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18GGB29618X
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
18GGB29618X
Covering your *%#:
Insurance and Cost Reduction Strategies Applicable to
Property and Casualty Insurance for Utilities
Heather Kinard | February 22, 2019
I would like to emphasize that the discussion set forth above is only an insurance/risk management perspective and is NOT legal advice. We do not provide legal advice as we are not qualified to do so. I highly recommend that you seek the advice of legal counsel in order to become fully apprised of the legal implications related to these issues.
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
1. Holistic Approach to Evaluating and Minimizing your TCOR
2. Market Update3. Auto premium increases4. General Liability Overview5. Management Liability
– Cyber– Crime / Employee theft– D&O– Environmental liability– Railroad Protective Coverage– UST
6. Emerging Risks7. IRF Coverages / Exclusions8. Contractors9. Evaluation/Options Timeline10. Covering Assets11. Limits and Deductibles12. Questions
AgendaWhat are we talking about today?
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
The CORE360™ ApproachEvaluating and Minimizing Your Total Cost of Risk
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
Page 4
Public Entity
1. Carrier Relationships With Experienced Markets
2. “Go to Market” Strategy
3. Property Schedule Data metrics
4. Quality Submissions
5. Program administration
6. Budget/TCOR Projections
7. Benchmarking and pricing knowledge
1. Risk Financing Options on the Control Continuum
2. Immunity Preservation
3. Pools & Captive Solutions
4. Optimize Limits and Deductibles
5. Loss Stratification Models/Tools
6. Umbrella Benchmarking Tool
7. Property CAT Modeling
8. Buffer layer and stop-loss features
1. Gallagher's Loss Control Services
2. Gallagher's Claims Advocacy Services
3. Public Sector Newsletters & White Papers
4. Online Risk control training platform
5. TPA Selection and Oversight
6. Cost reductions for ULAE and ALAE
7. Risk Management Services
1. Practice Group Collaboration
2. Violent and Malicious Acts Coverage
3. Terrorism Plus4. Tax Revenue
Exposures5. Fixed asset report
review6. TCOR Analysis7. ERM Risk
Assessment8. Crime9. Cyber10. Environmental/Po
llution Liability11. D&O / Public
Officials12. Weather insurance
products
1. Tenant User Liability Insurance Program (TULIP)
2. Certificate Issuance
3. Certificate Tracking
4. Contract Review
5. IGA Review6. Public-private
partnerships
1. Special Coverages for Public Sector
2. Risk assessment tools
3. Gallagher Policy Analysis (GPA)
4. Budget, CAFR, and Asset review
5. Gallagher Exclusive Products (Excess, Cyber, IMPACT, etc.)
An Overview of Tools & Resources aligned to your Cost Drivers
CORE360™ Resources
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
Top Four Takeaways:I. The U.S. Insurance Marketplace has tightenedII. Individual risk profiles are dictating renewal
outcomes III. Auto is consistently seeing rate increases IV. Rate trading across lines of coverage has helped to
offset some potential increases in premium
Market Update2018 State of the Market
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
WHY?• Distracted driving• Increased cost to repair
due to more technology• Improving economy =
driving more frequently and longer distances
WHAT CAN YOU DO?• MVR checks initially /
annually• Minimum guidelines• Defensive driver training• Telematics
Increasing Auto Premiums
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
7SC Rural Water Association.
1. Automobile Liability *2. Employment Practices
Liability *3. Public Officials/Directors
& Officers Liability *4. Pollution Liability *
– Except sudden and accidental
General Liability CoverageA tort, in common law jurisdictions, is a civil wrong that causes a claimant to suffer loss or harm resulting in legal liability for the person who commits the tortious act.
