It is the mission of the Office of Risk Management (ORM) to protect people, property, the community, the environment, and to enhance the well-being of students, faculty and staff through the development and implementation of cost effective, efficient, and compliant risk control and risk financing techniques for The University of Texas System (UT System) and its fifteen institutions.
The framework of the UT System risk management program consists of key elements including assessment, control, finance, communication, and monitoring. It is governed by executive leadership
and direction from the Risk Management Executive
Committee (RMEC). Operational risks are managed by professionals at UT
System Administration, the fifteen institutions, and through Systemwide
committees including the Risk Management Advisory Committee (RMAC),
the Environmental Health and Safety Advisory Committee (EHSAC),
and the Emergency Management Committee (EMC).
In Fiscal Year (FY) 2011, the total population of the UT System including students, faculty, and staff was over 317,000 and total payroll was over $6.1 billion. Collectively, there were over 85 million gross square feet of building space, and total insured values (building, contents, and business income) of $25 billion. Over 15,000 people traveled internationally for business, research or study abroad, and 2,500 vehicles were in the UT fleet. These are only a few of the metrics reflecting the diversity and magnitude of the exposures facing the UT institutions.
Systemwide risk financing programs continued to perform exceptionally well in FY 2011. All commercially marketed insurance programs experienced flat or reduced rates. Enhanced coverage terms were obtained for programs such as the International Package policy and a new Systemwide Student Medical Malpractice policy, which will result in annual savings of about $200,000 from previous years.
The Comprehensive Property Protection Plan (CPPP) was restructured to include a quota share retention in the primary coverage layer. In FY 2011, the total CPPP program costs decreased from $0.065 to $0.056 per $100 of total insured value (TIV), despite an increase of over $1.5 billion in TIV. Since 2007, the annual auto liability premiums have decreased from $230 to $208 per vehicle. Workers’ Compensation Insurance (WCI) benefits were $4.27 million (medical and indemnity) and were the lowest total paid since 1988 (23 years).
Prior to 2008, claims paid in the Unemployment Compensation Insurance (UCI) program averaged less than $4 million per year. The economic crisis, along with reductions of force due to Hurricane Ike, led to losses of $7 million in FY 2009, $9 million in FY 2010 and $8.5 million in FY 2011. The fiscal impact to the institutions has been mitigated by financing the losses over several years. Even with these increases, the UCI cost per employee at UT System is less than half of the average cost for other Texas employers.
In FY 2011, the $8.5 million of UCI Claims paid exceeded the total claims paid in all other lines of coverage combined ($8.1 million). Losses by line of coverage were: WCI - $4.27 million, Directors and Officers (D&O) - $.45 million, Professional Medical Liability (PMLI) - $2.1 million, Auto - $.23 million, and CPPP - $1.1 million.
ORM’s training and outreach activities continued in FY 2011. ORM staff serves in leadership roles in several professional organizations and frequently present at seminars and conferences. Along with a variety of training offered annually to UT professionals in Environmental Health and Safety, ORM co-hosted a summit with the US Department of State - Overseas Security Advisory Council with over 120 attendees from 65 institutions of higher education outside of the UT System. The risk management conference was attended by 432 attendees which included representation from all 15 UT institutions and 35 institutions outside the UT System.
Important risk control activities were implemented such as physical and programmatic risk assessments, training, and transfer of risk via Systemwide contracts. These activities continue to mitigate risk and reduce costs associated with UT System’s risk financing programs. A continued focus on loss prevention and control is necessary to continue this trend.
ORM continues to work with the Systemwide Environmental Health and Safety Advisory Committee to address new State and Federal environmental rules. International activity continues to increase and institutions have implemented International Oversight Committees (IOC) to assess, review, and approve trips to countries with travel warnings or significant risks. A new UCI claims and data management contract was executed resulting in more effective management of the program.
The UT System’s risk management framework encourages the application of prudent risk mitigation techniques and risk intelligent decision making. The following report demonstrates the activities and financial results of UT System’s risk management programs and the ORM for FY 2011.
Phillip B. Dendy, CRM
Director, Office of Risk Management
The University of Texas System