State of Kansas
Property/Casualty
Pooling Presentation
Presented by:
Byron Given, Robert McWeeney
Charlie Herr
Arthur J. Gallagher Risk Management Services, Inc.
National Public Entity & Scholastic Division
© Copyright Arthur J. Gallagher & Co. 2013
Why Arthur J. Gallagher?
• Expertise in pools, associations,
and risk purchasing groups –
Gallagher administers over 25% of
the nations pooled programs
• Staff dedicated entirely to
Scholastic Insurance
• Conduct training and speaking
sessions for various Local, State,
National and International
Associations
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AJG Public Entity Team Experience
• AJG’s Public Sector Practice serves more than 3,500 school
districts, including 40% of the largest 100 school districts in
the nation
• Gallagher is associated with 135+ public entity pools
throughout the country (estimated 11,000 individual entities)
• Our Team Operates school pools in IL, MN, VT, IN, IA,
PA, SD, WY, MI, OH
Local Service…
…Global Resources
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Sample Claim Loss Fund
Payment
Structure
*Based on data from current scholastic pools of similar demographics
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Claim #1 – Bus Runs into School - $3,500,000 claim
Excess Property
$400,000,000
Per Occ.
Aggregate Stop Loss
Protection
$10,000,000
Earthquake Sublimit
Per Occ./Agg.
Excess of the
Loss Fund
$10,000,000
Flood Sublimit
Per Occ./Agg.
Property
LOSS FUND
$385,000
-$35,000
$350,000
$1,000,000
Per Occurrence
SIR
$35,000 Per Occurrence
$1,000 Maintenance
Deductible
Total Cost to
School District: $1,000
Property, Business Income,
Extra Expense, Mobile
Equipment, Auto PD
.
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Benefits of Protected Self-Insurance (Pool)
• Retain a portion of the predictable losses
• Transfer a portion of the catastrophic risk
• Broaden your insurance program coverage
• Control your costs in the hard market
• Budget a known maximum cost
• Input in the claims process
• Provide long-term stability
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Spectrum of Insurance
Less Control
KS
Pool
X
Conventional
Insurance
Program
Greater Control
Safety
Dividend
Program
Large
Deductible
Retro-Plan
Secured
Self-Insurance
(w/ Stop Loss
Protection)
Specific
Excess
Insurance
Reinsurance
Insured
Controls Program
Insurance Company
Controls Program
Less Insurance Company Profits 
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Captive
or
RRG
Pure
Self-Insurance
Sample All District Pricing Example (Iowa School Pool; 7 members) – Property/Casualty
Estimated
Expiring
$1,212,677
Line of Coverage
1. Package Policy
(includes Property, General Liability, Automobile
Liability and Physical Damage, Garage Liability,
Inland Marine, EDP, SBLL and Crime)
2. Student Accident
2013-2014
Total
2013-2014
Expected
Maximum Costs
$301,184
$301,184
Included
$60,095
$60,095
3. Excess Property
Included
$207,060
$207,060
4. Boiler & Machinery
Included
$34,304
$34,304
5. Excess Liability –
6. Administration Fee – Arthur J. Gallagher Risk
Management Services, Inc. Fees
7. Claims Administration Fee
8. Loss Control Services Fee
Total Fixed Costs
Included
Included
$80,000
$80,000
$80,000
$80,000
Included
Included
$1,212,677
$20,000
$7,000
$789,643
$20,000
$7,000
$789,643
Estimated
2013-2014
2013-2014
Expiring
Expected Cost Maximum Cost
N/A
$196,714
$385,000
$1,212,677
$986,357
$1,174,643
Variable Cost
Loss Fund – Premium
Total Premium Contribution
•Under the Property/Casualty Program the school districts on a fixed costs basis will see a savings of
$423,034, or a 35% reduction over expiring, while improving coverages and limits.
