marketing Commercialisation of research
Damage to assets
Employment of staff
Current DEST monies for university - publication
Professional reputation of researcher
16
The Research Grant Machine

• This machine serves a very oppressive master
• time
• Most grants are for 3 years
• Honours students are working on project for 1
  year
• PhD students are working on the project for 1 to
  3 years.
• A Freezer loss at its most simple attacks the
  researcher in the most vulnerable part of their
  operation loss of time.

17
The Research Grant Machine
Time Line
Staffing
PhD
Honours
18
The Researchers Competition

• Always competitive environment.
• There are others working on similar projects
• Important to Publish First in High Level
  Publications
• If you dont publish first you are left to
  publish in inferior journals
• Dont want to be seen as doing me too research
  - want to maintain edge, be first with best
  anything which jeopardises that leadership role
  is a threat.

19
The Researchers Professional Identify

• Professional judged by output freezer loss
  affect this
• Promotions determined by publication.
• Grants ARC NHMRS look at your past 5 years
  research publication output and rank all
  rehearsers accordingly. Up top 40 of a grant
  application is based on the strength of your past
  publication output
• Need to seen as active in you area of speciality
• Need to be seen as seeking funding
• There we type casting you are genetic biologist

20
Who Owns the Freezer?

• Often not a funded part of the research.
• Hard to ask for more than 10K for freezer.
• A typical freezer costs 25K to 45K
• Part of facility such as sink or autoclave.
• Easier to get granting agencies to contribute
  toward multi-million piece of equipment than a
  40,000 freezer.
• Always a shortage of freezers and of freezer
  space.

21
Methods to Calculate Loss(Tangible Assets)
Time Expense cost to reconstruct what was
there manpower calculation man hours X time X
average cost to collect sample process,
etc. Replacement Cost equipment and items
purchased Publication/Grant Losses DEST
awards universities money for publications,
books, etc. DEST gives additional allocation for
publication, no publish no income
22
Methods to Calculate Loss(Intangible Assets)

• Loss of Engine - Loss of momentum can be fatal
• To future net income output of Research Engine.
• Loss of Future Earnings/Grants/Publications
• Additional Grants future funding
• Potential Future Opportunities from material.
• New diagnostic gear may allow research to
  continue to another level, so need samples to
  allow further investigation. Like books on the
  book shelf.

23
Claims Cost Drivers

• Employ additional staff to duplicate research or
  to collect/generate additional samples.
• Purchase new strains, samples, chemicals if
  possible.
• Replace the freezer with an upgraded model which
  will reduce the possibility of this type of loss
  again.
• Hiring of temps to expedite recovery
• Clean-up costs
• New equipment
• Additional wiring
• Buy a great deal of alcohol to drown ones
  sorrows

24
Risk Management(Loss Prevention)

• Reduce Likelihood
• Use of Industrial Types of Freezers not a home
  use model
• Power supply directly wired to mains or secured
• Written rules for contractors working with
  electricity or moving freezers
• Substation and building wiring upgrade
  notification procedures
• Notification of expected extended power outages
• Security notification protocols for unexpected
  outages.
• Freezers in limited or secure access parts of
  building
• Freezers on capital asset management program

25
Risk Management(Loss Reduction)

• Reduce Consequences
• Power and/or Temperature Alarms
• Alarm notification protocol
• Security
• Freezer owner
• Inspection of contractors working in vicinity.
• Back-up power supplies
• Co2 back up systems for critical freezers
• Sample duplication and off-site storage

26
Insurance Impact

• Policy Wording Pitfalls -Exclusions
• Requirement of temperature or power source
  alarms.
• Sub limits of spoilage of goods type losses
• Exclusion for malicious acts of own employees
• Requirement for industrial types of freezers.
• Derangement type loss exclusions

27
Summary

• Freezer loss is not a simple property claim. It
  can affect the reputation and net income of the
  university.
• The risk professionals response promotes the
  customer service culture of the unit.
• To meet the objectives of all stakeholders, there
  must be an understanding of the views of all.
• This type of loss lends itself to successful risk
  management.
• It can be very interesting.