Public Risk March 2012

Published by the Public Risk Management Association

www.primacentral.org

MARCH 2012

COLLEGE CAMPUS SECURITY:

KEEPING STUDENTS SAFE A CAPTIVATING IDEA FOR RISK FINANCING LAW ENFORCEMENT’S DELICATE ROLE IN PUBLIC PROTESTS

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Volume 28, No. 3 | March 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 Cindy B. Mallett, AIC, CWCP, ARM-P Risk Manager City of Gainesville Gainesville, GA

CONTENTS

PAST PRESIDENT Laura Peterson, JD, MPA Director of Risk and Insurance University of Wyoming Laramie, WY PRESIDENT-ELECT Dan Hurley, CSP, ARM-P, MS Senior Director, Risk Management & Safety Norfolk Public Schools Norfolk, VA

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DIRECTORS Ed Beecher Risk Manager City of Pompano Beach Pompano Beach, FL Betty Coulter Director of Risk Management and Insurance University of North Carolina at Charlotte Charlotte, NC

6 College Campus Security: KEEPING STUDENTS SAFE

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

By Dan Mahoney, CIH, CSP

Marilyn Rivers, CPCU, ARM, AIC Director of Risk and Safety City of Saratoga Springs Saratoga Springs, NY

12 A CAPTIVATING IDEA FOR RISK FINANCING

By Joel Kress, ARe

Regan Rychetsky, ABCP Director, HHS Enterprise Risk Management and Safety Texas Health and Human Services Commission Austin, TX

16 LAW ENFORCEMENT’S DELICATE ROLE IN PUBLIC PROTESTS

Linda Spacek, CPM, CGBA Interim Director, Human Resources City of San Marcos San Marcos, TX

By Dennis Molenaar

EXECUTIVE DIRECTOR Marshall W. Davies, Ph.D. EDITOR Jennifer Ackerman, CAE Deputy Executive Director 703.253.1267 • jackerman@primacentral.org ADVERTISING Donna Stigler 888.814.0022 • donna@ahi-services.com

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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

Copyright 2012 Public Risk Management Association Reprints: Contact the Reprint Outsource at 717.394.7350.

MARCH 2012 | PUBLIC RISK

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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!

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PRIMA INSTITUTE 2012

A full schedule of sessions, as well as registration information, will be available soon.

MARK YOUR CALENDARS AND DON’T MISS THIS EVENT!

Message from PRIMA President Cindy B. Mallett

MORALE BOOSTER

H

ere at the City of Gainesville, we’re beginning the budget process. During the next several weeks, we will find ourselves immersed in the time-consuming and critically important task of determining priorities for the coming year, then finding the resources to make them happen.

Government entity budgets are not immune from the difficult economic situation of the last several years.

Unfortunately, the employees in our organizations have felt the impact of shrunken budgets. Doing “more with less,” as the old adage goes, can be taxing on personnel who are working with limited resources and who may be struggling with personal financial challenges as well.

Financial concerns and anxiety about the future may contribute to a deterioration of employee morale. According to www.yourdictionary.com, morale “describes the general mood of a person and whether he is confident, motivated and willing to perform tasks.” Other causes of low workplace morale include poor leadership, negative working environments and lack of ability to provide input into workplace decisions.

Low employee morale can cause many problems within an organization. It has been widely acknowledged that low morale results in decreased productivity, increased absenteeism, greater likelihood of employee (and employee/ supervisor) conflicts and increased errors. Accompanying distraction, fatigue and anxiety can lead to workplace injuries, a lack of commitment to workplace safety procedures or cutting corners that can lead to third-party claims—all of which are concerns for the risk management professional.

The good news is that most employees are motivated by more than money. Employees want to be respected and to feel that their opinions matter. We should look for ways to improve communications with employees— listening to their concerns and sharing information on issues that impact them. By encouraging employees to come forward with problems and suggestions, then acting on them appropriately, we can improve the safety of our workplace, cultivate trust and boost employee job satisfaction.

Dwight D. Eisenhower once said, “The best morale exists when you never hear the word mentioned. When you hear a lot of talk about it, it’s usually lousy.” Unfortunately, I have heard lots of talk about it recently, so I know my organization has an opportunity to make improvements. Perhaps that’s true in your entity as well.

Risk management professionals, as leaders, can help guide the effort toward higher employment satisfaction and all the benefits associated with a happy work force.

Sincerely,

By encouraging employees to come forward with problems and suggestions, then acting on them appropriately, we can improve the safety of our workplace, cultivate trust and boost employee job satisfaction.

Cindy B. Mallett, AIC, CWCP, ARM-P 2011–2012 PRIMA President Risk Manager City of Gainesville, Ga.

MARCH 2012 | PUBLIC RISK

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News Briefs

NEWS

BRIEFS STUDY: ALABAMA LAW COSTS $11B Alabama’s controversial immigration law, considered one of the toughest in the nation, is costing the state’s economy up to a whopping $10.8 billion annually, according to a new study, reports Politico.

