Public Risk July 2012 by Moire Marketing Partners

Published by the Public Risk Management Association

www.primacentral.org

JULY 2012

WE’RE THE PUBLIC AND WE’RE HERE

TO HELP YOU!

PREPARING FOR A PROPERTY LOSS: WHAT YOU NEED TO KNOW ATTENDEES WALK THE LINE OF RISK at PRIMA’s 2012 Annual Conference in Nashville

THE “DIRTY DOZEN” Hidden Hazards on Playgrounds

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— Kevin Smith, Executive Director Alaska Municipal League Joint Insurance Association

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Volume 28, No. 6 | July 2012 | www.primacentral.org

The Public Risk Management Association promotes effective risk management in the public interest as an essential component of public administration.

PRESIDENT Dan Hurley, CSP, ARM-P, MS Senior Director, Risk Management & Safety Norfolk Public Schools Norfolk, VA

CONTENTS

PAST PRESIDENT Cindy B. Mallett, AIC, CWCP, ARM-P Risk Manager City of Gainesville Gainesville, GA PRESIDENT-ELECT Betty Coulter Director of Risk Management and Insurance University of North Carolina at Charlotte Charlotte, NC

6 WE’RE THE PUBLIC AND WE’RE HERE TO HELP YOU!

By Bill Kostner, MBA, ARM-P

Matt Hansen, MPA Director, Risk Management Division City & County of San Francisco San Francisco, CA

By Randall Zimmerman, MBA, ARM, and Tim Zimmerschied, CIC, CPCU, ARM-P, AAI

14 ATTENDEES WALK THE LINE OF RISK

at PRIMA’s 2012 Annual Conference in Nashville

By Jennifer Ackerman, CAE

Hidden Hazards on Playgrounds

By William Stinson, CSP, OHST, CHCM

Amy Larson, Esq. Risk and Litigation Manager City of Bloomington Bloomington, MN Regan Rychetsky, ABCP Director, HHS Enterprise Risk Management and Safety Texas Health and Human Services Commission Austin, TX EXECUTIVE DIRECTOR Marshall W. Davies, Ph.D. EDITOR Jennifer Ackerman, CAE Deputy Executive Director 703.253.1267 • jackerman@primacentral.org

16 THE “DIRTY DOZEN”

Dean Coughenour, ARM Risk Manager City of Goodyear Goodyear, AZ Michael Fann, ARM-P, MBA Director of Loss Control TML Risk Management Pool Brentwood, TN

10 PREPARING FOR A PROPERTY LOSS: WHAT YOU NEED TO KNOW

DIRECTORS Ed Beecher Risk Manager City of Pompano Beach Pompano Beach, FL

ADVERTISING Donna Stigler 888.814.0022 • donna@ahi-services.com

Public Risk is published 10 times per year by the Public Risk Management Association, 700 S. Washington St., #218, Alexandria, VA 22314 tel: 703.528.7701 • fax: 703.739.0200 email: info@primacentral.org • Web site: www.primacentral.org Opinions and ideas expressed are not necessarily representative of the policies of PRIMA. Subscription rate: $140 per year. Back issue copies for members available for $7 each ($13 each for non-PRIMA members). All back issues are subject to availability. Apply to the editor for permission to reprint any part of the magazine. POSTMASTER: Send address changes to PRIMA, 700 S. Washington St., #218, Alexandria, VA 22314.

IN EVERY ISSUE 4 News Briefs | 19 Advertiser Index | 20 Member Spotlight

JULY 2012 | PUBLIC RISK

In 2012, PRIMA welcomes back one of its most popular and successful education programs:

PRIMA INSTITUTE!

Plan now to attend the 2012 PRIMA Institute, November 5–7, in Charlotte, NC. This comprehensive risk management program is perfect for those just starting out in risk management or who have less than five years of risk management experience. This three-day session will help you define the total cost of risk in your organization, the types of insurance programs available to public risk managers, how to empower your risk management team and get a seat at the decision-makers’ table. Each day concludes with case study presentations from experienced risk managers!

PI 12

PRIMA INSTITUTE 2012

REGISTRATION OPENS JULY 16! MARK YOUR CALENDARS AND DON’T MISS THIS EVENT!

T H A N KS TO O U R S P O N S O R :

Want to learn more about sponsoring? Contact Jessica Konrath at jkonrath@primacentral.org.

Message from PRIMA President Dan Hurley

A GOOD TIME WAS HAD BY ALL

artoonist Charles Schulz (Peanuts) said, “Try not to have a good time ... This is supposed to be educational.” In the strip, Lucy was joking when she said this but those attending the PRIMA Annual Conference in Nashville will tell you that while it was an educational experience, they also enjoyed the atmosphere of Nashville, particularly the nighttime entertainment provided by sponsors. Session speakers were energetic and were right on target with their topics and presentations. Even Lucy would have been impressed with Richard Mackie’s session on ‘Risk Velocity to Reality,’ which dealt with how to classify levels of risk. It featured a PowerPoint presentation that combined animation, video outtakes and periodic yet subtle music with a quick beat. The presentation effectively conveyed the message but also reminded us that youth require more stimulation in learning since they are used to instant communication and action. The Nashville conference introduced the PRIMA Annual Conference smartphone and tablet mobile application, which provided a list of sessions, speakers, bios, handouts, schedules, conference maps and even alerts to let us know about extracurricular activities. It also included handouts for every session. This may be the first time I was able to find every session location and didn’t get lost. The only complaint that I heard, and frankly it was a compliment to our speakers and conference planning committee, was that it was often hard to pick which session to attend. The app is still available for download at http://conference.primacentral.org. The conference had several international guests, including Simon Davis, the chair of our British counterpart, ALARM. If you happened to be sitting in on the Global Standards Update session, you would have appreciated their contributions. I hope you had the opportunity to talk with them during our many social networking opportunities,

to enjoy their professional insights and even their sense of humor. While chatting with the ALARM and Australian participants during one of those socials, the subject turned to sports. One of the ALARM contingent said with a smile that the Welsh, Scots and English may often disagree ‘but they become united when any one of them beats Australia’ and everyone shared a laugh. We appreciate the assistance of the Tennessee chapter, led by their president, Michael Fann. The chapter helped with support activities, such as putting together registration materials, and put on an excellent golf outing. They also provided plenty of GooGoo Clusters, made right there in Nashville. As the dust settles, the PRIMA staff, who pulled off this exceptional conference, will be starting the work on the 2013 conference, to be held in Tampa, Fla. Session proposals for Tampa are being accepted now through August 3 on the PRIMA Web site.

