Chapter 6:
Asset and Risk Management
- Chapter Contents:
- A. Cash and Investment Management
- B. Risk Protection
- C. Bond Issuance and Indebtedness
- D. Tax Collections
- E. Fixed Asset Protection
B. RISK PROTECTION
Risk management limits the district's exposure to financial loss through insurance coverage for district employees, students, and district assets. HISD's risk management activities are administered by the staff listed below:
- Health Insurance and workers' compensation are administered by the deputy superintendent of Human Resources. The assistant superintendent of Benefits directs the managers of the Employee Benefits and Claims departments.
- Property, casualty, and general liability coverage is administered by the deputy superintendent of Fiscal and Business Affairs through the Risk Management Department. The department is charged with administering all risk management programs except for employee benefits.
Employee Health Insurance
FINDING
HISD is developing a wellness program for its employees. Plans are to begin the program with activities to include aerobics, walking, and diet programs. The district also plans to establish contractual arrangements with private health facilities to incorporate fitness activities for employees throughout the district.
COMMENDATION
The district is commended for implementing a wellness program to assist and encourage employees to pursue healthy activities.
FINDING
HISD operates a cafeteria plan that allows employees to choose from available options, with most requiring employee contributions. Listed below are the benefits and coverages available to HISD employees for the 1996 calendar year:
Health Coverage with four available options (Exhibit 6-11)
Basic and Supplemental Life and ADD Insurance Coverage with three available options
Dental Coverage with two available options
Vision Coverage
Cancer Coverage
Hospital Indemnity Coverage
Medical Care and Dependent Care Reimbursement Accounts
Income Replacement Coverage with a range of elimination periods
Pre-Paid Legal Services
Tax Sheltered Annuities with a large number of participating carriers and mutual funds
Deferred CompensationAll benefits are optional and can be paid with pre-tax dollars. HISD contributes only to the health care options.
Exhibit 6-11
HISD Medical Plan Choices
Feature
Sanus Plus
Point-of-Service
PN/HMO
EPN/HMO
Indemnity
Medical PlanHMO
(In-Network) Out-of-Network Individual Calendar Year Deductible
None $750 None None $500 Family Calendar Year Deductible None $2,250 None None $1,500 Maximum out-of-pocket per Calendar Year
$650 per person
$1,500 per family $3,500 per person
$10,500 per family
(less deductible) $850 per person
$2,000 per family $650 per person
$1,500 per family unlimited per person
unlimited per person Doctor's Office
$10 copayment per visit 70% after
deductible $20 copayment
per visit $5 copayment 50% after deductible Preventive Care 4 No charge Not covered No charge No charge Not covered Hospital Admission Copayment $275 70% after
deductible $500 $100 50% after deductible Emergency Room Copayment $40 70% after
deductible $40 $40 50% after deductible Outpatient Surgery $50 copayment per
surgery 70% after
deductible $100 copayment
per surgery $25 copayment
per surgery 50% after deductible Participating Pharmacy Deductible
Copayment Generic
Brand Name
$100
$5
$10
$100
$5
$10
$100
$5
$10
$50
$5
$10
Deductible above
applies
50% after deductible Mail Order Pharmacy Deductible
Copayment Generic
Brand Name
None
$5
$10
None
$5
$10
None
$5
$10
None
$5
$10
Deductible above
applies
50% after deductible Benefit maximums Mental & Nervous
Other Conditions
30 days per
calendar year
Unlimited
$30,000 lifetime
maximum
Unlimited
30 days per calendar year
Unlimited
30 days per
calendar year
Unlimited
$30,000 lifetime
maximum
Unlimited Source: HISD Employee Benefits 1996 Enrollment Guide
Exhibit 6-12 shows the total health care premium costs and employees' net cost based on the different health care options shown in Exhibit 6-11.