Under the law, which passed in the state last year, police are allowed to detain individuals suspected of being an illegal immigrant and cannot produce proper documentation to show their status. Some provisions of the law were stayed by the courts, but the law has still resulted in families fleeing the state to avoid the new strict rules.

The cost-benefit analysis, conducted by economist Samuel Addy of the University of Alabama, determined that the estimated 40,000 to 80,000 unauthorized immigrant workers fleeing the state have resulted in 70,000 to 140,000 jobs lost and $2.3 to $10.8 billion reduction in Alabama’s GDP annually.

Also, the law is estimated to cost Alabama $56.7 to $264.5 million in reduced state income and sales tax collections, as well as $20 to $93.1 million less in local sales tax collections, the report found.

The study’s conclusions were based on an examination of a wide range of costs that result from the law, including its implementation, enforcement and litigation expenditures, costs derived from decrease in economic development opportunities and reduced earning and spending from illegal immigrants who have left the state.

“Nobody can fault the intent of the immigration law, which targets illegal immigration, but the law itself is costly mainly because it reduces demand in the state economy,” wrote Addy. “Instead of boosting state economic growth, the law is certain to be a drag on economic development even without considering costs associated with its implementation and enforcement…

While the law’s costs are certain and some are large, it is not clear that the benefits will be realized.”

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PROVIDENCE, R.I., MAYOR WARNS OF POSSIBLE BANKRUPTCY Providence Mayor Angel Taveras painted a bleak picture of the city’s finances, saying Providence faces “devastation” and could go bankrupt if retiree benefits aren’t cut and tax-exempt institutions like Brown University don’t pay more in lieu of taxes, reports the Associated Press.

Taveras said he cut a projected $110 million deficit for the current fiscal year to less than $30 million but that the city is on track to run out of money by June. He said taxpayers and city workers have already sacrificed—taxes and fees have gone up, and there are 200 fewer people on the city’s payroll compared to a year ago—and he called on retirees and nonprofit hospitals and universities to do the same.

“Everyone must sacrifice or everyone will suffer the consequences,” he said at a news conference at City Hall. “We need everyone to be part of the solution.”

He said the city can’t afford retirees’ guaranteed annual cost-of-living increases— about 600 retirees get increases of 5 and 6 percent—and that benefits will be cut one way or another, either voluntarily or possibly through court action. He suggested the city could go the way of Central Falls, which was taken over by a state-appointed receiver in 2010 and where pensioners’ benefits were unilaterally slashed. The receiver declared bankruptcy on behalf of the city in August.

“Let me be clear: We will reduce retiree benefits,” he said.

Taveras has scheduled a town hall meeting with city retirees for March 3.

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REPORT PROPOSES DIVIDING GREAT LAKES, MISSISSIPPI Groups representing states and cities in the Great Lakes region proposed spending up to $9.5 billion on a massive engineering project to separate the lakes from the Mississippi River watershed in the Chicago area, describing it as the only sure way to protect both aquatic systems from invasions by destructive species such as Asian carp, reports the Associated Press.

The organizations issued a report suggesting three alternatives for severing an artificial link between the two drainage basins that was constructed more than a century ago.

Scientists say it has already provided a pathway for exotic species and is the likeliest route through which menacing carp could reach the lakes, where they could destabilize food webs and threaten a valuable fishing industry.

“We simply can’t afford to risk that,” said Tim Eder, executive director of the Great Lakes Commission, which sponsored the study with the Great Lakes and St. Lawrence Cities Initiative. “The Great Lakes have suffered immensely because of invasive species. We have to put a stop to this.”

While no single government agency has authority to approve or reject the project, federal support would be crucial because the U.S. Army Corps of Engineers oversees shipping locks and other navigation infrastructure in the Chicago waterway system. The federal government undoubtedly would be asked to provide some of the funding.

The report’s release is sure to ramp up pressure on the corps, which is conducting its own study of how to close off 18 potential pathways between the two systems, including the Chicago waterways. The corps plans to release its findings in late 2015, a timetable it says is necessary because of the job’s complexity and regulatory requirements. A pending federal lawsuit by five states—Michigan, Wisconsin, Minnesota, Ohio and Pennsylvania—demands quicker action.

“This study shows that hydrological separation is both technically and economically feasible,” said Rep. Dave Camp, a Michigan Republican.

Sen. Debbie Stabenow, a Michigan Democrat, said the report should help build support in Congress for legislation she and Camp are co-sponsoring that would order the corps to finish within 18 months.

A spokeswoman said the corps would not comment until it could review the report.

BATTLE TO END TEACHER SENIORITY IN MINNESOTA BEGINS Parents, teachers and education activists squared off at the Minnesota State Capitol over a Republican proposal that would transform the way Minnesota school districts conduct teacher layoffs by scrapping seniority, the sacred tenet of most teachers unions, reports the Star Tribune.

The proposal would effectively put an end to a state mandate that requires school districts to consider seniority when conducting layoffs. It’s the latest attempt to identify and protect good teachers in Minnesota while giving lousy ones the boot.