NOT included in GL:5. Cyber Liability/Breach *6. Railroad Protective
Liability *7. Crime *8. Coverage for owned
property *
*Coverage available under separate coverage form
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
Management Liability
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
I. First Party Breach Response Costs– Legal expenses– Notification expense– Credit monitoring expense– Forensic Investigations– Public Relations
II. First Party Operational Cost– Cyber extortion– Data Recovery– Business Interruption
III. Third Party liability– Organization being held liable as a result of lawsuit or
demand for injunctive relief
How strict is MY state regarding Data Breach Laws?
Most Strict: AL, CA, IL, NJ, NY, OH, OR, SC, TX, UT
Very Strict: AK,CT,FL, IN, LA, ME, MD, MI, MT, NV, NH, NM, VT, VA, WV
Moderate: AZ, CO, DE, HI, ID, IA, MN, MO, NE, NC, ND, OK, RI, TN, WA
Less Strict: AR, GA, KS, MA, PA, WI, WY, DC
Least Strict: KY, MS
Cyber Liability
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
I. Fraudulent acts by specified individuals– Dishonest acts of
employeesII. Coverage for
– Theft of cash– Assets– Merchandise– Other property loss from
fraud, embezzlement, forgery, misrepresentation, robbery or theft
CrimeFidelity bond / Employee Dishonesty / Crime Policy
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
Director & Officers / Public OfficialsLiability coverage for the errors and omissions of Public Officials
In effect, such policies serve the same function for elected/ appointed officials of state and local government as directors and officers (D&O) insurance serves for the directors and officers of corporations.
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
Environmental (Pollution) Liability
• Third-party and/or first party coverage for: • Bodily injury• Property damage• Cleanup • Related defense
costs as a result of pollution conditions.
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
Required by railroads • Protects the railroad
from liability it incurs because of the work done by others
• Contractors, utility co., etc.
• On or near a railroad right of way.
Railroad Protective Coverage
Coverage is available from:• The railroad can provide
RRP to you. • Request a quote from the
railroad PRIOR to work being performed.
• Best option!• Call your agent/broker to get
a separate quote from the standard insurance market.
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
I. Wastewater treatment tank systems regulated under Section 402 or 307(b) of the Clean Water Act and are not subject to UST regulation by the EPA
II. Other underground tanks –petroleum, other regulated substances. Subject to EPA regulation and must be registered and must evidence financial responsibility.
III. Financial responsibility can be evidenced through the SUPERB fund (South Carolina only) or purchasing a UST liability policy.
IV. UST liability policy provides coverage for third-party bodily injury and property damage from pollutionconditions emanating from scheduled underground and aboveground storage tanks
Underground Storage Tank Liability
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
1. Terrorism – Sabotage related to water system contamination
2. Active Shooters3. Drones4. Public Private Ventures5. #MeToo6. Erosion of Sovereign
Immunity7. Tort Cap increase
legislation
Emerging RisksGrowing in media coverage, claims, and lawsuits
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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I. Tort LiabilityII. Pre-Paid Legal (used to
pay the costs to defend legal suits that are not covered under the tort liability policy from the IRF. Examples-– Breach of Contract suits
(employment contracts, vendor contracts, etc.)
– Suits seeking injunctive relief– Suits seeking return of property
III. Auto LiabilityIV. Professional Liability
IRF - Liability Coverages
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
IRF - Liability Exclusions
• One party assumes the liabilities of another party, or the financial responsibility for those liabilities by means of a contract. – Hold harmless clauses– Indemnification wording
• SC Attorney General’s Office
– “…state agencies do not have the authority to enter into indemnification agreements. As stated in an opinion dated September 29, 2004 determining that indemnification agreements "are without legal authority".
Contractual Liability
• Remove any clause that clearly creates any obligation for the government to indemnify anyone. Likewise, remove any language that expresses an intention by the government to reimburse or pay the other party for any loss, damage, liability, or judgment.
• Take the same approach to language that requires you to provide a defense against claims, or to save harmless from costs, or attorney’s fees, or expenses of suit.
