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HOUSING SERVICES CORPORATION (HSC) AND TORONTO COMMUNITY HOUSING CORPORATION (TCHC) September 2, 2016
CONFIDENTIAL
MARSH
TCHC Current Program Overview – Limits and Deductible2015 – 2016 Insurance Program Overview
HSC Core Program
Non-Core Program
Deductible/Retention per coverage
Excess Property
$125M xs $25M except
Flood and Quake Aggregate: $125M
Property
Primary: $10M Excess: $15M xs $10M
Flood and Quake Program Aggregate $300MCore Limit: $25M
Equipment Breakdown
$50M per occurrence
General Liability$2M per occurrence
Incl $2M Abuse (NEW)
Umbrella Liability$3M excess $2M
Excess Liability $15M excess
$5M
Excess Liability
$30M excess $20M
Directors and Officers Liability
$5M per Claim$5M Annual
Aggregate (Dedicated own Limits)
$50,000 Deductible$100,000 Retention
$250,000 Deductible$250,000 Deductible
$20M
$100M
$50M
$150M
Crime(New Structure)$250,000 per
Claim
$10,000 Ded
Excess Crime(New Structure)
$5,000,000 excess $250,000
$5M
Privacy/Cyber Liability
$10,000,000
$250,000 Retention
$10M
$10,000 Ded
Misc E&OLiability
(NEW)$2M per occ
First Excess D&O Liability
(New Structure)$10M excess $5M
Excess Equipment Breakdown
$50M excess $50M
Second Excess D&O Liability
(New Structure)$5M excess
$15M
MARSH
TCHC Historical Property Claims 2011 – 2016 (As of June 30,2016)
TCHC Property Claims
• Total Claims: Self Insured and Insured (5 Years) $ 22,903,154
• Average Claim Amount (5 years) $757,364
• Average value of Self Insured Claims: $3,786,819
• Average # of Self Insured claims incl Reserves: 492 (2014: 719 Claims)
Wellesley Fire (2009) $36 Million + Insured Claim
TCHC Insured Property Claims Net of Deductible
Policy Year
Claims Count
Incurred
HSC Property Insurance Premiums (plus
contribution to Claims Fund)
2011/12 - - $ 2,811,001
2012/13 - - $ 2,973,966
2013/14 2 $ 2,769,058 $ 2,786,865
2014/15 2 $ 800,000 $ 3,117,866
2015/16 1 $ 400,000 $ 3,146,445
Total $ 3,969,058 $ 14,836,143
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
2011-12 2012-13 2013-14 2014-15 2015-16
HSC Premium including Contribution to Claims FundInsured ClaimsTCHC Self Insured incl Reserves
MARSH
TCHC Historical Liability Claims 2011 – 2016 (As of June 30, 2016)
TCH Liability Claims Including self insured claims:
• Total Claims (5 Years) $7,617,887
• Average Claims Count (5 years): 249/year
• Average Insured Claims: (5 Years) $ 35,136
• Average Self Insured Claims: (5 Years) $1,488,441
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
2011-12 2012-13 2013-14 2014-15 2015-16
HSC Premium TCHC Self Insured Insured Claims
MARSH
Property Claims Fund
Benefits of Claims Fund – established in 2010
• Allows greater control
• Removes insurer overhead margin in premium
(30 to 35% of premiums are typically to cover
insurer cost structure)
• Greater claims management oversight within
fund
• “Surplus” funds returned to existing participants
based on:
• Pro rata premium contribution
• Participant loss experience in fund year
• Allocation model
• Loyalty discount (for renewing participants)
• In 2015, the claims fund surplus was $877,107
• In 2014 the Fund increased from $10.3M to
$12M
• TCHC’s fund contribution represents 19% of
total fund contribution
Current Structure
$15,000,000 Excess of Stream A and Stream B Occurrence Deductible and Aggregate
Per Occurrence/Per Provider/No Aggregate except $200,000,000 Shared Aggregate
for Flood and $200,000,000 Shared Aggregate for Earthquake
$10,000,000 Excess of Stream A and Stream B Occurrence Deductible and Aggregate
Per Occurrence/Per Provider/No Aggregate except $100,000,000 Shared Aggregate
For Flood and $100,000,000 Shared Aggregate for Earthquake
Combined Stream A and Stream B Aggregate Reimbursement Deductible
$12,000,000
Stream A$1,000,000 per Occurrence Deductible
all participating Housing Providers
Stream B$2,500,000 per Occurrence Deductible
all participating Housing Providers
Various Housing Providers Deductibles
MARSH
Property Claims Fund Status as of August 31, 2016
November 1st Property Claims Fund established at $12M based on 639 Providers
As of August 31, 2016: There is $1,683,638.35 remaining in the Claims Fund
November 1, 2015 - November 1, 2016 policy period
Date of Update
Number of
Claims Ground -Up (net of Provider Ded) Fund Draw Fund Status
August 31, 2016 97 $11,577,986.45 $9,894,348.10 $1,683,638.35
MARSH
Renewal Strategy
• Underwriting presentation with existing Lloyd’s Syndicates occurred late June 2016.