Faced with a growing number of cash-strapped districts and demand for teacher accountability, Minnesota now joins several states looking to change long-standing seniority rules for teachers with the controversial plan.

“They [students] need a teacher who is going to make a difference whether they’ve been there one year, 10 years or 30 years,” said Sarah Schultes, an Andersen Open Elementary teacher who testified before a House education committee in support of the plan.

But leaders of several Minnesota teachers unions argued that students will suffer if Minnesota loses its most experienced teachers.

“Experience is valued in every other profession,” said Mary Cathryn Ricker, president of the St. Paul Federation of Teachers. “Why would it be ignored in ours?”

Changes nationally Minnesota is one of about a dozen states in the nation that still require school districts to consider seniority when conducting layoffs. In recent years, Colorado, Wisconsin, Georgia, Utah, Oklahoma and Utah have passed laws chipping away at teacher seniority.

About 40 percent of all Minnesota school districts have agreements with teachers unions that acknowledge factors other than just seniority, according to Education Minnesota, the statewide teachers union.

Those local contracts give school districts some flexibility, while bestowing some sense of security on good teachers, many of whom have several years of experience, union members argued.

“I know good teachers,” Ricker said. “My standards are very, very high. I don’t want good teachers laid off whether they are in their first year or their 40th.”

Peter Eckhoff, president of the Robbinsdale Federation of Teachers, said he worried the proposal sets up administrators to arbitrarily “pick and choose” which teachers are let go in the event of a layoff.

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COLLEGE CAMPUS SECURITY:

KEEPING STUDENTS SAFE

By Dan Mahoney, CIH, CSP

The protection of employees and students from physical harm, and preservation of public and personal property is critical in a campus security risk management program.

A well-designed campus security program should include the following elements: • Reliable communications for on and off campus.

• Campus law enforcement.

• Security assessments.

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• Building and site access control.

• Residence hall security.

• Security equipment.

• Record-keeping.

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Communication with the local police is important.

Local security personnel should be familiar with the campus setting to facilitate a timely response in the event of an emergency.

COMMUNICATIONS AND OUTREACH Written and electronic communications should include safety tips within the student handbook. Online and written postings or handouts can provide important information on safety and crime prevention tips. It can also be used to provide information on campus security procedures and policies and instructions on how to report suspicious or criminal activity on campus to the proper authorities.

Campus publications, such as the student newspaper and newsletters, campus e-mail systems and crime prevention bulletins, can be used to provide the information.

Communication with the local police is important. Local security personnel should be familiar with the campus setting to facilitate a timely response in the event of an emergency. Local emergency responders can also be a valuable resource in providing safety and crime prevention training programs for the student body. Students and staff should be made aware of the importance of security and be trained on how their campus security program works. The student online safety site, handbooks, student newspaper and posters can all be used to provide information about the security program. A crime prevention training program for students should promote the shared responsibility among students, staff and campus law enforcement.

CAMPUS LAW ENFORCEMENT A major task of campus security is patrolling the grounds.

Security patrols should focus on crime prevention through the reduction of criminal opportunities. The public safety department is responsible for the campus security program on most campuses including the staffing and supervision of campus security officers. This department may also have responsibility for investigating crimes, as well as instances of

employee misconduct, theft of college property and threats against individuals. Campus security staff authority can range from contract or proprietary security officers, with basically civilian status, to security officers that have limited arrest powers, but less than arrest powers of the police.

In some jurisdictions, campus security officers have full police authority.

Campus security officers should have minimum levels of education, work experience and training, be subject to background investigation and criminal history checks and be required to take psychological examinations and be tested for drug use. The training should be focused on the defined job responsibilities and should meet requirements of applicable state laws. Many states have regulations governing screening and/or training of security officers.

SECURITY ASSESSMENTS A physical assessment of the campus should focus on the following: • Access from other properties by physical barriers such as fencing.

• Maintenance of landscaping to eliminate hiding spaces for criminals and provide for visible surveillance of the property.

• Building design features that reduce or eliminate hiding spaces for criminals.

• Signs of vandalism or homelessness around the property as indications of potential high-risk areas.

• Lighting is a significant crime deterrent. Security lighting should adequately illuminate entrances to buildings, walkways, vehicle parking areas and other pedestrian traffic areas. The lighting system should be regularly maintained and repairs made expeditiously.

MARCH 2012 | PUBLIC RISK

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College Campus Security: Keeping Students Safe

One key security issue for college campuses and some high school campuses is the use of emergency call stations scattered throughout the campus along walking areas and in some of the remote areas such as parking lots. When the user picks up the phone, they are connected to security and a blue light flashes 8-to-10 feet high to alert others in the area.

BUILDING AND SITE ACCESS CONTROL Campuses are typically considered open environments where students, guests and staff can move freely from place to place. A building and site access control program should be designed to allow authorized individuals easy access, while restricting access to unauthorized individuals. The degree of access control should be a function of the campus layout. The size and layout of the campus plays a significant role in determining the feasibility of controlling perimeter access. A building access control system should take into consideration life safety, ADA and fire code regulations.