• If you suspect that a clause imposes an indemnity obligation on the government and you cannot get the contractor to remove the language, add clarifying language to the offending sentence. Use a phrase like this one: “provided that nothing in this section creates any obligation for the State to hold contractor harmless from, or defend contractor against, such claims.”
Hold Harmless / Indemnification Tips
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
I. Verify Workers Comp II. Certificates of Insurance
– Before work begins– Periodically– Change in contract/project
III. Audit / Time of claimIV. Same primary liability limits
as entity
ContractorsWorkers Comp / Liability
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
Client Experience Renewal Timeline | Meetings | Documents
45–0 DaysRenewal Prep Go To Market Propose & Bind
90–45 Days150–90 Days
CORE360™ Strategic Review CORE360™ Market Submission
Report
CORE360™ Executive SummaryStewardship
Details our work in the past year to reduce the Client’s
total cost of risk
StrategyIdentify opportunities to
improve results, and provide strategic options for next
policy year
Savings in past year Go to Market Strategy Transparency of competition, target pricing, list of exposures, claims summary Go to Market Strategy and results
Changes made in past year Options for this year Requested limits and deductible options, request for other program options with analytics to support
Strategy (limit and deductible options) and results
Coverage improvements in past year
Coverage improvements for this year Gallagher policy specifications by line of coverage Comparison of expiring versus renewal
program structure
Additional lines considered/ purchased in past year
Additional lines to consider this year (new and new to Gallagher)
Quotes for additional lines of coverage (include exposure and claims information)
Strategy (additional lines) and results (options and recommendations)
Results achieved with pre-and post-loss activities Service plan for this year Carrier loss control and claims parameters/services,
client loss control and safety efforts Strategy and results
Quantify certificates issued/ tracked and contracts
reviewed
Changes/improvements needed for this year
List of certificate holders, coverage specifications based on assumed contractual liability Strategy and results
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
Submission Info / Timeline
Task Date Assigned toComplete Renewal Strategy Worksheet April 4, 2019 GallagherCORE360TM Strategic Review* - Gallagher April 4, 2019 GallagherCORE360TM Strategic Review* - with Client May 4, 2019 Gallagher and ClientRequest Renewal Information (RES) May 4, 2019 GallagherDeliver FINAL CORE360 Strategic Review to Client May 19, 2019 GallagherReceive Renewal Information (RES) from Client June 3, 2019 ClientSubmission to Markets including CORE360 Market Submission Report** June 13, 2019 Gallagher and ClientMarket Meetings June 26, 2019 Gallagher and ClientQuotations from Markets July 23, 2019 Gallagher
CORE360TM Executive Summary & Proposal to Client August 11, 2019 GallagherBind Policies (sign required forms) August 18, 2019 ClientCerts/ID Cards/Binders to Client August 25, 2019 GallagherRenewal Date September 1, 2019Policies from Markets October 1, 2019 GallagherPolicies to Client*** October 31, 2019 Gallagher
• Current Valued Loss Runs*• Insurance Carriers/Policies*• Payroll by class code*• Current policy
- Limits/deductibles by LOC
*Last 5 years plus current year
• Schedules• FEIN• Other underwriting questions /
applications• Don’t Forget to send Notice of Intent
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
• Statement of Values (SOV)• Scheduled or a blanket
limit• Review and update
• When property is added• Annually at renewal
Assets Fully Covered?
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
Recommended limits and deductibles
Program Structure
Review your evolving risk appetite for the most optimal program structure:
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
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18GGB29618X © 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
SC Rural Water Association
Coverage GapsAnalyze current policies, offering the broadest available coverage specifications
Uninsured & Uninsurable Losses
Renewal Strategy
Loss Prevention & Claims
Contractual Liability
Review your uninsured risks both insurable and uninsurable
Take a strategic approach to your risk control procedures
Review contracts for proper coverage from an insurance standpoint
18GGB29618X
© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM
18GGB29618X
Questions?
1301 Gervais Street, Suite 400Columbia, SC 29201803.451.3009
Heather KinardAccount Executive