State
Insurance and Risk Management Board
At a Glance
M.ALICE SHERMAN, Interim
Chairperson
Joseph G. Lynch, Vice Chairman
Established – 1963
Statutory authority - Sec.
4a-19, 20 and 21
Central office -
Number of full-time employees
- 3
Recurring operating expenses
- $12,553,191.49
Mission
The mission of the State Insurance and
Risk Management Board is to protect assets of the State of
Statutory Responsibility
Pursuant to C.G.S. Section 4a-19, 20 and 21, the principal duties of the
Board are: Determine the method by which the state shall insure itself against
losses by the purchase of insurance; obtain the broadest coverage at the most
reasonable cost; direct negotiations for the purchase of such insurance and
determine the applicability of deductibles and self-insurance; designate the
Agent or Agents of Record and select companies from which the insurance
coverage shall be purchased; negotiate all elements of insurance premiums and
the agent's commission and/or fee for service and establish specifications and
request bids for each insurance contract through the Agent of Record. Effective July 1, 1998, House Bill #5622
amended the Board’s duties to include the development and implementation of
Risk Management and Loss Prevention Programs.
The
Board serves as the focal point of all non-employment related risk management
and insurance matters affecting the state. As such, each agency, department, commission
and board and its respective employees benefit from the Board's services by
minimizing the financial effect of loss to property and providing protection
and service for liability claims not precluded by sovereign immunity.
Public Service
Board members are appointed by the Governor, serve as volunteers and receive no compensation for the performance of their duties.
Open communication is encouraged. All Board members, the Risk Manager, staff to the Board and the Agent of Record make themselves readily available to all state agencies on matters relating to risk management and casualty and property insurance. The Board's focus is to promptly respond to state agencies in an effective and professional manner.
The Board continues to take steps to identify and address the state’s unique exposures. The Board has designed an insurance/risk management program to respond to its statutory responsibility and protect the assets of the state. The Board follows basic risk management principles in identifying exposures and examining and selecting techniques. Appropriate levels of insurance for a reasonable cost are currently maintained. Some of the risk management techniques which have been implemented to help reduce the overall cost of risk to the state are large loss review meetings, training sessions for state personnel, monthly property inspections and monthly accident review committee meetings. The Board measures the effectiveness of these techniques by establishing a benchmark of past loss experience and comparing that standard to current loss experience.
Improvements/Achievements 2005-06
Risk Management initiatives implemented by the Board included:
·
The Board purchased a software program designed
to detect sprinkler valves that are locked and in a closed position that would
be a disaster should a fire occur. The software program was purchased for
·
Appraisals were conducted at various state
buildings including the
·
The Board hosted a Loss Prevention Seminar at
· The Board’s online Risk Management Manual was updated to reflect policy and program changes.
The Board also printed a Policies and Practices manual that outlines the history of the Board, the statutory requirements, as well as the duties and responsibilities of the members, risk manager and employees.
Information Reported as Required by State Statute
As statutorily required, the Board continues to assess the feasibility of self-insurance (including deductibles and retentions) as a possible alternative to commercial insurance. Under the present program, prudent and cost effective risk assumptions are maintained by incorporating retentions and deductibles in property and liability policies. Deductibles and/or self-insured retentions are prudently used to reduce the overall cost of risk.
The property insurance program is subject to a $250,000 per occurrence deductible. This deductible is the responsibility of each state agency. This deductible allows the Board to purchase catastrophic coverage at a cost effective rate. The insurance program provides proactive engineering services to help avoid or mitigate property damage within the deductible. This insurance program with an emphasis on self-retention and engineering has been highly successful.
In order to keep costs down, the Board agreed to retain a $4,000,000 self-insured retention on the casualty program. The $4,000,000 self-insured retention is the responsibility of the Board. Claims within the self-insured retention are trended, developed and estimated with the assistance of independent actuarial projections. Claim payments have been within projected and budgeted amounts. In light of exposures and legal defenses, the casualty limits are appropriate. A proper balance of self-insurance and insurance is maintained. The casualty self-insurance/insurance program is an effective risk management tool. The Board continues to monitor and evaluate the retention level for this policy.
Gross expenditures for the fiscal year amounted to $16,105,935.24 of which $6,659,987.63 represents
self-insured/deductible and third party administrative fee reimbursements in accordance with various insurance policy provisions. Reimbursements amounted to $3,552,743.75, which represents refunds including return premiums and reimbursements from departments and agencies for insurance purchased on their behalf and for which reimbursement provisions are made in the statutes or through some other means.
The Board’s evaluation of the Agent of Record reinforces the position that the services provided to the State meet and/or exceed the requirements in all areas. The Agents of Record’s income for the fiscal year was $299,000.00 and was paid in monthly installments.
The Board uses Specialty Risk Services as the state’s Third Party Administrator to handle liability claims within the self-insured retention. The total amount of fees paid to Specialty Risk Services was $668,253.00.
The insurance program is subject to competitive bidding and premiums have been within reasonable parameters. Limits are set based upon historical perspective and industry standards.
The Board reports that it does business only with those insurance companies, which are licensed or approved by the State of Connecticut Insurance Department.
2005/06 Insurance Expenditures
|
Category |
Amount |
|
|
|
|
Accident & Health |
$ 418,516.60 |
|
|
|
|
Agent of Record Fee |
$ 299,000.00 |
|
|
|
|
Aircraft/Airport |
$ 308,573.59 |
|
|
|
|
Boiler and Machinery |
$ 195,565.16 |
|
|
|
|
Fire & Extended Coverage |
$ 3,912,197.00 |
|
|
|
|
Liability & Dram Act |
$ 2,202,841.70 |
|
|
|
|
Highway Liability |
$ 1,748,711.64 |
|
|
|
|
Motor Vehicles |
$ 5,974,877.38 |
|
|
|
|
Buses |
$ 753,956.97 |
|
|
|
|
Watercraft |
$ 90,905.66 |
|
|
|
|
Miscellaneous & Others |
$ 149,947.00 |
|
|
|
|
Risk Management Expenses |
$ 41,566.54 |
|
|
|
|
Surety Bonds |
$ 9,276.00 |
|
|
|
|
|
|
|
TOTAL GROSS EXPENDITURES |
$16,105,935.24 |
|
|
|
|
LESS: REIMBURSEMENTS |
$(3,552,743.75) |
|
|
|
|
TOTAL NET EXPENDITURES |
$12,553,191.49 |
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