Presentations were also made to potential markets, Liberty and Markel.
• Underwriting presentation to existing domestic insurers, occurred late June and
early July 2016.
• Goal, to obtain “as is” terms, conditions and rates for all core coverages based on
existing structure with coverage improvements.
MARSH
HSC 2016 Property Insurance Renewal
Property Renewal “As per expiring terms with some improvements in coverage”
Primary $10 million limit Excess $15 million limit
Lloyd’s 75%
MS Pritchard Syndicate
Kiln Syndicate
Brit Syndicate
QBE Syndicate / Facility
Liberty Syndicate
Talbot Syndicate
Markel
Pembroke Syndicate
XL Catlin 12.5%
Aviva 12.5%
Northbridge 37.5% (Lead)
Aviva 15%
Catlin 12.5%
AWAC 10%
Berkshire Hathaway 15%
RSA 10%
MARSH
• Accounts Receivable sublimit increased to $5,000,000 from the current $1,000,000
• Newly Acquired Property, sublimit of $10,000,000 now applies to all types of construction –
the $5,000,000 sublimit for framed structures has been eliminated.
• Additional Living Expenses, the max per occurrence limit has been increased to $2,500,000
from the current $1,000,000 – the $10,000 limit per living unit remains unchanged.
• Terrorism Exclusion amended to provide limited coverage for fire following and coverage to be
based on actual cash value of the property
• Specified Perils Business Interruption/Crisis - Actual Loss Sustained and EXTRA EXPENSE
incurred if an order of civil or military authority limits, restricts or prohibits partial or total
access to an insured location, provided such order is a direct result of:
1) a violent crime, suicide, attempted suicide, or armed robbery; or
2) a death or bodily injury caused by a workplace accident
HSC 2016 Property Insurance RenewalCoverage Improvements
MARSH
HSC 2016 Casualty Insurance Renewal
XL Catlin (Incumbent)
Offered expiring terms, conditions and premium/rates including the following improvements:
• Limited Pollution Liability – Detection/Reporting period increased to 240 hrs from the current
120hrs
• Legal Lability for Hired Autos Limit increased to $100,000 from the current $75,000
• Tenants Legal Liability & Fighting Expenses deductible reduced to $5,000 from the current
$50,000
• Fumigation and Extermination Operations limit increased to $2,000,000 from the current
$1,000,000
• “Compensatory damages” – modified to just reference “damages” and definition modified to be
silent as respects punitive damages
* Insurer will not agree to provide additional “abuse” coverage and requires further review and
improvement of TCHC’s current “abuse” protocols in place.
MARSH
HSC 2016 Machinery Breakdown Insurance
BI&I have offered to renew at expiring terms, conditions and premium / rates including the
following improvements:
• Errors and Omissions, sublimit increased to $5,000,000 from the current $500,000
• Water Damage, sublimit increased to $1,000,000 from the current $500,000
• Ammonia Contamination, sublimit increased to $1,000,000 from the current $500,000
• Hazardous Substances, sublimit increased to $1,000,000 from the current $500,000
• Business Interruption – Loss of Rental income – increased period of indemnity of 24mos from
the current 12mos.
BI&I Have also introduced a new policy wording, improvements include:
• Microelectronics coverage- adds a brand new cause of loss for microelectronics failures when
physical damage is not detectable.
• Cloud Computing Service Interruption - pays for business interruption and extra expense
when the insured's cloud computing service provider experiences an outage due to an
equipment breakdown.
MARSH
HSC 2016 Machinery Breakdown Insurance
• Cloud Computing added to Data Restoration- data restoration coverage for data lost when
stored and managed by a cloud computing service provider that experiences an equipment
breakdown failure.