Exhibit 6-12
1996 Monthly Benefits Rate Schedule
Option 1SanusPlus
Total Health Premium
Basic Life
Premium
District Contribution Total Employee
CostEmployee Only $221.58 $0.72 ($173.22) $49.02 Employee & Spouse $318.40 $0.72 ($173.22) $145.84 Employee & Children $409.88 $0.72 ($173.22) $237.32 Employee & Family $538.30 $0.72 ($173.22) $365.74
Option 2PPN/HMO
Total Health Premium
Basic Life
Premium
District Contribution Total Employee
CostEmployee Only $187.20 $0.72 ($173.22) $14.64 Employee & Spouse $273.70 $0.72 ($173.22) $101.14 Employee & Children $266.72 $0.72 ($173.22) $94.16 Employee & Family $408.16 $0.72 ($173.22) $235.60
Option 3EPN/HMO
Total Health Premium
Basic Life
Premium
District Contribution Total Employee
CostEmployee Only $172.56 $0.72 ($173.22) $0 Employee & Spouse $248.74 $0.72 ($173.22) $76.18 Employee & Children $241.76 $0.72 ($173.22) $69.20 Employee & Family $373.22 $0.72 ($173.22) $200.66
Option 4Indemnity Plan
Total Health Premium
Basic Life
Premium
District Contribution Total Employee
CostEmployee Only $172.56 $0.72 ($173.22) $0 Employee & Spouse $252.98 $0.72 ($173.22) $80.42 Employee & Children $250.34 $0.72 ($173.22) $77.78 Employee & Family $379.16 $0.72 ($173.22) $206.60 Source: HISD Employee Benefits 1996 Enrollment Guide
As shown in Exhibit 6-13 the district's contribution of $173.32 a month per employee toward the cost of health coverage is one of the highest in the state among the largest school districts.
Exhibit 6-13
Employee Benefits Comparative Analysis
DistrictDistrict Monthly Contribution for
Health Coverage per EmployeeAustin I.S.D. $117.13 Dallas I.S.D. $110.00 El Paso $199.40 Choice Care
$154.00 HMO Blue Ft. Worth I.S.D. $154.00 Houston $173.32 San Antonio $130.91 Source: Houston I.S.D. Employee Benefits Department
The district's contribution rate, however, is well below the premiums paid for employee health care coverage by other large Houston employers as shown in Exhibit 6-14.
Exhibit 6-14
Health Care Coverage Costs of Houston Major Employers
Type of Plan Average Monthly Premium Contribution per Employee Preferred Provider Organization $326 Point of Service Plan $352 Indemnity Insurance $299 Health Maintenance Organization $298 Average of All Plans $313 Houston I.S.D. $173 Source: J.E. Stone & Associates, Houston Area Health Care Coalition
FINDING
The district switched its health insurance coverage back to Sanus (now NYLCare) beginning with fiscal 1995-1996. According to the district, NYLCare purchased UMG and as a result, has agreed to offset a minimum $700,000 in overcharges against premiums being paid by HISD.
The district's internal audit group conducted a follow-up investigation of the unresolved payment issues from the 1994 Major Medical Plan. The internal auditors report dated August 31, 1996 concluded that the district "needs to collect the $700,000 immediately."
As part of its contract with NYLCare, the district negotiated a number of cost containment and performance related measures.
- Rate Guarantees - The district secured limits (caps) on premium rate increases, regardless of the final participation in each of the four options offered by NYLCare. For the plan year 1997, the renewal rate is guaranteed not to exceed 5 percent of the prior year premium, and for 1998, the renewal rate is guaranteed not to exceed 6 percent of the 1997 premium. The premium costs (and therefore increases) may be lower depending upon final utilization.
- Provider Review Committee - NYLCare agreed to establish a Provider Review Committee to ensure that plan members have an additional mechanism to appeal health care referral and access determinations. The Committee is comprised of four representatives from HISD (two from HISD Administration and two from the Employee Benefits Committee), one independent licensed medical doctor, and two representatives from NYLCare.
- Performance Guarantee - NYLCare agreed to place a maximum of $500,000 at risk to meet member survey criteria which were developed by NYLCare and approved by the district. The guarantee was designed to provide an incentive for NYLCare to provide a high level of service to the employees participating in the health care plan.