EMERGENCY CALL STATIONS One key security issue for college campuses and some high school campuses is the use of emergency call stations scattered throughout the campus along walking areas and in some of the remote areas such as parking lots. When the user picks up the phone, they are connected to security and a blue light flashes 8-to-10 feet high to alert others in the area.

ELECTRONIC CARD AND KEY ACCESS Computer card access to buildings offers many advantages over key-controlled buildings, and as older buildings are renovated, consideration should be given to converting to electronic card access.

A key-control program must include a key inventory control, and if the locking system has been in place for a long time, and all keys cannot be accounted for, consideration must be given to changing to a new locking system. When selecting a new key system the system should have restrictive key blanks that are not readily available to locksmiths, to ensure that those keys are not easily replicated. The key system also should be compatible with the existing campus locks so that new locks will not have to be purchased. Accurate and timely tracking of who has what keys is critical, and keys should only be distributed on an

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as-needed basis. A secure key storage should be maintained for extra keys. Policies should be established regarding who has access to rooms, who has authority to grant access to a particular area and who is responsible for issuing keys. And only designated locksmiths should be permitted to change or repair locks.

As a result of increased security awareness on campuses, there has been a move away from the traditional key-andlock systems to more sophisticated card access systems.

An advantage of card access systems is the fact that codes can be changed rapidly to disable lost or stolen cards.

Card access system flexibility varies from single locks to systems that electronically control multiple locks in multiple buildings. In card access systems, the same principles of key control apply to the distribution and management of access cards. Data can be retained and retrieved on building access histories to assist in investigations.

RESIDENCE HALL SECURITY A residence hall security program should include the following elements: • Training of residents in responsibilities and roles in maintaining the integrity of the security program.

• Door controls assuring that the doors are always locked.

• Restricting nighttime access into residence halls to one door.

• Separate keys or cards to enter the building and to gain access into student rooms.

• Updating access codes or changing locks to student rooms whenever a key or access card is lost.

• Security patrols should verify that accessible doors and windows are locked at night.

All door access controls should meet the most current life safety code standards.

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SECURITY EQUIPMENT Fire alarms, sprinkler monitoring systems, video monitoring and security alarms can be integrated to make it easier for the school to staff a centralized monitoring station, and to coordinate an emergency response. Closed-circuit TV systems are oftentimes used to enhance security. These systems are typically installed at entrances to residence halls to identify visitors requesting entry, in parking lots to monitor potential criminal activity, and on campus grounds for surveillance purposes and as a deterrent to crime. The system should be tied into a video recorder to provide a historical record that can be reviewed to evaluate access control, traffic patterns and as evidence of a crime. Intrusion alarms should be used when a fast response is needed to breaches of security.

Statistics can then be consistently monitored to evaluate trends and the success of a campus security program.

A campus security program requires a multi-pronged approach including:

RECORD-KEEPING

• Equipment that can deter, delay and detect individuals who pose a threat to the campus.

• Building and property design that enhances visibility and enables surveillance of the campus buildings and grounds.

• Ongoing, coordinated communication with the students, staff, campus security and local law enforcement.

• Site security assessments by trained security professionals to identify security risks, monitor changing conditions and implement changes to enhance security throughout the campus.

Tracking of security events is helpful so that criminal and violent acts on campus can be evaluated for patterns and for providing the information to the police for investigations.

Daniel Mahoney CIH, CSP, is vice president for risk control for Glatfelter Public Practice.

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R U?

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PRIMAtalk is PRIMA’s member-only listserv that puts more than 500 industry specialists at your fingertips.

PRIMAtalk is the easiest way to get an answer to your risk managementrelated questions as well as exchange ideas and information. This forum gives members quick feedback on issues that are important to risk managers and their work.

For more information or to join PRIMAtalk, visit www.primacentral.org.

MARCH 2012 | PUBLIC RISK

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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.

MARCH 21, 2012 | 12 PM – 1:30 PM EST The Risk Manager’s Role in Disaster Recovery Presenter: Peter Potemkin, ARM Deputy Director, Adjusters International When disaster strikes, everyone in the organization gets involved in the disaster recovery initiative.

Whether it is a minor incident or a major storm or act of terrorism, public risk managers play a vital role in the recovery process. This Webinar will explore critical priorities of risk management during the recovery: coordinating property insurance proceeds and FEMA funding, how to adhere to recordkeeping requirements, and how to address statutory requirements in order to obtain additional insurance after receiving FEMA funding.

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A CAPTIVATING IDEA FOR

RISK FINANCING

By Joel Kress, ARe

Many of the readers of Public Risk are not associated with the pooling. This does not mean, however, we cannot learn from pools. Specifically concerning the challenges of financing risk, there may be an option embraced by many in the pooling sector, which could prove advantageous for many self-insured public entities. This option also provides versatility during the difficult times ahead, such as the sluggish national economy, the tentative world markets, the ongoing pressures on public entity budgets and the imminent hard insurance market.

