The anticipated rate increases had serious budget repercussions, creating financial challenges for the Colleges. Underwriting guidelines were restrictive, limits decreased, deductibles soared and market availability decreased. Trying to break from the insurance market cycle, the sixteen Colleges cooperatively joined in the formation of DMI.
On July 1, 2004, DMI began operation with a commitment that no College would pay more in “insurance premium” than was paid the previous year. DMI held costs in year one to pre-DMI levels. The initial goal to start-up with a zero% budget increase was achieved. At this premium level the DMI budget has met all of its financial obligations including funding to mandated reserve levels, paying claims, providing insurance services and accumulating working capital for operations. Cost containment has continued for years two and three.
The Colleges participate routinely in discussions regarding exposures and how these drive the expense associated with “insurance”. The DMI Board of Directors sets the rate for the premium dollars charged. The strategic plan includes the retention of “profits” to remain with DMI. DMI was capitalized using the same premium dollars that had been paid to the regular commercial marketplace.
Since the 7/1/04 startup, manuscript insurance policies have been issued to the Colleges extending the same coverage limits, sub limits and deductible levels. Claims reporting has been standardized. Defense Counsel has been identified with negotiated rates applicable to all Members. Numerous coverage enhancements have been included along with higher coverage limits than available prior to DMI.
For the first five years of DMI operation cost containment has been achieved. For the 7/1/04-05 policy year total program costs (cost of coverage) were maintained at pre-DMI levels. All 16 Colleges have benefitted from received a 0% rate increase (except workers’ compensation –rated by Wisconsin Compensation Rating Bureau (WCRB)) for 7/1/06-07, 7/1/07-08, and 7/1/08-09. Holding costs was achieved even though exposure data increased (payroll, property values, student and faculty FTE, for example).
The formation of DMI by the Wisconsin Technical College System has resonated very positively. In 2004 the Community Colleges Business Officers awarded their Exemplary Practices Award in Financial Practices to DMI. In 2005 the Community College Future Assembly recognized DMI as a Bellwether Award Finalist. That same year the Government Finance Officers Association recognized the formation of DMI with a National Award for Excellence in Management and Service Delivery. The formation of DMI was featured in the 2005 Public Risk Magazine, in 2006 in the Risk Management Magazine, and in the 2005 Annual Report of Michael Best and Friedrich and the 2006 Annual Report of Arthur J. Gallagher and Company.
Building a Legacy of Service, Innovation, and Collaboration
To date, DMI has been fortunate to have developed the highly constructive partnership with the reinsurance marketplace. For the last several years reinsurance renewal rates have been flat. Thus far the claims reported to DMI have necessitated only one report to the reinsurance carriers.
It is the DMI philosophy to distinguish ourselves with the risk and loss control services provided to our Member Colleges. Since the 7/1/04 startup the following are examples of the kinds of services made available to our College Members:
- Monthly electronic newsletter – [The Incident Report].
- Targeted loss control programs based on claim history and member feedback.
- Slip, Trip and Fall CD-based training program
- Material Handling training on-site
- Claims Management Manual
- Claims Investigation Kit
- Cyber-Risk Assessment
- Blueprint for Pandemic Flu Preparedness
- Campus Safety Audit Checklist
A content valuation model was developed for use by all the Colleges. This model has significantly reduced the time and effort required to capture the College’s content value. A building appraisal valuation update service is being utilized to properly quantify the building replacement cost. This practice has also reduced the underwriting data gathering performed by the local risk manager.
DMI has joined URMIA and through this affiliation can make the TULIP program accessible to our Member Colleges.
DMI performs (at no cost to the College) driver record checks annually for any College employee. DMI has promulgated a driver evaluation criteria used to review the driving record. Feedback is then provided to the College regarding the acceptable or unacceptable status of the driver.
On-site services are available to the College. A stated goal for DMI staff is to conduct a campus visit twice each policy year. Other expertise can be made available to conduct physical hazard surveys, loss control, training, claims investigation and other fieldwork via several contracted service providers. These contracted provider specialists are coordinated through the Executive Vice President’s office.
DMI has made concerted efforts to cultivate and encourage information sharing among the Members. Quarterly meetings are hosted by DMI . Each College has a risk manager representative invited to attend. The agenda format typically includes a claims overview to identify trends, coverage clarification, and risk and loss control topical information. Guest experts are routinely invited to make presentation to the risk manager group.
This website has been created to serve as a ready resource for the risk managers. Additional resources are routinely added to the website. The “Hot Topics” and “Consultant Report” website sections provide the College with easy access to commonly used forms and the opportunity to review materials regarding risk and loss control issues. A “best practices” reference list is routinely updated by DMI and posted on website for Member use.
The creation of DMI has resulted in the development of an integrated risk management program that includes comprehensive coverage via the insurance policies along with strategic and targeted services that assist each College in assessing the multiple exposures associated with the dynamic environment of technical education.
The previous method of “acquiring” insurance via a bid process was time-consuming and duplicative. The creation of DMI has eliminated much of the time and duplication creating a significantly streamlined process.
The formation of DMI eliminated numerous coverage gaps. Insurance coverage is now consistent and uniform, providing the same coverage parameters, sub-limits, deductibles, claims administration and risk management resources.
The insurance coverage documents are written for the unique exposures presented by technical education. Loss control services are targeted to strategically address “hot topics”. The risk management approach that has been adopted is proactive. The Colleges have evolved from holding an insurance policy to being an active participant in an integrated risk management program.
Cost has been a significant consideration. DMI has successfully provided comprehensive coverage and a range of services previously unavailable yet has maintained a flat rating model for coverage. The capitalization goal of DMI has been achieved without requiring any additional cost incurred by the Colleges.
Multiple years of stable pricing in the commercial insurance market is highly uncommon. DMI has held the rates stable for our College members even though exposure data has changed (payroll increases, property value increases, FTE increases and number of motor vehicles increased).
DMI continues to develop a “best practices” approach to common risk management and claims related matters. The DMI website is a growing resource for members. On a quarterly basis DMI conducts Risk Manager meetings and instructional programs via webinar and ITV. The quarterly member meeting provides opportunities for information sharing and networking. The goal is to put practical information in the hands of the local risk manager making the transition to implementation as easy as possible.
As DMI looks ahead our goal is to continue to provide superior insurance coverage, enhanced specialty coverage, grow the risk management resource base, address loss control in a proactive manner, aggressively manage claims expense and maintain price stability.