UTSA Financing Risk Management

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UTSAFinancing Risk Management

• John DeLaHunt, MBA, ARM
• UTSA Risk Life Safety Manager
• April 22, 2009

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Risk Mapping
OftenFREQUENCYRare
MinorSEVERITYMajor
Paper Cuts
Warfare
MANAGE
AVOID
Bird Attacks
Auto Fatality
TOLERATE
TRANSFER
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Integrated Risk ManagementA Three Legged Stool

• Loss Prevention
• Loss Control
• Risk Finance
• - and -
• Business Continuity

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Risk Finance Strategies
Cost Capacity
Naked Low Low
Self-Insurance Low Moderate
Risk Pooling Moderate Moderate
Commercial High High
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Policies in Place for People

• Workers Compensation (WCI)
• Unemployment Compensation (UCI)
• Directors Officers (DO)
• Commercial Crime

2008 Premiums 326,632
2009 Premiums (estimated) 374,456
Offered through UT System to all UT
institutions (System Coverage)
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Policies in Place for Property

• Real Property (CPPP)
• Vehicles (liability, physical damage, etc)
• Scheduled equipment
• Fine Arts
• Mobile equipment

2008 Premiums 235,366
2009 Premiums (estimated) 242,682
Offered through UT System to all UT
institutions (System Coverage)
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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
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UTSA Insurance Premiums
2008 2009 (estimated)
People (WCI, UCI, DO, Crime) 326,632 374,456
Property (CPPP, Auto, Mobile Equipment, Equipment) 235,366 339,532
Liability (Festivals, TULIP, Camps, D/B) 35,540 35,540
Total 558,848 713,987
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UTSA Cost of Risk
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CPPP Fire/AOP Structure
Loss Financing Financing
up 1B No Coverage No Coverage
1B 5M Commercial Insurance Commercial Insurance
5M 250k 50 institution w/loss (5 yr amortization) 50 all other institutions (5 yr amortization)
250k 0 Deductible institution w/loss Deductible institution w/loss
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CPPP Wind Flood Structure
Loss Financing Financing
Up 150M No Coverage No Coverage
150M 50M Commercial Insurance Commercial Insurance
50M 250k 40 Debt Svc Institution w/loss (20-30 yr amort.) 60 Debt Service All other institutions (deferred capitalization on property fund, 20-30 yrs)
250k 0 Deductible (institution w/loss) Deductible (institution w/loss)
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UTSA Fire/AOP Cash Flows

• Following Catastrophic Property Loss (thousands
  of dollars)

Year 0
Year 2
Year 1
Year 4
Year 3
Year 5
0
-25
-25
-25
-25
-25
-250
-475
-475
-475
-475
-475
UTSA suffers the loss
Any sister institution suffers the loss
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Unfunded DeductiblesCPPP - Fire/AOP and WF

• Exposure
• Property loss gt250k
• 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
• WF Debt Service over 20-30 years
• 20M if UTSA suffers the loss
• 1.5M if another campus suffers the loss

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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

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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

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Unfunded Exposures Summary
Problem Insurance Exposure
Property Loss to UTSA - Fire/AOP CPPP 250k Deductible 475k Fund Replenishment for 5 yrs
Property Loss to UTSA - Wind and Flood CPPP 250k Deductible 20-30 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 CPPP 20-30 yrs debt service on 1.5M Deferred Capitalization
Employment Practices DO 100k individual 300k institution
Tort Liability 250k Per person 500k Per occurrence 100k Property Damage
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UTSA Scheduled Equipment Coverage
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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

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Ideas

• Build liability reserve
• Tort liability 600k cap
• DO deductible 100k/300k
• Immediately 600k (assumes 1 loss per year)
• Premium and reserve sharing analysis

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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

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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)

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UTSAFinancing Risk Management

• John DeLaHunt, MBA, ARM
• UTSA Risk Life Safety Manager
• April 22, 2009