RISK FINANCING Public entity risk financing is simply the method in which we finance or fund the uncertainties of conducting the business of our public entities. Most of us enjoy the luxury of local and state immunities and tort cap legislation, but that does not absolve all risk. It is undeniable that our lives are filled with risk, and in the modern world we live in, our business is equally filled with risk. The challenge of financing that risk lies in its uncertainty, both in how often it happens (frequency) and how much it will cost (severity). The field of actuarial science continues to improve its estimation techniques, but in the end, all estimates are still guesses.

a-thousand” loss. So, for a single public entity, insurable losses are volatile and hard to predict.

FIGURE 1 LOSSES FOR SINGLE PUBLIC ENTITY #1

25,000

20,000

15,000

10,000

5,000

A phenomenon that continues to be the risk financier’s best friend is the Law of Large Numbers. Let’s take a single public entity with a relative small amount of yearly losses (Figure 1). The graph represents an entire year of insurable losses, and it can be easily seen that most losses are small and incidental; but, every now and again, there is an insurable loss of note (the highest bar looks to be about $24,000). The chances of this event happening may be the figurative “one-in-a-thousand,” but if there are hundreds of insurable losses per year, it doesn’t take too long (a couple of months or years) to hit a “one-in-

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0

If we aggregate several public entities’ losses together, there are two effects (Figure 2). First, the volatility of losses is reduced below a more clearly defined threshold (this is usually where a deductible or self-insured retention is set), and therefore, losses are easier to predict. The second effect of aggregating the loss histories is that the $24,000 large loss of Public Entity #1 (red arrow in Figure 2) is certainly not an outlier any more. In fact, given the others’ losses in the

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There are many reasons for starting a captive insurance company, but the first and foremost reason needs to be the intention of improving risk financing.

Improvement should be evaluated based on predictability group, it becomes closer to a regular occurrence. Additionally, it is dwarfed by one entity that had a loss at about $180,000. This is the new outlier in the aggregated group.

From a risk financing perspective, the group has more predictable losses than each individual entity, and the group is better suited to pay for the extreme outlier than each individual entity would be on their own.

FIGURE 2 LOSSES FOR SINGLE PUBLIC ENTITIES #1–6 200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0

So, how do single public entities band together?

CAPTIVE INSURANCE COMPANIES As risk-financing methods keep pace with the complexity of our technology-driven world, the modern risk financier must examine all the alternatives to the classic fulcrum of “to risk finance or to risk transfer.” Alternative Risk Transfer (ART) refers to any method of financing risk other than the standard method of insuring or self-insuring. Examples of ART range from the extremely complex Finite Risk Plans to the much simpler Shock Loss Funds, but also include such financial innovations as catastrophe bonds and reinsurance sidecars.

The public entity pooling sector has embraced captive insurance companies as a method of ART for nearly 25 years. Dozens of public entity pools representing thousands

of public entities across the country have banded together to form several captive insurance companies. For the most part, these captive insurance companies were formed to provide reinsurance support to public entity pools, but there is no reason why it will not work on the primary insurance level.

Single public entities could similarly band together to create their own captive insurance companies. The obvious question is why this has not already been done. It has been attempted in other forms of ART, but, traditionally, the answer as to its lack of widespread use was that the benefits did not outweigh the fractional costs of administering the captive. There are challenges, but the successful effort will benefit the public entity, which in turn will benefit the taxpayer.

BENEFITS There are many reasons for starting a captive insurance company, but the first and foremost reason needs to be the intention of improving risk financing. Improvement should be evaluated based on predictability versus erratic pay-as-yougo systems currently maintained by most self-insured public entities. By aggregating insurable loss experience with others within one’s own state, or even nationally, the financing of risk becomes more predictable and easier to manage. An ancillary benefit to predictability is aggregated loss experience. This is the ability to access and secure reinsurance more easily and at higher levels. This reduces costs in the form of reinsurer profitability, broker commissions, etc.

versus erratic pay-asyou-go systems currently maintained by most self-insured public entities. By aggregating insurable loss experience with others within one’s own state, or even nationally, the financing of risk becomes more predictable and easier to manage.

Captive insurance companies are regulated by each domicile’s department of insurance, which is a huge hurdle for a lot of risk financiers who are used to having relaxed or little regulation of their own self-insured programs.

First, setting up a captive may be able to be done in one’s own state. There are currently 22 states plus the District of Columbia [see chart on page 14] that have laws that would enable captives to be formed. This would definitely ease

MARCH 2012 | PUBLIC RISK

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A Captivating Idea for Risk Financing 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.

the process of setting up a captive, since the monies would be staying within the state. In addition, captive regulation is usually more stable than the politically motivated reign of public entity and departmental budgets.