COMMENDATION
The district is commended for negotiating favorable cost containment measures and performance commitments with its health care provider.
The district's overall health care costs, which include administrative and claims costs, have risen dramatically over the past three years as shown in Exhibit 6-15. From fiscal 1992 to 1995, the district's health care (including life insurance) costs have increased by 46 percent.
Exhibit 6-15
HISD Health Care Costs
Source: PEIMS Data
FINDING
HISD has changed health insurance carriers twice in the last three years.
An investigation of the 1994 major medical plan by the district's internal audit group indicated that the district implemented a self-funded plan for 1994 as a result of employee dissatisfaction with the 1993 major medical plan administered by Sanus. The report stated that, based on the recommendation of an independent consulting firm, the district sought to initially establish an exclusive provider organization (EPO) to take advantage of its size and bargaining power. The consulting firm estimated that an EPO would reduce the district's health care expense by approximately 20 percent and resolve problems dealing with specialist referrals and other administrative problems encountered under the Sanus 1993 major medical plan.
A District Benefits Committee, comprised of representatives from each of the district's eight employee groups, meets regularly to discuss employee benefits concerns. The committee's purpose is to consult with and advise management on benefits issues. While the committee has no official bargaining authority and was established as an advisory group, influence in decision-making with the previous administration was significant and contributed greatly to the ultimate demise of the planned EPO. Employee group representatives indicated they were not opposed to the EPO, but had specific coverage recommendations that they felt were uninsured by the EPO.
The district ultimately selected John Hancock to administer the 1994 major medical plan. Unfortunately, severe problems were encountered with the administration of the plan and significant additional costs were incurred. The internal auditor's report included the following assessment of the 1994 plan:
As of March 17, 1995, the District's Risk Management Department estimated the 1994 major medical plan cost overage (under-funding) to be $13,163,738. This amount may be reduced by $700,000 of overcharges identified during a preliminary audit of University Medical Group (UMG), one of the medical care providers in the major medical plan network. To date, the District has not collected any of the $700,000. Current negotiations and additional medical claims audits may result in recovery of a greater amount.The 1994 major medical plan claims were not adequately monitored because John Hancock's major medical claims reporting system repeatedly broke-down and, when not broken-down, did not provide the analysis of medical claims as required by the District.
The auditor's report made the following recommendations :
An audit of the entire 1994 health care provider network, inclusive of claims paid and service discounts received, should be conducted utilizing a professional medical audit group. Consideration may be given to funding the audit on a contingency basis.Employee Benefits and Risk Management needs to actively pursue collection of the $700,000 overcharges identified during the preliminary audit of UMG.
RECOMMENDATION 123:
The Benefit Committee, in cooperation with the district, should set standards for health insurance and the district should competitively bid the coverage based on those standards.
Once standards are set , it should be the district's responsibility to bid and negotiate the most cost-effective options for the employees.
In addition, the district should explore forming alliances with other employer groups to further leverage its bargaining position with hospitals and doctor groups. The Houston Area Health Care Coalition is a group of corporations that have banded together to achieve greater efficiencies in the managed care arena. Prominent Houston companies such Compaq, Coastal Energy, and Mitchell Energy are members of the Coalition. HISD should consider this alternative as well as part of a long-range study of its health care needs.
While it is important that the district consider the needs of its employees, the administration must assume the lead role in the planning effort to structure a managed health care arrangement.
IMPLEMENTATION STRATEGIES AND TIMELINE
1. As part of a districtwide strategic planning effort, the superintendent sets up meetings with the Benefit Committee to develop standards for health care for district employees. November 1996 2. The district issues a request for proposal (RFP) that contains the standards agreed to by the committee and the district. January 1997 3. The district purchases the most cost-effective insurance coverage possible, within the agreed-to standards. May 1997 FISCAL IMPACT
HISD should set a goal of reducing health care costs by $2 million. This amount is about 5 percent of current costs ($41 million), which insurance groups indicate is a conservative reduction based on HISD's current costs.