The Nashville conference introduced the PRIMA Annual Conference smartphone and tablet mobile application, which provided a list of sessions, speakers, bios, handouts, schedules, conference maps and even alerts to let us know about

Thank you to Marshall Davies and all the PRIMA staff, along with the conference planning committee and speakers, for making Nashville a great success. I hope to see you all in Tampa next year and spread the good word about the re-emergence of PRIMA Institute, which will be held November 5–7, in Charlotte, N.C.

extracurricular

Sincerely,

time I was able to

activities. It also included handouts for every session. This may be the first find every session location and didn’t

Dan Hurley, CSP, ARM-P,MS 2012–2013 PRIMA President Senior Director, Risk Management and Safety Norfolk (VA) Public Schools

get lost.

JULY 2012 | PUBLIC RISK

News Briefs

NEWS

BRIEFS GOVERNMENTS DISCOVER THE IMPORTANCE OF MENTAL HEALTH FIRST AID One in four adults and 10 percent of children in the United States will suffer from a mental health illness this year. Mental disorders are more common than heart disease and cancer combined—the leading causes of death, reports Governing.com. “You’re more likely to see someone having a panic attack than you are to see someone having a heart attack,” says Linda Rosenberg, CEO of the National Council for Community Behavioral Healthcare (National Council). Yet most people, she says, don’t know how to react to the former. That’s why in 2008, the National Council, the Maryland Department of Health and Mental Hygiene and the Missouri Department of Mental Health joined forces to bring the Australian concept of Mental Health First Aid (MHFA) to the United States. The idea behind MHFA is no different than that of traditional first aid: to create an environment where people know how to help someone in emergency situations. But instead of learning how to give CPR or how to treat a broken bone, the 12-hour course teaches people how to recognize the signs and symptoms of mental health problems and how to provide initial aid before guiding a person toward appropriate professional help. Since its introduction in the U.S. four years ago, more than 50,000 people have been trained in 47 states and the District of Columbia. In at least 22 of those states, state or local governments supported the program, usually paying for employees to take the course, says Susan Partain of the National Council. Several states—including Arizona, Colorado, Georgia, Maryland and Missouri—already have statewide programs, which require some public workers and citizens to complete training as part of their job. For example, in Rhode Island the course is part of police officer training. Austin, Texas, offers it to every public library employee. Maryland offers it at every community college—something several other states are looking to do. And Missouri partners with faith-based organizations since the clergy is often “the first place people go when they feel stressed,” says Edwin Benton Goon, the state’s program coordinator. Arizona toyed with the idea a few years ago, but really invested in the program after a mentally ill man shot U.S. Rep. Gabrielle Giffords in Tucson in January 2011. Sometimes it takes a tragic event for governments to take notice of the program, says Rosenberg, but she believes it has the ability to prevent future incidents like the Giffords shooting. Chief Anthony Silva, the executive director of Rhode Island’s Municipal Police Training Academy agrees. “The training helps our officers better understand people with mental illnesses so they can respond appropriately without compromising safety,” he said in a testimonial. Not only does the course increase mental health literacy, according to studies of the Australian model, but it’s also shown to improve the mental health of those taking the training, making them more confident in dealing with people who have a mental health illness.

PUBLIC RISK | JULY 2012

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DEBIT CARDS REPLACE PAPER TAX REFUNDS IN SOME STATES This tax season, many Americans who were owed refunds didn’t receive a familiar check in the mail, reports Governing.com. They got a prepaid debit card instead. At least six states this year issued their tax refunds on debit cards, in a move they say will save money for both the refund recipients and the government. Residents who have bank accounts can still have their refunds deposited directly to their accounts. For those who don’t, however, states say there are many advantages of plastic cards over paper checks. For one, residents will be spared hefty check-cashing fees often imposed by banks or check-to-cash storefronts. And state revenue offices say the move will save them anywhere from $300,000 to $1 million every year, because they’ll no longer have to print checks. (The bill for managing and shipping debit cards is typically footed by the banks contracted by the states.) Connecticut, Louisiana, New York, Oklahoma and South Carolina all launched debit card programs this year, and Georgia continued a program it launched in 2011. Banks make money off the cards by earning interest on the funds before they’re spent by taxpayers, charging merchants each time the cards are swiped and levying various fees on the consumers who use the cards. In most cases, the debit card fees are structured so that, with some planning, taxpayers can avoid most or all of the associated fees. In South Carolina, for example, there’s no fee for using the card to make purchases from merchants that accept Visa debit cards, and taxpayers don’t pay a fee when they withdraw cash from Bank of America ATMs.

Protect your volunteers

JUSTICE DEPT. ORDERS FLORIDA TO STOP PURGING NON-CITIZENS FROM VOTER ROLLS The Justice Department ordered Florida’s elections division to halt a systematic effort to find and purge the state’s voter rolls of non-citizen voters, reports The Miami Herald. Florida’s effort appears to violate both the 1965 Voting Rights Act, which protects minorities, and the 1993 National Voter Registration Act—which governs voter purges—T. Christian Herren Jr., the Justice Department’s lead civil rights lawyer, wrote in a detailed two-page letter. State officials said they were reviewing the letter. But they indicated they might fight DOJ over its interpretation of federal law and expressed frustration that President Barack Obama’s administration has stonewalled the state’s non-citizen voter hunt for nine months. “We are firmly committed to doing the right thing and preventing ineligible voters from being able to cast a ballot,” said Chris Cate, spokesman for Secretary of State Ken Detzner, who was ordered by Gov. Rick Scott to conduct the search for potentially ineligible voters. DOJ’s written demand came hours after the agency refused to comment on the matter to The Miami Herald. It also followed a federal court ruling that struck down a Republican voter-registration law that a judge found too onerous.