• Off-Premises Transportable Objects- coverage for off-premises transportable equipment
breakdown anywhere in North America includes direct damage, business income, extra
expense and data restoration.
• Public Relations coverage - pays for public relations assistance to help manage reputation
that may become damaged by an interruption of business- applies if there is a covered loss of
business income.
• Environmental and Efficiency coverage- pays up to 150% of the loss payable for upgrades to
more energy efficient or environmentally friendly equipment.
• Green coverage- up to $50,000 in addition to our energy-efficient upgrade coverage.
MARSH
TCHC’s Directors & Officers Liability
5-Year Claims Overview
29
11
6
0
5
10
15
20
25
30
35
Stream A Stream B TCHC
Claim Frequency by Stream
$216,062.12
$32,147.77
$211,408.04
$-
$50,000.00
$100,000.00
$150,000.00
$200,000.00
$250,000.00
Stream A Stream B TCHC
Paid $ Amount
MARSH
TCHC’s Directors & Officers Liability
Great American Insurance Group (GAIC) Incumbent
• GAIC offered to renew at expiring terms, conditions and premium / rates.• Coverage improvements requested were not approved by Great American
Insurance
MARSH
TCHC’s Directors & Officers Liability – Renewal
• Nov 1, 2015 to
• Nov 1, 2016
Expiring 2015 -2016
Policy Limit Insurer Premium
$ 5 M Great
American $ 55,000
$10 M xs $5 M HDI
Gerling $47,500
$5 M xs $15 M AIG $12,000
$20 M $114,500
$150,000
Renewal 2016 -2017
Policy Limit Insurer Premium
$ 5 M Great
American $ 55,000
$10 M xs $5 M HDI
Gerling $47,500
$5 M xs $15 M AIG $12,000
$20 M $114,500
$150,000
• Entity coverage for Joint Venture and Affiliated Companies of TCHC: Awaiting clarification and confirmation of Directors and Officers Liability Insurance and instructions from TCHC if Marsh needs to place insurance for these companies.
MARSH
TCHC’s Privacy / Cyber Liability - Renewal
Expiring 2015 -2016
Policy Limit Insurer Premium
$10 M AIG $84,927
Coverage Enhancements
• PCI Coverage• Bitcoin Ransom Endorsement • Cyber Extortion Enhancement• Notice of Claim (60 days)• Continuity Date Exclusion• Retention Amendatory
Renewal 2016 -2017
Policy Limit Insurer Premium
$10 M AIG $84,454
Insurer Recommendations
Employee Training: In order to maintain a consistent adherencewith privacy policies and avoid various security issues, such as social engineering, phishing attacks which have a higher impact on computer network users with inadequate training, a user awareness training program should be developed and implemented. Your account qualifies for the CyberEdge Risk Tool, we recommend thatTCHC implements this tool.
Data encryption recommendation: In order to safeguard sensitive data, it is required that you adopt a data encryption scheme for all sensitive data at rest and in transit. All removable media should be forced to use encryption when data is
transferred to such devices.
AIG have offered to renew at expiring terms and conditions including the following improvements:
MARSH
TCHC’s Crime - Renewal
AIG have offered to renew at expiring terms and conditions with a premium increase of $132 due to the increase in employee count
from 1,705 to 1,948 (14%)
Expiring 2015 -2016
Policy Limit Insurer Premium
$5 M Excess of $250K AIG $24,155
Renewal 2016 -2017
Policy Limit Insurer Premium
$5 M Excess of $250K AIG $24,287
MARSH
2015 - 2016 Focus
Examine TCHC’s potential exposures related to Users of TCHC property
• Tenant’s Associations
• Resident Led Activities
2016- 2017 Focus
• Continue review of schedule of locations and property values insured to ensure current values
are declared
• Tenant Insurance?
• Discuss other risk management goals/priorities for the coming period.