Recommendation 1996-97 1997-98 1998-99 1999-2000 2000-01 Bid health insurance based on standards -0- $2,000,000 $2,000,000 $2,000,000 $2,000,000 Workers' Compensation
CURRENT SITUATION
HISD's workers' compensation program is self-funded up to $350,000 per employee. An insurance policy is maintained that provides coverage for claims above this amount.
FINDING
As part of its efforts to contain increasing workers' compensation costs, the district has developed a Transitional Duty Program, which encourages injured employees to return to work early. The program would help to identify and place injured workers in meaningful positions within the district, ideally in the worker's own department. The workers participating in the program can be placed back on active duty status, back on the payroll, and off workers' benefit payment status.
The district has also introduced a Preferred Provider Organization (PPO) and a select network of "gatekeeper" physicians to steer injured employees to quality medical providers. Through the program, the district has identified and networked doctors who are located in close proximity to all HISD work locations. These doctors provide a discount well below the Texas Workers' Compensation Commission fee schedule.
In addition to the above, the district and its outside workers' compensation administrator have recently stepped up their investigation of fraudulent workers' compensation claims. In several recent cases, the district used hidden surveillance cameras to document physical activities of workers who had filed injury claims. The cases were well publicized in news reports on local television stations and in a newspaper article. The publicity surrounding the district's actions should act as a deterrent for employees filing fraudulent claims.
COMMENDATION
The district is commended for implementing a number of initiatives designed to control and contain the increase in workers' compensation claims and associated costs.
FINDING
The district's workers' compensation costs have increased significantly over the past three years. As shown in Exhibit 6-16, fiscal 1995 costs totaled $15.2 million, an increase of 27 percent over fiscal 1994, and 86 percent since fiscal 1992.
Exhibit 6-16
Workers' Compensation Costs
Source: PEIMS Data
During this period of time, the district's workers' compensation claims were administered by the Texas Association of School Boards (TASB), with assistance from the district's claims administration personnel. An internal audit report entitled Analysis of Worker's Compensation Bids attributes much of the increase to "determinations made by the district's Benefits staff and outside vendors, (which) indicate (TASB on the behalf of) the district has significantly overpaid workers' compensation claims." The district prepared a request for proposal to solicit bids of companies to conduct audits of their prior workers' compensation claims in an effort to recover overpaid claims, and, on August 16, 1996, the district hired an outside firm to conduct the audit.
In conjunction with internal efforts to develop a more cost-efficient workers' compensation program, the district requested proposals for outsourcing the administration of workers' compensation claims in July 1995. The district received 15 proposals and hired an independent consultant to evaluate the proposals and outline the strengths and weaknesses of each bidder. As part of this process, HISD's benefits group also prepared a proposal to provide all of the claims administration services in house.
After reviewing the proposals, the district contracted with IHDS-Summit of Texas in December 1995 to provide all workers' compensation administrative claims processing and payment services. The internal audit report claims the new process will reduce the district's costs by a minimum of $1 million per year.
While the independent report rated another bidder higher for their traditional claims handling approach and experience in Texas, IHDS's bid was ultimately selected because it included a "stop loss insurance package" in its proposal, which would indemnify the district if claims exceeded a certain (capped) amount. IHDS was required to post a performance bond due to its relatively weak financial position. The auditor's report cited that IHDS, a relatively new company to Texas, had not had a profitable year. IHDS performs the same service for the City of Houston.
While the district has recently taken some actions to contain and control spiraling workers' compensation costs, no long-range planning has taken place to consider alternative strategies that could yield additional cost savings. According to Russ Edwards of Edwards Risk Management, several smaller Texas school districts have established consortiums or " pool programs," which have reduced retention costs and claims administration costs.
RECOMMENDATION 124:
The district should establish a workers' compensation planning committee to study alternative approaches to manage its long-term workers' compensation program cost-effectively.