Volunteers Insurance—it’s not just our name; it’s our specialty—and we’ve been at it for over 40 years! • Accident, liability and excess auto liability • Accident coverage also available for work-release and alternative-sentencing participants Find out more at www.cimaworld.com or by calling us at 800.222.8920

So far, Florida has flagged 2,700 potential non-citizen voters and sent the list to county elections supervisors, who have found the data and methodology to be flawed and problematic. The list of potential non-citizen voters—many of whom have turned out to be lawful citizens and voters— disproportionately hits minorities, especially Hispanics. About 58 percent of those flagged as potential non-citizens are Hispanics, Florida’s largest ethnic immigrant population, a Miami Herald analysis found. Hispanics make up 13 percent of the overall 11.3 million active registered voters.

JULY 2012 | PUBLIC RISK

We’re the Public and We’re Here

TO HELP YOU! By Bill Kostner, MBA, ARM-P

We’ve all heard the reverse of the title—“I’m from the government and I’m here to help.” In managing the risks public entities face, the effective use and policy development around volunteers can play an integral role in a successful outcome. Volunteers are great! They can bring a certain enthusiasm to the workforce, help with community projects and provide motivated assistance where we need extra help. Volunteers come from a variety of sources with varying motivational skill sets. They may be students, adult workers, retired people or individuals working on a local community service goal. Volunteer service may also be court-ordered. Volunteers provide an important resource for any public or not-for-profit, entity. They also pose risks that must be managed to effectively utilize resources, to the mutual benefit of your volunteers, the public entity and our taxpayers.

PUBLIC RISK | JULY 2012

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When drawing up a volunteer policy for your public entity, start by reviewing your state and local laws regarding the hiring process for volunteers. Check to see if volunteers are eligible for additional benefits like workers’ compensation or a pay stipend or if there are special background checks or other requirements applicable to them. A few examples of laws that may directly affect your volunteer policy include Florida Statute, section 1012.465, that requires a background check of all volunteers. This is known as the Jessica Lunsford Act, named after a minor child who was murdered by a previously convicted sex offender. Many states, including New York and Indiana, mandate that you provide workers’ compensation benefits to volunteer firefighters as well as other state employees. Your particular state may dictate who is an employee, how to screen your volunteers and what type of a background check is necessary. When setting up your program, remember to use a basic risk management process, such as the one outlined by C. Arthur Williams Jr. and Richard M. Heins in their book, Risk Management and Insurance. They break the risk management process down into six steps:  Determining the objectives of the organization (Just because someone wants to volunteer doesn’t mean it aligns with the goals and objectives of your entity.)  Identifying exposures to loss (What could go wrong?)  Measuring those same exposures (Establish the likelihood and cost of potential losses.)  Selecting alternatives (Identify acceptable risks within your risk appetite, controls and transfer mechanisms.)  Implementing a solution (Publish a policy and integrate risks into the portfolio.)  Monitoring the results. (See how it is working and make adjustments.)

For the City of Lincoln, Neb., as we started out with our volunteer program, we quickly determined that volunteers under 18 years of age had a number of regulatory hurdles such as child labor law restrictions for hazardous work and required adult waivers/permission slips. As a consequence, we routinely accept volunteers who are 18 years of age, and will also accept volunteers of at least 16 years of age, but only for non-hazardous work, with close supervision and a waiver signed by a parent or guardian. On some occasions, an organized group such as scouts, a church group or other affiliation group that has youths under age 16, under their own direction, may work on various projects under the supervision of their own group leaders. We permit this with two conditions: they must provide an additional insured endorsement to their liability insurance; and adults from the group must be actively involved in the supervision of this group. Compliance with the federal Fair Labor Standards Act requires that children under 18 years of age refrain from engaging in a number of hazardous work duties. This applies to volunteers, as well as to employees. Ensure that your definitions are at least as restrictive as these applicable laws. To ensure that we are getting the best qualified volunteer applicants, the City of Lincoln implemented a volunteer application. An application form should be concise but also collect all of the relevant information to allow underwriting of the exposures. It should contain, at a minimum, the following: • • • • • •

Name, address and past employment Prior residences, states of residence Criminal and motor vehicle convictions Personal references and work interests Desired work schedule A signed waiver and release of all claims

JULY 2012 | PUBLIC RISK

We’re the Public and We’re Here to Help You!

Volunteers can provide valuable, enthusiastic labor to public entities, create a greater sense of community and potentially cost your public entity, if the risks aren’t managed. Reap the benefits and reduce the risks by creating your own volunteer policy using a risk management process. Mitigate negligent hiring or negligent retention claims by doing the right thing and screening your volunteers.

As we looked at our local volunteer program, we were provided with very little direction or restriction from our state statutes. We established job descriptions to advise potential volunteers about what kind of work was available. We also established information about our entity, our policies, how to call off and make reports, use of name tags and appropriate dress code. We wanted our volunteers, who would be the face of our public entity, to represent us reasonably and appropriately, knowing our values and goals. Identifying appropriate supervision is also an important element of our volunteer program. The volunteer must know to whom they report and the supervisor must provide the necessary direction and control. This can include some difficult communication, including what is acceptable and what is not acceptable. For our screening, all volunteers are checked through our local police department. This includes city police and local county checks through police and the county attorney. We also check the abuse database and the state sex offender registry. However, for volunteers who will be working with minors or vulnerable adults, we conduct a more detailed criminal background screening using a member of the National Association of Professional Background Screeners. There are a variety of these professional background check companies available, and we use their service to check criminal records in every state that is listed on the application. This professional background check for not-for-profits reviews the following: • • • • • • •