STATES WITH LAWS PERMITTING CAPTIVE INSURANCE COMPANIES

WEBINARS 2012 • March 21: The Risk Manager’s Role in Disaster Recovery • May 16: Practical Issues Related to Litigation and Investigation • July 18: Concussion Education and Management in the Student-Athlete • September 19: What Happens When It Happens Here? Crisis Response for Schools • November 17: Generational Differences in the Workplace (session presented by Genesis Management and Insurance Services Corporation) PRIMA ANNUAL CONFERENCES June 3–6, 2012 PRIMA 2012 Annual Conference Nashville, TN Opryland Hotel 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 June 7–10, 2015 PRIMA 2015 Annual Conference Houston, TX George R. Brown Convention Center OTHER MEETINGS November 5–7, 2012 PRIMA Institute 2012 Charlotte, NC UPCOMING CHAPTER MEETINGS 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.

Arizona Connecticut

Minnesota

Michigan South Carolina

March 16 March 14 March 8 March 22 March 4–6

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

Alabama

Delaware

Kentucky

Nevada

Tennessee

Arizona

Washington, D.C.

Maine

New Jersey

Utah

Arkansas

Florida

Missouri

Rhode Island

Vermont

Colorado

Georgia

Montana

South Carolina

Connecticut

Hawaii

New York

South Dakota

As owners of a captive insurance company, public entity risk financiers would have complete administrative control over the company, making it exist exactly as it needs to be. Control of the company means owners have the freedom of investing their assets in a portfolio that has more risk flexibility than normally allowed for the public entity coffers. Should it be the desire of the captive owners, there is also the ability to earn an underwriting profit. These “profits” can be used to further enhance the use of the captive, or can be returned to the public entity owners as dividends.

Most everyone suspects a hard insurance market is right around the corner, brought on by either a single catastrophic event, or the consistent erosion of profit in the insurance and reinsurance sector. In a hard insurance market, public entities will likely face meteoric rate increases for insurance and reinsurance. By controlling more of the risk financing within the captive, the hard market will have less of an impact of its public entity owners.

From a long-term viewpoint, consequences of the benefits listed above are overall pricing stability, decreased cost of financing and flexibility of future risk financing options.

CHALLENGES Of course, there are challenges that must be overcome to launch a captive insurance company. The national economic recovery is painfully slow, and could slip at any time down a precarious precipice. Taxpayers are instigating grassroots movements to cut government’s budgets and its role within our lives. Legislators are looking under every pillow, cushion and rug to find loose change to pay for millions in shortfalls for benefits and entitlement programs. The climate is certainly not perfect for a new project. But, the time is perfect for new ideas and possible solutions.

The biggest challenge for the risk financier is simply getting this idea off the ground. It seems the first question of anyone involved in the chain of command would be, “Why isn’t anyone else doing this?” The reason, as noted above, is that the benefits never used to outweigh the costs. Starting and maintaining a captive insurance company costs time and money. This is time and money that could be spent helping other departments in your own public entity. So, why now?

For all the reasons and rationale stated above, thinking about captive insurance companies and other forms of ART to finance risk is a long-term solution—a long-term solution with complexity to match our evolving culture, versatility to be useful no matter the economic horizon, and ingenuity to allow your public entity to be a trend setter to others. And, at the end of the day, thinking with a long-term perspective may start to undo all our short-sighted blunders of the past.

Joel Kress, ARe, is an underwriting manager with Government Entities Mutual, Inc. PCC.

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JUNE 3–6, 2012 • NASHVILLE, TENNESSEE Register Today! Early bird registration rates end March 14!

KICK UP YOUR HEELS IN NASHVILLE AS WE WALK THE LINE OF RISK AT PRIMA’S 2012 ANNUAL CONFERENCE! The 2012 Annual Conference will bring together thought leaders in the public risk management field who will share their experiences and solutions to some of risk management’s toughest problems.

At the 2012 Annual Conference, you will have more than 55 educational sessions in eight tracks, including benefits and human resources, pooling, enterprise risk management and workers’ compensation. These topics will cover the latest trends and changes that will affect all risk managers sooner or later. In, addition, this conference will feature late-breaking hot topics that capture the latest dynamics occurring within our profession. Find out how your peers are addressing these challenges today!

Visit http://conference.primacentral.org for more information or to register!

LAW ENFORCEMENT’S DELICATE ROLE IN

PUBLIC PROTESTS

By Dennis Molenaar

In September 2011, in response to the country’s financial crisis and the turmoil on Wall Street, the “Occupy Wall Street” movement began and quickly swept the nation and globe, with movements cropping up in 100 U.S. cites and more than 1,500 cities worldwide. As the movement gained traction, many cities called in law enforcement to help maintain order, remove protesters and, in some cases, to make arrests.

This is nothing new. Throughout history, law enforcement has been called upon to handle protestors, from strikes during our county’s early industrial era to more recent protests over various causes. But in an era of rampant lawsuits, digital cameras on every mobile phone and the adoption of social media, the presence of law enforcement at such events becomes more complicated and delicate.