IMPLEMENTATION STRATEGIES AND TIMELINE
1. The superintendent establishes a Workers' Compensation Planning Committee to study alternative approaches to managing and controlling workers' compensation costs. November 1996 2. The committee studies alternative approaches including establishing a consortium of large school districts to reduce workers' compensation costs. January 1997 3. The committee recommends a specific course of action to the superintendent on the district's workers' compensation program. February 1997 4. The superintendent directs the assistant superintendent of Benefits to implement the recommendations. March 1997 FISCAL IMPACT
This recommendation can be implemented at no cost to the district.
FINDING
The contract with IHDS to provide third-party administration of workers' compensation claims created an opportunity for the district to eliminate several positions. Before outsourcing the claims administration function, the district's claims department staff consisted of 19 full-time personnel, with another 16 open positions included in the fiscal 1996 budget. The funds were included in the budget in anticipation of bringing more of the claims administration functions in house. As of August 1996, the district's workers' compensation staff had been reduced to nine personnel. Once the transition of all existing files to IHDS - Houston is completed, based on the comprehensive nature of IHDS' services, a staff of only six positions would be needed to coordinate the claims administration with IHDS.
RECOMMENDATION 125:
The district should eliminate unnecessary positions due to outsourcing workers' compensation claims administration.
Exhibit 6-17
Proposed Claims Department
IMPLEMENTATION STRATEGIES AND TIMELINE
The deputy superintendent of Human Resources notifies displaced workers of the district's intent to eliminate their positions due to the outsourcing of workers' compensation administration. Consideration is given to providing some assistance to the displaced workers by allowing them to apply for open positions in other departments within the district. November 1996 FISCAL IMPACT
Based on the budgeted salaries and benefits for the 26 positions already eliminated, the district will save approximately $792,169 annually (salaries of $708,686 plus benefits at 11.78 percent or $83,483). Eliminating an additional three positions will yield annual cost savings of $91,404.
Recommendation 1996-97 1997-98 1998-99 1999-2000 2000-01 Eliminate 3 additional positions in the workers' compensation department $91,404 $91,404 $91,404 $91,404 $91,404
FINDING
The district's Claims Department analyzes all workers' compensation claims for the district. As shown in Exhibit 6-18, workers' compensation claims for professional administrative and clerical staff increased 13 percent in fiscal 1995, while claims from driver/vehicle maintenance employees increased 32 percent.
Exhibit 6-18
HISD Workers' Compensation Reported Claims
By Worker Category
CATEGORY 92-93 93-94 94-95 % CHG Professional Adm. & Clerical 3022 2006 2266 12.8% Muilding Maintenance 440 434 372 (15.5%) Food Service 413 459 444 7.5% Custodial 535 529 497 (7.1%) Drivers/Vehicle Maintenance 332 320 439 32.2% Others 86 82 81 (5.8%) TOTAL 3828 3830 4099 7.1% Source: HISD Claim Department Workers' Compensation Activity Report
The Safety and Loss Control Section has developed a number of Training Programs for district employees and students in an effort to reduce job-related accidents. Examples include:
- Safety awareness on the job and stress management;
- Personal Protection Equipment: back safety, preventing slips and falls, etc.;
- Campus safety training programs; and
- Student aggression
The section also began publishing two semi-monthly newsletters in January entitled Safety Link and Campus Safety Alert on safety issues.
The Safety and Loss Control section also is responsible for investigating workers' compensation related injuries, however, the report from the workers' compensation area is not received for several days, resulting in delays in investigating the injuries. Access to workers' compensation reports either through E-Mail or direct computer access to injury reports would improve efficiency in conducting investigations.
RECOMMENDATION 126:
Injury reports should be E-Mailed or sent on-line to Safety and Loss Control for immediate investigation.
According to the publication Healthy Business, Fall 1995 by Kelsey-Seybold Clinic of Houston - Department of Occupational Medicine, the strategies most effective at cutting workers' compensation costs include:
- auditing claims;
- establishing an injury prevention program; and
- educating workers.
The district has recently implemented several cost containment initiatives discussed earlier in this chapter.
Immediate access to claim information will allow the district to investigate claims efficiently, monitor the nature of reported claims, update reports, and target preventive measures.