Applicant verification County criminal records search, state-wide Multi-court jurisdictional database National sex offender registries Federal criminal search Global watch search State health and human services and child abuse registry

We also require that a waiver be signed by an adult volunteer, or by the volunteer’s parent or adult guardian, if they are a minor, or under the age of 19 in our state. Other screenings may also be necessary, even though they do not pertain to our operations. For example, if volunteers have access to financial information that could be used by some unscrupulous individuals, we would also run a more detailed background check. If your volunteer were to engage in driving a motor vehicle in the course of their service to the public entity, then a more detailed motor vehicle record check could be necessary. This is where your risk management plan will come into place. At our entity, we try to mitigate the exposure

PUBLIC RISK | JULY 2012

we have for criminal fraud and vehicle accidents by keeping volunteers removed from these activities. Providing protection for the volunteer is important as well. In most instances, they will not be covered by state workers’ compensation laws. Therefore, one very positive thing that we provide for our volunteers is volunteer accident insurance. This is excess insurance that pays for medical care that is above what the volunteer’s health insurance will pay, if there is some kind of injury while volunteering at our direction. This insurance is meant to make the volunteer whole, but not for them to profit from an injury. Certainly injuries occur, even in the best of programs, and this provides for a reasonable solution without requiring volunteers to file a claim or proceed with litigation. Under our standard volunteer accident insurance, accident excess medical coverage will pay up to $50,000, plus there is a small death benefit of $2,500 with this policy. As we move ahead with recruiting volunteers, there are a number of ways to recognize and appreciate their services. Some of the things we have looked at include sending out volunteer birthday cards, holding appreciation meetings or including volunteers in our awards banquets. Other activities include giving out certificates of appreciation to our volunteers, discounts or special services, or appreciation gifts, if possible, opportunities to get updated information from top department or officials, convenient work hours with family members or public recognition (via the newspaper) or privately (as with a personal note). All of these niceties allow our volunteers to feel appreciated and encourage them to continue to pledge their services as volunteers. The City of Lincoln is the capital city of Nebraska with approximately 250,000 residents. Our departments look for good volunteers, require a background check and a signed waiver, do an interview and if working with children or vulnerable adults, must do a more extensive background check. We value our volunteers and provide volunteer insurance in case they become injured. We don’t want a “black swan event” to put us in a hole. Volunteers can provide valuable, enthusiastic labor to public entities, create a greater sense of community and potentially cost your public entity, if the risks aren’t managed. Reap the benefits and reduce the risks by creating your own volunteer policy using a risk management process. Mitigate negligent hiring or negligent retention claims by doing the right thing and screening your volunteers. Bill Kostner, MBA, ARM-P, is the risk manager for the City of Lincoln, Neb.

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PRIMA 2012

WEBINAR SERIES FREE FOR PRIMA MEMBERS! Looking for a cost-effective way to train your staff while avoiding the frustration of budget cuts and travel expenses? The Public Risk Management Association’s Webinar series is designed to help risk management professionals like you excel in the field without leaving your office.

WEDNESDAY, JULY 18, 2012 | 12 PM – 1:30 PM EST Concussion Education and Management in the Student-Athlete Presenter: Michael L. Williams, CMAA, Coordinator of Athletics for the Howard County Public School System (HCPSS) Gerard A. Gioia, PhD, Chief of the Division of Pediatric Neuropsychology at Children’s National Medical Center The presenters will outline the components of a concussion education and management program. Webinar participants will become familiar with the risks, dangers, signs and symptoms associated with concussions. In addition, attendees will be introduced to return-to-play/work protocols and the components of an effective concussion management and education program.

SERIES SPONSOR:

Visit www.primacentral.org to register.

PREPARING FOR A PROPERTY LOSS:

WHAT YOU NEED TO KNOW By Randall Zimmerman, MBA, ARM, and Tim Zimmerschied, CIC, CPCU, ARM-P, AAI

With property losses, there are three important phases that occur: pre-loss, events during loss recovery and post-loss resolution. The most important phase at the moment of loss is pre-loss. How prepared am I? What have I done to prepare for this day? Am I covered and how much am I covered for? Who/what are my resources to begin recovery? Unfortunately, many public entities may not know this information until after they have had a loss. This article will review some of the best practices to put in place to protect your properties in the event of a loss. The difference between property claims and other claim types is that many risk managers have not dealt with large property losses. In a property loss, the risk manager has to make multiple assessments to mitigate the loss and develop contingency plans to get the operations back up and running. Prior to loss, the three important areas to concentrate on in your property policy are:  coverage type;  valuations (statement of values); and  having a checklist in the event of loss.

COVERAGE TYPE There are three coverage types that are seen most often for valuation: replacement cost, agreed value and co-insurance. In most cases, it is preferable to have replacement cost coverage in the event of loss. This indicates the carrier will pay for the full replacement cost for the building and contents that were damaged. In the current market, there are several carriers placing margin clauses on the policy that can dramatically change the maximum amount that the carrier will pay per location. For example, if the policy says replacement cost, but then has the margin clause of 100 percent, you no longer have true replacement cost. If the replacement cost of your building was $4 million, and the value on your statement of values was $2 million, the carrier, due to the margin clause, would only pay $2 million. Without the margin clause, they would have paid the full replacement cost even though it was greater than the amount on the statement of values. The policy actually only has up to the value on the statement of values for that location. This may be fine if you are absolutely certain that the building and contents will be accurately valued at the time of loss—but does not allow any margin of error. The second option is to have valuation based on an agreed value. In this case, the carrier is agreeing that the value at time of loss will be the amount on the statement of values, signed at policy inception. The third common option is co-insurance, Typically it is recommended to stay clear of co-insurance valuation unless the carrier will agree to blanket all locations and have a lower co-insurance percentage, such as 80 percent. Listed below is a table showing the differences in how a claim would be paid out under different coverage conditions. The example assumes a building that is on your schedule of values is listed at $400,000. At the time of loss, the replacement cost is $1 million, and loss is $500,000 (Table I): Full Replacement Cost No Margin Clause