Other Considerations:
• Transferring Risks: Tenant’s Insurance
• Limiting Risks: Excess Workers Compensation Insurance
• Managing Risks: TCHC’s Owner Controlled Insurance Program (For ongoing and new
construction projects)
Key Lines of Coverage – 2016 Focus
MARSH
Renewal Annual Premium Breakdown Nov 1st 2016-2017Based on existing structure (Limits & Deductibles)
Coverage Limits
2014/2015 Expiring Annual
Premium
2015/2016 Estimated Renewal Annual
Premium
2015/16 Actual Final Renewal
Premium
Adjustment Endorsements
from Estimated to
Actual
2015/16 Expiring
Premium
2016/17 Renewal Quotes
Billed for Rnwl
Total Insurable Values $8,229,815,387 $8,339,713,976 $8,339,714,371.91 $8,344,214,371.91 $8,344,214,371.91
Property $25M limit $820,860 $830,011 $908,766.58 $78,755.58 $909,085.36 $909,085.36
Property Claims Fund $12M $12M shared over 646 participating Providers $2,297,006 $2,316,434 $2,237,678.03 -78,755.97 $2,238,462.99 $2,238,462.99
General Liability (incl Abuse) $2M $1,171,413 $1,001,810 $1,003,101.72 1,291.72 $1,003,956.14 $1,003,956.14
Crime Insurance $100,000 (Increased to $250,000 at renewal) $45,868 $45,868 $45,868.00 - $45,868.00 $45,868.00
Miscellaneous E&O* New coverage to TCHC added mid-term $8,659 $8,659 $8,658.75 -0.25 $8,658.75 $8,658.75
Umbrella Liability $3M excess of $2M $91,708 $91,708 $90,416.54 -1,291.46 $90,504.21 $90,504.21
Equipment Breakdown $50M $63,332 $64,178 $64,177.62 -0.38 $64,212.25 $64,212.25
Directors & Officers $10M dedicated limit no longer shared; Reduced to
$5 Million dedicated limit in 2015$69,750 *$55,000 $55,000.00 - $55,000.00 $55,000.00
Total Core Program $4,568,596 $4,413,668 $4,413,667.24 -0.76 $4,415,747.70 $4,415,747.70 *
Non Core Program
Excess Property $125M limit $159,736 $161,869 161,869 - 161,869 161,956
1st Excess Liability $20M excess of $5M $117,108 $105,560 114,448 $8,888 114,448 114,493
2nd Excess Liability $25M excess of $25M $45,000 $45,000 40,000 ($5,000) 40,000 40,000
Equipment Breakdown $50 M excess $50 M $2,500 $2,533 2,500 2,500 2,500
Excess Crime $5 M excess of $100k $25,572 $24,155 24,155 - 24,155 24,287
Privacy and Cyber Liability $10 M $84,432 $84,927 84,927 - 84,927 84,454
Excess Directors and Officers $10 M excess of $5 M $33,472 $47,500 47,000 - 47,000 47,000
Excess Directors and Officers $5 M excess of $15 M n/a $12,000 12,000 - 12,000 12,000
Total Non-Core Program467,820 483,544 486,899 3,888 439,899 486,690
*HSC will commit to the Total Core Premium stated above but the allocations may change depending on final confirmation of housing providers renewing with the program.**Options to increase overall liability insurance coverage by $25 Million or $50 Million to follow shortly.
MARSH
Thank You!Questions?
MARSH
Appendices
• Allocation Model – Property & Liability
MARSH
Deductible(Credit) moving from
$1k Ded't
$1,000 N/A
$2,500 (2.8%)
$5,000 (7.2%)
$10,000 (18.1%)
$25,000 (25.6%)
$50,000 (35.5%)
$100,000 (39.0%)
$250,000 (62.4%)
Construction SurchargeTown
GradeSurcharge
Frame/Brick Veneer 140% 01-04 0%
Masonry 110% 05-07 25%
Non-Combustible 0% 08-10 90%
Smoke Free (Credit)Tenants
Insurance(Credit)
y (5.0%) y (2.5%)
n 0.0% n 0.0%
TIV per Unit(Credit)/
Surcharge
Tenants
Insurance
Monitored
(Credit)
min 10.0% y (2.5%)
↕ ¦ n 0.0%Average 0%
↕ ¦
max (10.0%)
Loss per Adj.
TIV/Yr(Credit)/ Surcharge
min (20.0%)
↕ ¦
Average 0%
↕ ¦
max 20.0%
Allocation Model FactorsProperty Allocation
Adj. TIV Values
TrendedNet Losses
Final AdjustedTIVs
Each provider’s allocation is determined
using Total Insured Values.
TIV values are the sum of:
– Building values
– Value of Contents
– Additional Income (Annual)
The TIVs are adjusted according to a
number of rating factors (see right):
– Exposure Factors
– Deductible
– Construction Type
– Town Grade
– Smoke Free
– Tenant insurance
– Monitoring of Tenants Insurance
– TIV per unit
– Losses
– Losses per unit of TIV
– In order to ensure that no provider
experiences a large
increase/decrease in allocation from
year to year, a cap on allocation
increase/decrease is imposed where
necessary.