IMPLEMENTATION STRATEGIES AND TIMELINE
1. The assistant superintendent of Fiscal and Business Administration directs the Claims Department to E-mail injury reports to Safety and Loss Control immediately upon completion. November 1996 2. The Claims Department and Safety and Loss Control establishes the necessary procedures and controls to communicate via E-mail.
November 1996 FISCAL IMPACT
This recommendation can be implemented at no cost to the district.
Property, Casualty And General Liability Insurance
FINDING
HISD had developed a comprehensive property and casualty program that protects against financial loss. The district evaluates insurance premium costs every year to ensure the district pays the lowest possible premiums. Exhibit 6-19 presents HISD's property-related insurance coverage.
Exhibit 6-19
HISD Property Casualty/General Liability Insurance Coverage
Fiscal 1995 - 1996
Type of Policy Insurance
CompanyAmount of
Insurance
Deductible Policy
Term
Premium Category I - Property
A. Physical damage to Buildings and Contents;
Blanket Coverage
The TravelersInsurance Company
of Illinois (Primary Layer)
$200,000,000 all perils; $10,000,000 flood and earthquake.
$100,000 per occurrence
$250,000 per occurrence for catastrophic events
09/01/94
to
09/15/95
$867,809 Annual
B. Flood
South Carolina Insurance Company
Per Schedule; $6,200-$25,000.
$500-$750 Each Building & Contents
08/23/95
to
08/23/96
$4,977 Annual
C. Boiler and Machinery Policy (plus boiler Inspections)
American Manufacturers Mutual Insurance Company(Kemper)
$30,000,000 per accident; $2,000,000 hazardous substance.
$10,000 per accident & location.
$100,000
aggregate per accident
08/01/95
to
08/01/96
$41,459 Annual
D. Mobile Equipment Floater and Fleet Catastrophe Floaters
United Pacific Insurance Company (Reliance)
Mobile Equipment; Per Schedule.Fleet Catastrophe; Replacement cost $10,000,000 per
occurrence.
Mobile Equipment: Per Schedule.
Fleet Catastrophe: $100,000 per occurrence.
12/01/94
to
12/01/95
$29,637 Annual
E. Communications Equipment Misc. Articles Floater
Texas Pacific Indemnity Co. (Chubb Insurance Group)
Per Schedule.
$500
08/24/94
to
08/24/97
$1,017 Annual
(Based On Insured Value) F. Crime Coverage U.S. Fire Insurance Company $5,000,000 per occurrence.
$100,000 per occurrence.
$5,000 per occurrence.
$5,000 per occurrence.
12/01/94
to
12/01/97 $20,339 Annual Source: HISD Risk Management Department
Exhibit 6-19
HISD Property Casualty/General Liability Insurance Coverage (continued)
Fiscal 1995 - 1996
Type of Policy Insurance
CompanyAmount of
Insurance
Deductible Policy
Term
Premium Category II - Liability A. Business Automobile Policy (BAP) Mid-Continent Casualty Company Bodily Injury: $100,000 per person; $300,000 per occurrence
$20,000 per occurrence. 12/01/94
to
12/01/95 $910,000 Estimated (Based On $463.81 per Vehicle)
B. Business Automobile Policy (BAP)
Mid-Continent Casualty Company
$1,000,000 Combined Single Limit
None
12/01/94
to
12/01/95
$500
Annual
C. School Professional Legal Liability
TASB Property Casualty Joint Account
$5,000,000 per occurrence.
$5,000,000 annual aggregate.
$100,000 per occurrence.
12/01/94
to
12/01/95
$313,959
Annual
D. General Liability
Personal Injury
Employee Benefits Liability
TASB Property Casualty Joint Account
$1,000,000 per occurrence
$10,000 per occurrence.
12/01/94
to
12/01/95
$124,380
Annual
E. General Liability for Health Science Proctor Program
Audobon Indemnity Company
$1000,000 per occurrence. $300,000 aggregate.