Replacement Cost 110% Margin Clause

Agreed Value

80% Co-Insurance

$400,000

$1,000,000

Lost Sustained

$500,000

Amount Policy Would Pay

$500,000

$440,000

$400,000

$250,000

$–

$60,000

*Agreed Value

$250,000

TABLE 1 Listed Value Actual Replacement Cost

Unpaid Loss

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The reason for these examples is to illustrate the importance of having the widest margin possible or better yet—no margin clause. This allows for a margin of error in your building and content values, which is especially important in a changing real estate market. Another important consideration in valuation protection is obtaining blanket coverage, instead of specific-location coverage. Blanket coverage (coverage in which the values for multiple locations are combined for one per occurrence limit) is preferred but may not be available in some markets. This type of coverage is preferred in the event there are valuation errors on single locations, as the blanket coverage will provide more margin of error. The coverage type will normally be shown in the front of your policy while any reference to a margin clause will be listed within your policy language. In looking at coverages, confirm whether or not there are supplemental coverages such as flood and earth movement. Depending on your geographic location, it is recommended that entities have both of these coverages. Your buildings may not be near a body of water; however, we have seen a number of water damage claims in downtown locations that were not in flood zones. These resulted from copious rainfall in a short amount of time overflowing streets because of inadequate or blocked drainage systems. Adequate mold coverage goes hand-in-hand with flood coverage. At the very least, you should have these coverages quoted to analyze the trade-off and financial impact of the having coverage or rolling the dice. On the coverage side, also pay attention to a number of the sub-limits contained in the policy. There are many important sub-limits to evaluate; however this article will focus on:  Documents: Several policies are now worded that if damaged or destroyed, documents will be replaced with copies made from a previous version. This may not cover

restoration of important documents, if no previous generation existed. Since many documents have retention requirements, attempted restoration will be necessary. To illustrate the importance of wording, recently a room that contained 400 boxes of important original files was flooded. The initial restoration estimate was $600,000, and the carrier interpreted the language in the policy and subsequently offered to replace the files with 400 boxes of blank paper.  Fine Arts: There have been instances where public entities and schools with works of art, fossils and/or historical documents may exceed the sub-limit in the property policy. This is one of the items where a risk manager needs to be aware of any items with high-dollar value or historical value; routinely the policies will have $50,000 or $100,000 sub-limits.

 Ordinance/Law: We all are familiar with the fact that various buildings have different code requirements, depending on when they were built. That changes if you have a building that has to undergo substantial restoration due to a loss. Normally, replacement policies will cover the cost of restoring the building as it previously existed. However, depending on the degree of damage and restoration, you may have to bring the entire building up to current ordinance/code in all areas. Without an adequate sub-limit for this coverage, your entity may have to absorb all or some of this cost.

As mentioned previously, the proper valuation of the buildings and contents can have a significant impact at the

Your phone list should include: • • • • •

County/City Manager Facilities Manager Media Contact Security Employees

ELEMENTS OF AN EMERGENCY RESOURCE LIST Your resource list can include: Property Name/Location Emergency Services: Fire Department Police Department Hospital Poison Control Center

 Business Interruption: If you have operations that generate revenue such as theaters, convention centers or athletic complexes, there will be a need to consider the benefits of having business interruption coverage. By obtaining business interruption coverage, there will be revenue protection for you entity in the event of loss.

VALUATION CONCERNS

ELEMENTS OF AN EMERGENCY PHONE LIST

Emergency Resources: Insurance Company Red Cross Local Shelter Salvation Army Local Area Services: Health Department Animal Control Electric Company Telephone Company Water Company Gas Company Hospitals Locations of: First aid kit Fire extinguisher Disaster supplies Bottled water company

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Preparing for a Property Loss: What You Need to Know

ELEMENTS OF A VENDOR RESOURCE LIST Your vendor resource list should include: • General Contractor • Landscaping/Tree Service • Roofing Company • Plumber • Electrician • Trash Collection/Dumpster • Security Company • Bio Hazard Company • Janitorial Company • Carpet Cleaner/ Water Extraction • Laundry Service • Carpet/Flooring Company • Paint Contractor • Local Hardware Store • Locksmith • Fire/Alarm Company • Limited Access Gate Contractor • Elevator Company • Glass Company (You should have Key Contact Name, Phone Number, Emergency Number, Insurance Agent, Claims Contact Person, Policy# and Carrier Name.)

time of loss. In recent years, even though in most parts of the country, commercial real estate values are down, the construction costs have started to rise, which would need to be factored into replacement cost of structures. Also seen are changes in flood zones and most recently, wind zones, with various models used by insurance carriers. The best practice model is to evaluate the real property values at least every three years. This evaluation can be completed using either internal resources (property management, facilities, maintenance) or outside valuation firms or a combination of the two. A number of entities use internal resources for lower-valued buildings and use outside evaluation for buildings/structures of higher value or specialized structures, such as convention centers, power plants and waste water treatment facilities. There are a number of computer databases that will provide information on average square footage cost for a given occupancy and given construction. This information is a great starting point to get a sense of the

accuracy of values in the current market conditions. It is recommended that when values are re-evaluated, the valuation of the building and contents are updated using additional information such as building construction, age of building and any renovation, age of HVAC systems, electrical and specific locations of structures. With the most recent changes in property modeling, the more detailed information provided for the property exposure, the better you will be positioned from a price and coverage standpoint. In addition to the buildings, they will also need a comfort level of the value of the contents. It is helpful to put a system in place to get updated estimates from departments on the replacement cost of the contents in their department. These additional steps ensure that any piece of equipment or supplies over $50,000 require that the department notifies risk management. This can be done via the individual departments or purchasing department for newly purchased material. This can be critical when it comes to computer/electronics and electronics placed on any owned/leased towers. One way to double-check information is to have a schedule in place to do a walkthrough of all the locations. As risk managers, you should already be conducting walkthroughs of your buildings but among other issues, it is recommended that valuation of contents be a factor. This will give you the chance to visually confirm what you have from a valuation standpoint. Having a camera handy is also a wise choice. Certainly the old saying, “A picture is worth a thousand words,” would apply in this case. In some instances, this has led to pictures of the structures being included on the actual statement of values for your property schedule.