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Sample Small District Pricing – Property/Casualty
2012-2013
Expiring
$32,235
2013-2014
Maximum Cost
Proposed
$9,000
2013-2014
Expected Cost
Program
$9,000
1,500
1,159
1,159
N/A
3,556
3,556
Included
711
711
5,000
1,543
1,543
Gallagher/Local Agent Fee
Included
3,500
3,500
Claims Administration Fee
Included
1,120
1,120
Loss Control Services Fee
Included
1,000
1,000
Total Fixed Costs
$38,735
$21,589
$21,589
-44%
-44%
N/A
2013-2014
Maximum Cost
Proposed
$9,000
2013-2014
Expected Cost
Program
$4,500
$38,735
$30,589
$26,089
-21%
-33%
Fixed Costs
Self-Insured Package Premium (includes Property, General
Liability, Garage Liability, Auto Liability and Physical
Damage, Inland Marine, EDP, SBLL and Crime
Student Accident
Excess Property
Boiler & Machinery
Excess Liability
% of Increase/Decrease
2012-2013
Expiring
Variable Costs
Loss Fund – Premium
Total Premium Contributions on a Maximum Cost Basis
% of Increase/Decrease
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Sample Large District Pricing– Property/Casualty
2012-2013
Expiring
$323,619
2013-2014
Maximum Cost
Proposed
$96,000
2013-2014
Expected Cost
Program
$96,000
8,119
19,774
19,774
N/A
57,097
57,097
Included
10,061
10,061
56,874
26,324
26,324
Gallagher/Local Agent Fee
Included
19,743
19,743
Claims Administration Fee
Included
4,167
4,167
Loss Control Services Fee
Included
1,000
1,000
$388,612
$234,166
$234,166
-40%
-40%
N/A
2013-2014
Maximum Cost
Proposed
$122,663
2013-2014
Expected Cost
Program
$51,397
$388,612
$356,829
$285,563
-8%
-27%
Fixed Costs
Self-Insured Package Premium (includes Property, General
Liability, Garage Liability, Auto Liability and Physical
Damage, Inland Marine, EDP, SBLL and Crime
Student Accident
Excess Property
Boiler & Machinery
Excess Liability
Total Fixed Costs
% of Increase/Decrease
2012-2013
Expiring
Variable Costs
Loss Fund – Premium
Total Premium Contributions on a Maximum Cost Basis
% of Increase/Decrease
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KERMP District Savings – Property/Casualty
District
EXPECT COST SAVE/EXPR
MAX COST SAVE/EXPR
District 1
-46.48%
-36.04%
District 2
-37.75%
-27.92%
District 3
-45.49%
-27.38%
District 4
-56.16%
-49.53%
District 5
-49.98%
-32.01%
District 6
-32.97%
-22.57%
District 7
-27.92%
-20.28%
District 8
-31.19%
-17.74%
District 9
-34.26%
-15.47%
District 10
-55.72%
-42.92%
-38.73%
-25.85%
Average
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What the First Dollars Markets
are going to Say (EMC/WSI)…
• “Too many meetings and too much of a time commitment.”
• “The pool has the ability to be assessed.”
• “The price you see is NOT the price you will pay!”
• “These pools make use of the E&S Markets. The carriers used are not AM
Best Rated.”
• “To get the program started the insurance companies will undercut
premiums in the first year. The carriers will jack up the premiums/rates in
year two of the program.”
• “If you decide to leave the Pool, you have to take your Claims with you.”
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Kansas Pooling Sample Timeline
• July 2015: Creation of design study for Western Kansas Scholastic Program
• September - November 2015: Pooling design study is displayed for School Districts throughout Western Kansas and
applications are administered to prospective School Districts
• September - November 2015: Phone calls to discuss the applications and information gathering process
• October 30, 2015: All applications are due to Gallagher for charter member prospective school districts
• December 31, 2015: Quotations from Gallagher’s market partners expected
• January, 2016: Proposal Meetings with prospective districts
• February 2016: Prospective members present the program option to your respective school boards
• March 4, 2016: Kansas Department of Insurance Presentation
• March 4, 2016: Kansas Attorney General and Kansas State Department of Education Applications due
• June 1, 2016: Approval Decision Deadline for various State entities due per KS State Statue 12.2618
• July 1, 2016 – Program Inception Date!
▪
Please see the packet of information on how to obtain the required information that we will need to quote
the insurance.
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