$1,000 per occurrence
12/01/94
to
12/01/95
$2,534 Estimated (Based On $6,465 per Student)
F. General Liability (Well Monitoring)
Western World Insurance Company
$500,000 per occurrence. $500,000 aggregate.
$250 per occurrence
09/31/94
to
09/13/95
$1,787
Annual
G. General Liability (Antenna Lease)
Mid-Continent Casualty Company
$1,000,000Combined Single Limit
None
05/19/95
to
05/19/96
$500.00
Annual
H. General Liability (CBVI Program)
Mid-Continent Casualty Company
$1,000,000Combined Single Limit
None
07/01/95
to
07/01/96
$2,500
Estimated (Based On $18.52 per Student) Source: HISD Risk Management Department
Exhibit 6-19
HISD Property Casualty/General Liability Insurance Coverage (continued)
Fiscal 1995 - 1996
Type 0f Policy Insurance
CompanyAmount of
Policy
Deductible Policy
Term
Premium Category III - Bonds
A. Public Official Position
Bond (Peace Officer Bond # 1)
Fidelity andDeposit Company
$1,000.00Each Officer
N/A
12/13/93
to
12/13/96
$2,160
3-Year Premium
B. Public Official PositionBond (Peace Officer Bond # 2)
Universal Suretyof America
$1,000.00Each Officer
N/A
05/07/95
to
05/07/98
$1,638
3-Year Premium
C. Sidewalk Driveway, Curb and Gutter Builders Bond
Universal Suretyof America
$2,000
None
04/01/95
to
04/01/96
$50
D. Notary Bond
Universal Surety of America or Western Surety
$2,500
None
Varies; Individual polices, last four years
$71 Per Person
E. Restoration Bond (Well Monitoring)
Universal Surety of America
$25,000.00
None
09/13/94
Until Canceled
$500 Source: HISD Risk Management Department
Exhibit 6-19
HISD Property Casualty/General Liability Insurance Coverage (continued)
Fiscal 1995 - 1996
Type 0f Policy Insurance
CompanyAmount of
Policy
Deductible Policy
Term
Premium Category IV - Misc.
A. Excess Workers' Compensation and Employers' Liability Insurance
ContinentalCasualty Company (CNA)
Workers' Comp. Statutory
Employers' Liability $1,000,000
$350,000 peroccurrence.
09/01/94
to 09/01/95
$320,000 Minimum premium
based on
$0.05
per $100 of
payroll costs.
B. Athletic Injury Insurance
Life Insurance Co. Of North America (Primary)
Life Insurance Co. Of North America (Catastrophic)
Primary: $10,000
Excess: $5,000,000
Reasonable and customary charge for medical expenses.
No deductible, excess all other policies.
08/01/95
to
07/31/96
Annual Premium: $648,561*
Primary $592,000
Flat Fee.
Catastrophic $57,561
Based on HS & MS
* Partially Funded by parents.
C. Voluntary Student Accident Insurance
Life Insurance CO. Of North America
Maximum Benefits$250,000
See polices for schedule of benefits.
No deductible, excess all other policies.
08/21/95
to
09/01/96
At School Plan B - $16 Plan D - $8
24 Hour
Plan B - $54
Plan D - $30
Add $8 For Extended Dental
Coverage Source: HISD Risk Management Department
The district uses independent insurance brokerage and consulting firms to help procure insurance coverage and advise the district on how to reduce premium costs by using various risk management techniques. The district acquires all of its insurance coverage through competitive bids and is in compliance with the State Attorney General opinion on this issue.
An independent accounting firm's report noted that:
The District's Office of Risk Management obtained a $300,000 premium reduction in the District's school professional legal liability insurance for the fiscal years ended August 31, 1994 and 1995 by increasing the District's deductible from $50,000 to $100,000 per occurrence. Based on the District's loss experience during the past ten years, the increase in the deductible (will make the district liable for about) $70,000 annual (for a net savings of $230,000).COMMENDATION
The district should be commended for maintaining comprehensive, cost-effective property, casualty, and general liability insurance for the district.
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