CHECKLISTS/RESOURCE LISTS With a major property loss, one item that is essential to smooth transitions through the loss and restoration process is having a checklist for the potential resources

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and personnel that will need to be involved in events. The checklist should cover items such as contact information for municipal management, facilities management, security, departmental contact and media contacts. Resource lists should include utility contacts and medical and emergency services contacts. With a property loss, the property carrier will assist with suggestions, but in most cases, it will be up to you to bring in the appropriate vendors and get quotes when needed. It is helpful to have a list of the disaster recovery companies, electricians, plumbers and landscapers that would be called in after a loss. When a loss occurs, you want to be able to grab these checklists and begin the process toward a full recovery from the event. Certain events that affect multiple structures will require more in-depth procedures and protocols. This article has concentrated on three areas of concern that must be addressed prior to a loss: valuations of your buildings and contents; the type of coverage provided by your policy; and a sample checklists/resource lists to use as a quick reference in the event of loss. The more prepared you are prior to a loss, the easier it will be to recover from the loss. Randall R. Zimmerman, MBA, ARM, is the risk manager for Guilford County, NC, and the president of the North Carolina chapter of PRIMA. Tim Zimmerschied, CIC,CPCU, ARM-P, AAI, is area vice president, public entity and scholastic division, for Arthur J Gallagher Risk Management Services

CALENDAR OF EVENTS PRIMA’s calendar of events is current at time of publication. For the most up-to-date schedule, visit www.primacentral.org.

WEBINARS 2012 • July 18: Concussion Education and Management in the Student-Athlete • September 19: You Don’t Choose Tragedy, But You Can Choose Your Response: Crisis Response for Schools • November 17: Generational Differences in the Workplace (session presented by Genesis Management and Insurance Services Corporation)

PRIMA ANNUAL CONFERENCES June 2–5, 2013 PRIMA 2013 Annual Conference Tampa, FL Tampa Convention Center June 8–11, 2014 PRIMA 2014 Annual Conference Long Beach, CA Long Beach Convention Center

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June 7–10, 2015 PRIMA 2015 Annual Conference Houston, TX George R. Brown Convention Center

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UPCOMING CHAPTER MEETINGS • Safety Training • Industrial Hygiene Services • Loss History Analysis / Accident Investigation • Program Evaluation • Risk Improvement

Chapter meetings are listed on a space-available basis. For a complete list of PRIMA chapter meetings, visit www.primacentral.org. For information on a specific meeting, please contact the chapter directly. Colorado

August 12-14

Michigan

July 19

North Carolina

July 20

To have your chapter meeting listed on the PRIMA Website, contact Bles Dones at bdones@primacentral.org.

JULY 2012 | PUBLIC RISK

Attendees Walk the line

AT PRIMA’S 2012 ANNUAL CONFERENCE IN NASHVILLE By Jennifer Ackerman, CAE

With Music City as the backdrop, more than 1,000 public risk managers gathered for three days of learning and networking at PRIMA’s 2012 Annual Conference. This year’s theme, ‘walking the line of risk’ typifies the day-to-day activities of many risk managers in public entities today. This year’s conference kicked off on Monday, June 4, with the state of the association address. PRIMA 2011–2012 President Cindy Mallett, AIC, CWCP, ARM-P, greeted the audience with an update on what PRIMA has done for its members during the last 12 months and a preview of what’s to come. Highlights included the launch of streaming Webinars, the introduction of PRIMA’s first-ever Annual Conference mobile application and the production of a special issue of Public Risk magazine focusing on enterprise risk management in the public sector. Mallett wrapped up her speech by introducing the general session sponsor, who brought out Monday’s keynote presenter, Bill Bott. Bott, along with PRIMA’s other general session speakers, started each day right with motivating, thought-provoking and sometimes comical presentations that spoke to both new and experienced risk managers. Following the morning general session, attendees spent the first day of the conference in concurrent sessions learning about topics such insurance market cycles, playground safety, social media risk and community safety leadership. Attendees convened for PRIMA’s Awards Luncheon on Monday afternoon to honor risk management excellence. Mallett and President-Elect Dan Hurley, CSP, ARM-P, MS, presented awards for achievement in risk management programs, products and pools, in addition to awarding PRIMA’s Public Risk Manager of the Year prize to Gary Eastes, risk manager for the City of Knoxville, Tenn.

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THANKS TO PRIMA’S 2012 ANNUAL CONFERENCE SPONSORS! PLATINUM SPONSORS

“Gary’s commitment to the health and safety of his entity and his peers made him a standout candidate in a very competitive field this year,” said Marshall Davies, PhD, PRIMA executive director. “His programs have made a difference to the City of Knoxville and its employees, even going so far as to save lives.” PRIMA also presented its Distinguished Service Award to Abbie Hudgens, ARM. The PRIMA Distinguished Service Award honors an individual working within the field of public risk management who has made a significant contribution to the profession and given sustained service to PRIMA as an organization.

GOLD SPONSORS

Hudgens, who is the workers’ compensation division administrator for the Tennessee Department of Labor and Workforce Development, was chosen to receive the Distinguished Service Award based on her many years of dedicated service to both PRIMA and the profession of risk management.

Claims Management and Solutions

Throughout Monday and Tuesday, attendees crowded into the PRIMA Exhibit Hall to learn about new products and services for public sector risk managers from the 100+ exhibitors.