Whether it is the Occupy movement today or the next big protest tomorrow, there are implications and challenges to police involvement in moral and political causes. And in order to prevent the potential for liability claims against them, law enforcement organizations should be vigilant and have actionable tactics in place.

UNDERSTANDING THE NATURE OF THE PROBLEM While first and foremost, it is the job of law enforcement to enforce the law, in the case of protests there is also a responsibility to fully understand the nature and circumstances of the situation and people involved. These insights can help an organization predict, prepare and hopefully prevent likely claims.

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It can be argued that in recent years, in the wake of the Rodney King and other widely publicized police misconduct cases, the American people have lost some trust in law enforcement as a whole. When combined with pressures from business and political communities, this sentiment can cause tension and unnecessary police action, resulting in claims. The recent Occupy movement highlights this fact— almost from the beginning, there were numerous news articles spanning the movement that alleged misconduct and violations of people’s constitutional rights.

Whether these were actual cases of police misconduct or not, it has become more common for those involved in organized protests or similar circumstances to bring charges against police. The most prevalent circumstances for which claims are filed are: those in which force was used (i.e. pepper spray) in the arrest; those in which perceived injuries occurred and those that are invalid, but chiefly filed to draw attention to the cause or protest.

By understanding the common sentiment of the community and protestors and not succumbing to political or business

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pressures calling for action, law enforcement can go a long way in hedging claims.

CLEAR POLICIES, CLEAR CONSCIENCE While each situation is unique and it is not always easy to read the emotions of all involved, there is one clear action law enforcement organizations, both large and small, can pursue no matter what cause or protest arises—create clear parameters around when police action is required and ensure that officers are aware and trained on these policies.

To help guide these policies, law enforcement agencies should meet with their local district or county attorney.

In the case of protests, it should be made clear that any police action should only be spurred by a violation of the law and/or a court order. If there is a civil claim against the agency, police officers acting on a court document, such as an arrest warrant, generally have a solid defense–as long as they act within the terms of that document when it comes to civil liability. Therefore, whenever possible, law enforcement should plan on obtaining their legal guidance well in advance of taking action. Similarly, to avoid liability as well as acting based on political pressures, it is important that any request for police action from an elected official be directed to the courts before law enforcement acts.

Beyond this, it is also important that policies for arrest using force (e.g. Tasers, pepper spray and batons) are up-to-date and that officers are fully prepared and trained to understand the appropriate times for implementation. The training piece on this matter is especially critical. Many times, when law enforcement agencies are faced with litigation in such matters, it is found that up-to-date policies were in place but that those policies were not followed when officers were confronted with a use-of-force situation. Therefore, having the policy is not enough, officers must be trained and prepared.

One problematic issue that can arise, and has been highlighted by the Occupy protests, is when officers are not mindful of the fact that most policies on less-than-lethal force do not allow for chemical agents or Taser use on those who are passively resisting. Although most of the Occupy protests were nonviolent confrontations, many of the claims filed by participants against police were for excessive force when a taser or pepper spray was used to remove nonviolent, passively resisting protestors. It’s imperative that law enforcement agencies clearly define exactly when certain uses of force is allowed and that law enforcement personnel understand and follow these policies.

FOLLOW THE LEADER Policies and proper training are critical to all law enforcement agencies, this is clear. But in addition to having proper

procedures in place, it is essential that law enforcement agencies employ strong leadership by experienced supervisors to oversee and enforce them.

Such supervisory roles are especially paramount in public and political situations, such as the Occupy protests, where officers may be forced to face people in the community that they know—friends, neighbors and possibly family.

Officers themselves may even identify with the movement or sympathize with the protestors. This can cause conflict, confusion and division within a police force. When or if a movement or protest becomes personal, a strong leader is critical to ensuring officers are following policy, performing their duties properly and responding appropriately.

But in an era of rampant lawsuits, digital cameras on every mobile phone and the adoption of social media, the

USE TECHNOLOGY TO YOUR ADVANTAGE

presence of law

One of the reasons the Occupy movement spread across the U.S. and globe so quickly is the widespread use of technology, such as mobile phones with cameras and social media. Such movements no longer need to wait for local news camera crews to spread their message, meetings spots or talking points.

They can simply upload a video through their phone or send a message through social channels such as Facebook and Twitter.

enforcement at such events becomes more complicated and delicate.

While these tools can be used by law enforcement to monitor protest sentiment and movements, it can also be used against them in cases of misconduct. Now that nearly everyone with a cell phone also has photo and video capabilities, law enforcement mistakes, or misconduct charges can be backed up with digital evidence. This reinforces the point that all officers must be properly trained on policies and should be constantly vigilant on proper conduct and practices because everything they say and do, especially at protests, may be monitored, recorded and shared.

It may be helpful for law enforcement to employ their own camera crews to follow and document officers’ actions in order to discredit possible edited or unfaithful civilian versions claiming that officers used excessive force or that citizens were doing nothing wrong and did not see or hear the officers’ commands. Because, as with any legal battle, documentation is key to refuting unfair claims.

