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A Primer on Insurance and

Risk Management for

Private Schools

with Guests Ron Wanglin and Cheryl McDowell Facilitated by David Marcus

1.Adobe Connect;

• unmute #6

2.A Primer on Insurance and Risk

Management for Private Schools

3.Our next call

4. Your final questions

Ron, former Board Chair of the Board of Trustees of The Buckley School in Sherman Oaks, is the Chairman of the Board of Bolton & Co. In addition

to many other organizations, Ron is on the Board of Directors of National Alliance Research Academy which is a leading educational institution of insurance and risk management.

Cheryl is the Vice-President of Bolton’s Education Practice Group and has over 25 years of experience in the insurance industry and is the architect behind Bolton’s on-line harassment training program for private schools. Cheryl and works with private schools in reviewing and improving their existing risk

management and insurance programs and performs forensic audits. Both Ron and Cheryl present across the United States to local, regional, and

national school organizations including NAIS, NBOA, TABS, CAIS, HAIS,

PNAIS, NACUBO, PEJE, and RAVSAK on topics ranging from insurance and risk management best practices, crisis management and disaster planning and forming risk management committees for private schools.

Ron & Cheryl can be contacted at

[email protected] and [email protected]

Please welcome

Session

Overview

• Managing the Risk Management Partnership

• The Concept of Enterprise Risk Management

(ERM)

• Auditing Your Existing Program/Conducting a

Broker RFP

• Core Coverage Areas

• New Coverage/Risk Management Solutions

• Best Practices Strategies

• Current Market Conditions

1. Managing the Risk

Management Partnership

1. Managing the Risk

Management Partnership

 Risk Management Committee – Board Level and Operational Level

Enterprise Risk Management

What is Enterprise Risk Management (ERM) in an Independent School?

 It is “a process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the

enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable

assurance regarding the achievement of entity objectives” (COSO, 2004).

Enterprise Risk Management

There are five types of risk that schools

should address in a comprehensive ERM:

1. Strategic risk that affects an

organization’s ability to achieve it’s goals.

2. Financial risk that may result in a loss of assets.

3. Operational risk that affects on ongoing management process

© 2011 Bolton and Company All Rights Reserved © 2011 Bolton and Company All Rights Reserved

Enterprise Risk Management

Five types of risk (cont.):

4. Compliance risk that relates to externally imposed laws and regulations as well as with internally imposed policies and

procedures concerning safety, conflict of interest and the like.

5. Reputational risk that affects a school’s

reputation, brand or both.

2. Auditing Your Existing

Program

 Consider a “forensic audit” of your current program

 Broker who is an expert in education risks

 Third party consultant

3. Conducting a Broker Review

(RFP).

 Don’t look for quotes

 Look for broker expertise in insuring education risks

 Collateral risk management resources

4. Picking the Right Insurance

Company

 Coverage

 Risk Management support

 Claims management

5. Key Coverages for Private

Schools

 Property

 Loss of Tuition/Extra Expense

 Equipment Breakdown

 Crime Coverage

 Liability Insurance (Complex!)

 Automobile Insurance

 Workers’ Compensation

 Catastrophic Coverage (Earthquake, Wind, etc.)

6. Building Your Program

 Concurrency whenever possible

 Primary Liability and Umbrella coverage – pick one carrier whenever possible

 Crossover Claims (General Liability, Sexual Abuse & Molestation, Trustee Liability, Employment Practices Liability and Educators Legal Liability)

 Liability Coverage Model – Aggregate Limit vs. Coverage Towers

 Deductibles, self insurance and risk retention groups

 Beware sub-limits!

6. Building Your Program

Example A

Coverage Re-Cap

Combined Tower/Excess Tower $26,000,000 Limits

Excess Liability $15,000,000

Umbrella $10,000,000

General Liability and Educators Legal Liability $1,000,000 Automobile Liability $1,000,000 Employers’ Liability $1,000,000

6. Building Your Program

Example B

Coverage Re-Cap Two Tower/Excess Carrier $26,000,000/$25,000,000 Limits Umbrella $25,000,000 General Liability $1,000,000 Automobile Liability $1,000,000 Employers’ Liability $1,000,000 Educators Legal Liability $25,000,000

7. Benchmarking and Best

Practices

 Liability Limits

 Deductible Strategies

 Loss of Tuition/Extra Expense

 Waiver and consent agreements

 Risk Management Committee

8. The Risk Management

Committee

 At the Board Level

 Finance Committee

 Audit Committee

 Risk Management Committee

 At the Operational Level

 Business Officer

 Facilities

 Dean of Students

 Director of Athletics

9. Annual Stewardship Report

 Begins with developing a service plan for

the year

 Review approximately 120 days prior to

renewal date

 May be used as a board reporting tool as

10. Evaluating Emerging Risks

and Exposures

 Cyber Liability

 Academic Security Risk

 Travel Coverage – Domestic vs. Foreign

 Relationships/Services with foreign school

partners

 Crisis Communication Response Protocols

The internal Risk Management Audit (10 more key areas)

 Board Oversight on Fiduciary Matters

 Financial and Accounting Policies

 Student Programs and Activities

 Facilities Management—maintenance,

safety, security

 Human Resources—employment

practices, handbooks, records management

The internal Risk Management Audit (10 more key areas) - cont.

 Legal Compliance – report filings, contracts

 Technology—internal controls, safeguarding

data & assets

 Admissions—services, activities and policies

 Fundraising—services, activities and policies

 Environmental—indoor air quality, noise,

Current Market Conditions

 Firming of pricing for school liability coverage (driven by educators legal liability/employment law claims)

 Workers’ compensation pricing varies by state

(California, for example, is firming due to increased frequency and severity of claims)

 Property pricing may face pricing challenges due to high claims activity in 2011

 Catastrophe (earthquake/flood/wind) remains stable, but could be impacted by loss development in 2012

 Underwriting requirements and claims history has greater impact than in the past

We Want to Hear

From You!

Have you shared your • Ideas?

• Thoughts? • Opinions?

with your peers and colleagues?

Financial Management Community of Practice

You can share your ideas on the PEJE Google group:

Upcoming Webinars

Dates & Details coming up!

JOINT with Admissions COP

The Strategic Use of Financial Aid: Elements of the Partnership Between Key Professionals

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JOINT with Development COP

The Cost of Raising Money: A Partnership making it easier with greater results

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Thank you

Ron Wanglin & Cheryl McDowell

Bolton and Company

…also…

Thank you Elana Alfred

Final Questions?

We’ll stay on for another

15 minutes

Don’t have time,

please feel free to contact Ron or Cheryl

[email protected] or (626) 535-1420