SILVER SPONSORS

Tuesday evening, after a long day of learning, attendees gathered at the Wildhorse Saloon for PRIMA’s Tuesday Night Two Step event. Visitors put on their cowboy best and kicked up their heels to the country sounds of one of Nashville’s most popular bands. Wednesday kicked off with PRIMA’s annual Fun Run/Walk. Nearly 60 runners and walkers lined up at the Gaylord’s presidential portico to start their day with a jaunt around the Gaylord’s grounds. All proceeds from the event were given to the Middle Tennessee Food Bank, which received a donation of $570. After a short morning of education sessions, the PRIMA Annual Conference wrapped up with the membership luncheon, where the new slate of officers was installed, including PRIMA’s 2012–2013 president, Dan Hurley, CSP, ARM-P, MS, and president-elect, Betty Coulter. PRIMA also welcomed three new board members: Dean Coughenour, ARM Risk Manager City of Goodyear, AZ

Michael Fann, ARM-P, MBA Director of Loss Control TML Risk Management Pool

Amy J. Larson, Esq. Risk and Litigation Manager City of Bloomington, MN

PRIMA would like to thank the 2012 Annual Conference Planning Committee members for their hard work and dedication, which helped make the event a success. A special thanks also goes out to the 2012 Annual Conference sponsors for their generous support.

BRONZE SPONSORS CorVel Corporation

Meadowbrook

Ironshore

Poms and Associates Insurance Brokers, Inc.

Marsh

See you next year in Tampa!

JULY 2012 | PUBLIC RISK

THE “DIRTY DOZEN”

HIDDEN HAZARDS ON PLAYGROUNDS By William Stinson, CSP, OHST, CHCM

Park and recreation departments throughout the United States are ramping up for summer, their busiest season, when children flock to playgrounds at recess, after school and on weekends. But while playgrounds may get the most use during summer months, it is still critical that they receive specific attention all year round. Ensuring safe play areas for your community can help reduce playground injuries and potential claims against your entity, while also building goodwill and good relationships with your community and citizens. So, let’s review what the National Recreation and Parks Association (NRPA) refers to as “The Dirty Dozen”—the top 12 safety hazards in America’s playgrounds. The NRPA issues a manual by the same name with details and specifics about each of these 12 hazards. Take a look at the list below. Are these present on your playground facility? If so, you are now “on notice” and the elimination or proper awareness of these items should be paramount to your playground priorities!

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THE DIRTY DOZEN 1. Improper Protective Surfacing The surface around playground equipment (commonly called “fall surfaces”) should be soft enough to cushion the fall of a child from the playground equipment. Examples of acceptable surfaces include poured-in-place rubber, mats, shredded rubber or wood chips. All surfaces should be maintained to a minimum depth of 12 inches and should be free of debris or standing water.

Playgrounds should never be surfaced with the following material: concrete, asphalt, packed earth or grass. These surfaces may cause severe, even life-threatening injuries, and if your entity has a playground with equipment over these surfaces, it should be replaced with an acceptable surface material immediately.

2. Inadequate Use Zone Similar to the surface, a use zone is the area under and around playground equipment that stretches as far as the equipment is used; think of it as an invisible boundary. For example, swings have a long use zone in front and back and a small use zone on the sides of the equipment. A slide has a long use zone in front of the exit area of the slide and a smaller area to the sides and rear. The area, and lack of conflicting areas for certain types of play equipment, is what is important when thinking of the use zone. A use zone should be covered in a protective surface to ensure a child’s safety. 3. Protrusion and Entanglement Hazards A protrusion hazard is a component or piece of hardware that is capable of impaling or cutting a child, should the child fall against the hazard. Some protrusions are also capable of catching strings or portions of clothing worn around the child’s neck. Equipment should be thoroughly checked often for such protrusions. 4. Entrapment in Openings Enclosed openings on playground equipment must be checked for head entrapment hazards. Children often enter openings feet first and attempt to slide through the opening. If the opening is not large enough, the feet and body may pass through but entrap the head. Most likely suspects include openings at the top of a slide, between platforms or between rungs on a ladder. 5. Insufficient Equipment Spacing Each ‘zone’ of play equipment needs to have a sufficient area of protective spacing between other equipment. Improper spacing between pieces of play equipment can cause overcrowding of a play area, resulting in unsafe conditions.

6. Trip Hazards Trip hazards are created by play structure components or items on the playground surface, such as exposed concrete footings that anchor equipment to tree stumps and roots. Trip hazards can appear suddenly, so equipment and play areas should be checked often, not just annually. 7. Lack of Supervision Almost 40 percent of all playground injuries are attributed to a lack of effective supervision. While supervision of a playground environment rests with the parents or guardians of the children using the play equipment, entities can assist with safety awareness through posted signage. 8. Age-Inappropriate Activities Children’s developmental needs vary greatly from age two to age 12, so it is important to make sure that playground equipment is appropriate for the age of the intended user and each section should be clearly indicated as such. 9. Lack of Maintenance A formal, overarching playground inspection and maintenance program should be implemented to ensure the safe condition and operation of play areas. Inspections should take place frequently throughout the year and be extensively documented. 10. Crush, Shearing and Sharp Edge Hazards Similar to protrusion inspections, the play environment should be inspected to make sure there are no sharp edges or points that could penetrate skin. Moving components such as suspension bridges, track rides, merry-go-rounds, seesaws and swings should be checked to ensure there are no moving parts or mechanisms that might crush a child’s finger. 11. Platforms with No Guardrails Elevated surfaces such as platforms, ramps and bridges should have guardrails or barriers to help prevent accidental falls. Height requirements vary by expected age of the child. 12. Equipment Not Recommended for Public Playgrounds Accidents associated with certain types of play equipment has resulted in the Consumer Product Safety Commission (CPSC) recommending their removal from public playgrounds. Examples of these include: heavy swings such as animal figure swings, multiple occupancy or glider-type swings and swinging exercise rings or trapeze bars.

JULY 2012 | PUBLIC RISK

The “Dirty Dozen”—Hidden Hazards on Playgrounds

With a few simple steps—reviewing safety guidelines and conducting monthly audits of your play equipment—your entity can reduce playground injuries and potential claims while increasing safety and positive sentiment from your community.