If a law enforcement agency acted appropriately but has no documentation of the incident—what happened, how it was handled, use of force (if any) employed—it is much harder to prove that it is not at fault when a claim arises. Beyond an in-car or other police video, documentation can be in the form of a written report or verbal documentation. Too often, agencies will act appropriately but not document the full scope of an incident, (e.g. if a suspect reaches into his pocket as if to pull a gun or is threatening to kill an officer).

MARCH 2012 | PUBLIC RISK

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Law Enforcement’s Delicate Role in Public Protests This can be problematic because several years later, if the officer is called to testify, testimony may not be consistent with the incident report because such pertinent information was omitted. All incidents, be it protest or other, should be documented and reviewed by management or a supervisor and kept on file. Retain all documentation, including videos, through statutory time limit for filing claims.

No matter what the political, economic or social causes that

Finally, law enforcement officials can utilize social media platforms to quickly and accurately distribute important messages to the public, without interference from the media or any other third party. By releasing their own messages, law enforcement groups ensure that their messaging isn’t lost in translation.

leads to protests, law

PREPARE TO HELP PREVENT

large and small will

No matter what the political, economic or social causes that leads to protests, law enforcement agencies of communities both large and small will likely to be called upon to be present.

Whether involvement is on the periphery or in the thick of things, conduct by the police in such situations is heavily scrutinized and can result in a liability headache for agencies.

By taking steps to thoroughly understand such situations, creating clear parameters of action for officers, employing strong leadership and using all the tools at their disposal, law enforcement agencies can better navigate a delicate situation and prepare and possibly prevent claims against them.

enforcement agencies of communities both likely to be called upon to be present.

Dennis Molenaar is the vice president of risk control for OneBeacon Government Risks.

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PUBLIC RISK | MARCH 2012

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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.

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MARCH 2012 | PUBLIC RISK

19

Member Spotlight

CITY OF BAYTOWN MAKES WELLNESS A “CORE” VALUE Each month, Public Risk features a member who has gone above and beyond in a feature column titled “Member Spotlight.” Do you know someone who deserves recognition, has made a contribution or excelled in their profession?

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 or 703.253.1267.

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T

he City of Baytown’s Wellness to the Core is a comprehensive employee and retiree wellness program implemented as a proactive approach to health in order to avoid illness and optimize wellness. The Texas city’s program consists of an on-site wellness program and an off-site employee health and wellness clinic.

According to Baytown’s risk management department, the cumulative effect of ongoing health care cost increases to its self-insured health plan, combined with the cost of an unhealthy population, led to significant affordability challenges for both the city and its employees and retirees.

To combat both challenges, Wellness to the Core was developed to encourage an overall healthy population, saving the city and its employees on their health care costs.

Baytown’s Wellness to the Core program is made up of several components: • An employee health and wellness clinic, which is a partnership with a local health care provider. The clinic is open three days-a-week free-of-charge to all full-time employees, retirees and dependents, who are on the city’s health insurance.

• Know Your Numbers: This deductible discount provides individuals with free annual on-site biometric screenings and an opportunity to earn a total of $300 off their medical insurance deductible, if they complete a screening and health assessment.

• Healthy Lifestyles Premium Discount: Employees with verified participation in the city’s wellness initiatives can receive a discount on their bi-weekly medical insurance premiums. Wellness initiatives include preventative screenings, fitness programs, nutritional programs and disease management programs.

PUBLIC RISK | MARCH 2012

• Supporting programs, including a Wellness Lunch and Learn series, on-site mammograms, an Employee Health and Wellness Expo and core fitness classes.

According to the risk management department, Wellness to the Core or a similar program is important to risk management because many employers are faced with the same affordability gap and costly, unhealthy population challenges. With the cost of health care rising every year, it is important to play an active role in assisting employees and retirees with managing health risks and adopting positive lifestyle practices to reduce claims costs.

And the City of Baytown’s risk management department has seen its efforts pay off: • The Know Your Numbers Deductible Discount participation more than doubled in 2010 and included 49 percent of the participants following up with the clinic to address their out-of-range condition.

• Healthy Lifestyle Premium Discount showed a 15 percent increase from the first year, even though requirements were more stringent.

• With Core Fitness, the physical fitness component of Wellness to the Core, the city has seen an average of 14 percent participation in the overall population. The city has partnered with three local gyms to offer discounts and waived membership fees.

• The city’s monthly Wellness Lunch and Learn events generate an average of 80-90 participants.

For more information on the Wellness to the Core program, contact the Colleen Martin, ARM, risk manager at 281.420.5362 or via email at colleen.martin@baytown.org, or Stephanie Myers, benefits specialist at 281.420.6523 or via email at stephanie.myers@baytown.org.

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STATES OFFERS YOU: • A broadly interpreted excess liability coverage form that is second to none in the industry.

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FOR INFORMATION CONTACT: States Self-Insurers Risk Retention Group, Inc. at 1-800-640-0345, extension 3357, or visit our website at www.statesrrg.com

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