• Credit for moving to
higher deductibles,
determined using
historical weighted
claims frequencies and
net losses for guidance.
• Shown is the credit in
relation to a $1k
deductible.
• Surcharges for less favourable Town Grades on individual buildings
• Determined using historical rates
TIVValues
• Surcharges for less favourable Construction on individual buildings
• Determined using historical rates
• Credit for provider having smoke free properties
• Determined using historical loss rates per unit of TIV on non-smoke free and smoke free locations
• No significant difference in loss rates was noted, thus small credit
• Credit for tenants having Tennant’s Insurance
• TIVs may capture in part the number of units (i.e. higher TIV suggests more units).
• A correction is included to account for large numbers of units with low value
• Final adjusted TIV values is used to proportionally allocate premium/pool amounts.
• The split of pool and premium allocation depends on the stream• Stream B providers contribute proportionally more the pool than to the
premium when compared to Stream A.
• Members should not receive a double loading when they experience more claims if this was already accounted for in the exposure factors. Instead of straight claims, a claims performance (per unit of adj. building value per year) is determined using historical claims.
• Best performing providers receive up to a 20% credit, while worst receive up to a 20% surcharge.
Property Allocation Methodology
• Credit for tenants having Tennant’s Insurance monitored
Stream Pool Premium
A 63.6% 36.4%
B 74.5% 25.5%
*Approximated
MARSH
Allocation Model FactorsCasualty Allocation
Numberof Units
Tennant Support
ServicesSurcharge
n 0%
y 25%
Loss per
Unit/Yr
(Credit)/
Surcharge
0 (20%)
↕ ¦
Average 0%
↕ ¦
max 20%
Adjusted Numberof Units
TrendedNet Losses
Final AdjustedNumber of Units
CGL Allocation:
– New allocation methodology (See right) to account
for:
– Number of units.
– Provide credit for retention of small claims.
– Recognize increased exposure from TSS.
– Provide credit/surcharge based off of claims
history.
Crime Allocation:
– number of units
• E&O Property Managers:
– deductible
E&O Misc. (TSS)
– deductible and number of counsellors/Massage
Therapists, Nurses, Support Workers, Physio) etc.
Umbrella
– number of units and deductible.
CGL Allocation Methodology
• Providers who offer tenant support services where a third party is not responsible for such services will receive a 25% surcharge.
• Increased credit for moving to higher deductibles, determined using historical weighted claims frequencies and net losses for guidance.
• Shown is the credit in relation to a $1k deductible.
Exp
osu
re F
acto
rsC
laim
s P
erf
orm
ance
• Providers should not receive a double loading when they experience more claims if this was already accounted for in the exposure section. Instead of straight claims, a claims performance (per adj. number of units per year) is determined using historical claims.
• Best performing Providers receive up to a 20% credit, while worst receive up to a 20% surcharge.
• Final number of adjusted units is used to proportionally allocate premium/fund amounts.
Category(Credit) moving
from $1k Deductible
$1,000 N/A
$2,500 (10.8%)
$5,000 (17.6%)
$10,000 (22.1%)
$25,000 (31.0%)
$50,000 (40.9%)
This document and any recommendations, analysis, or advice provided by Marsh (collectively, the “Marsh Analysis”) are intended solely for the entity identified as the recipient herein (“you”).
This document contains proprietary, confidential information of Marsh and may not be shared with any third party, including other insurance producers, without Marsh’s prior written consent.
Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial,
accounting, tax, or legal advice, for which you should consult your own professional advisors. Any modeling, analytics, or projections are subject to inherent uncertainty, and the Marsh Analysis
could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change. The information contained herein is based on
sources we believe reliable, but we make no representation or warranty as to its accuracy. Except as may be set forth in an agreement between you and Marsh, Marsh shall have no obligation
to update the Marsh Analysis and shall have no liability to you or any other party with regard to the Marsh Analysis or to any services provided by a third party to you or Marsh. Marsh makes no
representation or warranty concerning the application of policy wordings or the financial condition or solvency of insurers or reinsurers. Marsh makes no assurances regarding the availability,
cost, or terms of insurance coverage.
Marsh is one of the Marsh & McLennan Companies, together with Guy Carpenter, Mercer, and Oliver Wyman.
Copyright © 2014 Marsh Canada Limited and its licensors. All rights reserved. www.marsh.ca | www.marsh.com
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