PROPER MONTHLY MAINTENANCE

ADDING NEW PLAY EQUIPMENT

The Center for Disease Control reports that 44 percent of all playground injuries can be attributed to the improper maintenance of equipment and protective fall surfaces. To ensure that your entity is providing a safe environment for play, all public entities should review “The Dirty Dozen” hazards often, perhaps by setting up a monthly maintenance inspection program to keep your play areas as safe as possible. Documenting these inspections and any necessary maintenance and repairs to play areas is a critical element of this process as it will assist in the defense of future claims of negligence to the public entity from playground accidents.

What if your entity decides to build a new playground in the future? Are you exempt from worrying about the ‘Dirty Dozen?’ Certainly, all new play equipment is built to these standards, right? Not necessarily. When your entity installs new equipment, ensure that it is designed, manufactured and installed by licensed manufacturers and contractors and that all equipment is in compliance with the CPSC and NRPA guidelines. Once the new equipment is installed, it is important to conduct and document a baseline playground audit, followed up by monthly safety inspections. The baseline safety audit must be conducted by a CPSI, but the recurring safety inspections can be completed and documented by park and recreation maintenance personnel.

Begin this program by enlisting a Certified Playground Safety Inspector (CPSI) to conduct a baseline evaluation of your entity’s playground, to provide a starting point for maintenance repairs and deficiencies. Such evaluations should also help identify ‘high-play areas’ where entities should pay additional attention. If any deficiencies are found, entities should consider closing areas that require repair until the equipment or surface is up-to-par and the risk of injury is minimized.

BUILDING GOODWILL IN THE COMMUNITY Not only will maintaining and repairing your equipment help reduce frequency and severity of injuries, it also helps to build good community relations between parents and guardians and the local entity. As ongoing maintenance checks are performed, parents and guardians will notice the frequent presence of the maintenance team, which can build a feeling of satisfaction among playground users. Parents feel safer about their kids playing on equipment that has been frequently and routinely inspected.

PUBLIC RISK | JULY 2012

Playground safety isn’t rocket science but it is a scientific process with standards and guidelines readily available from the Consumer Product Safety Commission and the National Park and Recreation Association. With a few simple steps—reviewing safety guidelines and conducting monthly audits of your play equipment—your entity can reduce playground injuries and potential claims while increasing safety and positive sentiment from your community. For more information on “The Dirty Dozen,” or playground safety, visit the following Web sites: • www.nrpa.org • www.safekids.org • www.cpsc.gov. William Stinson, CSP, OHST, CHCM, is a government risk management specialist for OneBeacon Government Risks.

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Advertiser Index

ADVERTISER INDEX CIMA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 5 Genesis Underwriting Management Company.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Front Cover Midlands Management Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 18 Munich Reinsurance America.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Back Cover Safety National. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Back Cover

Has your entity launched a successful program? An innovative solution to a common problem? A money-saving idea that kept a program underbudget? Each month, Public Risk features articles from practitioners like you. Share your successes with your colleagues by writing for Public Risk magazine! For more information, or to submit an article, contact Jennifer Ackerman at jackerman@primacentral.org or 703.253.1267.

FIND US ON FACEBOOK!

Keep up with whatâ€™s happening at PRIMA and connect with your risk management peers! Visit us at www.facebook.com/primacentral.

JULY 2012 | PUBLIC RISK

Member Spotlight

IOWA CITY REDUCES COSTS WITH FLEET RISK CONTROL PROGRAM Each month, Public Risk features a member who has gone above and beyond

n order to combat rising costs related to fleet safety and accident prevention, the City of Davenport, Iowa, developed a comprehensive driver safety program for its employees, which led to a drastic reduction in claims paid.

in a feature column titled “Member Spotlight.” Do you know someone who deserves recognition, has made a contribution or excelled in their profession?

“Our challenge was to develop a vehicle loss control program that would effectively reduce the number and cost of incidents and improve employee performance,” said Michael Farris, the city’s risk manager. “An analysis of vehicle incidents over a three-year period showed there were 475 incidents with 406 determined to been the fault of a city employee, or preventable.”

For employees involved in accidents, a five-person review board takes a look at the root cause. Employees are required to attend the review board meeting. Points are assigned to the involved employee based on the type of incident, preventability and fault, and are tracked for a two-year period. Exceeding a certain point threshold requires the employee enter one-on-one driver training with an instructor. The review board is made up of four permanent members— the fleet manager, risk manager, human resources director and city administration deputy clerk—and a fifth, floating member that is assigned by the department of the employee appearing before the committee.

If so, we’d like to hear from you for this exciting column, as PRIMA shines the spotlight on its members. To be considered for the Member Spotlight column, contact Jennifer Ackerman at jackerman@primacentral.org

Farris said the hard cost to the city over the three-year period was nearly $1 million. In addition to a high rate of incidents, the analysis also revealed that not all incidents were being reported; that there was an attitude among many that crashes were “just part of doing business;” there was a lack of accountability; and loss control practices were absent.

or 703.253.1267.

Farris and a team of city employees created a fleet safety program that includes extensive driver training as well as a review board for post-accident investigations. “The program begins with a classroom session then moves outside for a hands-on defensive driving course,” said Farris. “The driving course was developed by the Davenport Police Department driving instructors and is designed to provide hands-on training of precision and defensive driving skills on a controlled course.” Those who finish the course get a certificate of completion.

PUBLIC RISK | JULY 2012

According to Farris, the benefit measurement of the program came in the form of reduced costs for vehicle incidents. The following reductions have been seen by the City: • Comparing the cost to the City for incidents in the three years prior to the start of the program—$994,478—to the three years after its inception ($377,645), there was a total cost reduction of $616,833 or 62 percent. • The average cost-per-incident over the same time period was reduced from $2,094 to $910, or a 57 percent reduction. “All public entities manage vehicle fleets,” said Farris. “One of the most frequent contacts with the public is out on the roads and streets of the jurisdictions. It is important to present a professional and safe image to the public while avoiding costly liability and injury claims.” Farris said that all public entities could duplicate the City’s program easily. For more information on the City of Davenport’s fleet safety program, contact Michael Farris at mwf@ci.davenport.ia.us.

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