Comparative Cost of Risk Survey

              COMPARATIVE COST OF RISK
SURVEY
Final Report 571
Prepared by:
Mark Priven
Bickmore Risk Services and Consulting
1831 K Street
Sacramento, CA 85811
July 2008
Prepared for:
Arizona Department of Transportation
206 South 17th Avenue
Phoenix, Arizona 85007
In cooperation with
U. S. Department of Transportation
Federal Highway Administration
The contents of the report reflect the views of the authors who are responsible
for the facts and the accuracy of the data presented herein. The contents do
not necessarily reflect the official views or policies of the Arizona Department of
Transportation or the Federal Highway Administration. This report does not
constitute a standard, specification, or regulation. Trade or manufacturers’
names that may appear herein are cited only because they are considered es-sential
to the objectives of the report. The U. S. Government and the State of
Arizona do not endorse products or manufacturers.
ATRC reports are available on the Arizona Department of Transportation’s In-ternet
site.
Technical Report Documentation Page
1. Report No.
FHWA- AZ- 08- 571
2. Government Accession No.
3. Recipient’s Catalog No.
5. Report Date
July 2008
4. Title and Subtitle
COMPARATIVE COST OF RISK SURVEY 6. Performing Organization Code
R0571 16P
7. Author
Mark Priven
8. Performing Organization Report No.
10. Work Unit No.
9. Performing Organization Name and Address
Mark Priven
Bickmore Risk Services and Consulting
1831 K Street
Sacramento, CA 85811
11. Contract or Grant No.
SPR- PL- 1-( 61) 571
13. Type of Report & Period Covered
FINAL:
June 2007 – July 2008
12. Sponsoring Agency Name and Address
Arizona Department of Transportation
206 S. 17th Avenue
Phoenix, Arizona 85007
Project Manager: John Semmens
14. Sponsoring Agency Code
15. Supplementary
Prepared in cooperation with the U. S. Department of Transportation, Federal Highway Administration
16. Abstract
The objective of this research was to determine the annual cost of risk to the Arizona Department of Transportation
( ADOT) and to compare it with that of other state transportation agencies. ADOT is charged with the responsibility of
designing, building, and maintaining the highway system for the state of Arizona. Insurance premiums are a notable por-tion
of ADOT’s expenses and have risen significantly over the last decade.
The research work began with a determination of ADOT’s annual cost of risk. Costs by type of coverage were evaluated
and quantified so that the major drivers affecting total cost were easily identified. A survey was developed and distrib-uted
to the risk managers of each state, requesting their state’s participation in the survey. A summary of ADOT’s cost
of risk was provided to encourage participation. Information received from the 17 responding DOTs was analyzed and
used to make determinations.
The report compares four major areas concerning ADOT’s loss costs for that of the other state DOTs: the cost of claims,
risk control methods, legal environment, and other program cost sources. It is noted that ADOT has a lower than aver-age
rate for workers’ compensation claims, a higher than average rate for general liability claims, and an average rate
for auto liability claims.
The report will assist ADOT in comparing Arizona’s cost of risk with other responding transportation agencies and in the
evaluation of current Arizona practices.
17. Key Words
Cost of risk, public transportation, risk control, litigation
18. Distribution statement
Document is available to the
U. S. public through the National
Technical Information Service,
Springfield, Virginia, 22161
19. Security Classification
Unclassified
20. Security Classification
Unclassified
21. No. of Pages
102
22. Price
23. Registrant’s Seal
SI* ( MODERN METRIC) CONVERSION FACTORS
APPROXIMATE CONVERSIONS TO SI UNITS APPROXIMATE CONVERSIONS FROM SI UNITS
Symbol When You Know Multiply By To Find Symbol Symbol When You Know Multiply By To Find Symbol
LENGTH LENGTH
in inches 25.4 millimeters mm mm millimeters 0.039 inches in
ft feet 0.305 meters m m meters 3.28 feet ft
yd yards 0.914 meters m m meters 1.09 yards yd
mi miles 1.61 kilometers km km kilometers 0.621 miles mi
AREA AREA
in2 square inches 645.2 square millimeters mm2 mm2 square millimeters 0.0016 square inches in2
ft2 square feet 0.093 square meters m2 m2 square meters 10.764 square feet ft2
yd2 square yards 0.836 square meters m2 m2 square meters 1.195 square yards yd2
ac acres 0.405 hectares ha ha hectares 2.47 acres ac
mi2 square miles 2.59 square kilometers km2 km2 square kilometers 0.386 square miles mi2
VOLUME VOLUME
fl oz fluid ounces 29.57 milliliters mL mL milliliters 0.034 fluid ounces fl oz
gal gallons 3.785 liters L L liters 0.264 gallons gal
ft3 cubic feet 0.028 cubic meters m3 m3 cubic meters 35.315 cubic feet ft3
yd3 cubic yards 0.765 cubic meters m3 m3 cubic meters 1.308 cubic yards yd3
NOTE: Volumes greater than 1000L shall be shown in m3.
MASS MASS
oz ounces 28.35 grams g g grams 0.035 ounces oz
lb pounds 0.454 kilograms kg kg kilograms 2.205 pounds lb
T short tons ( 2000lb) 0.907 megagrams
( or “ metric ton”)
mg
( or “ t”)
mg
( or “ t”)
megagrams
( or “ metric ton”)
1.102 short tons ( 2000lb) T
TEMPERATURE ( exact) TEMPERATURE ( exact)
º F Fahrenheit tempera-ture
5( F- 32)/ 9
or ( F- 32)/ 1.8
Celsius temperature º C º C Celsius temperature 1.8C + 32 Fahrenheit tempera-ture
º F
ILLUMINATION ILLUMINATION
fc foot- candles 10.76 lux lx lx lux 0.0929 foot- candles fc
fl foot- Lamberts 3.426 candela/ m2 cd/ m2 cd/ m2 candela/ m2 0.2919 foot- Lamberts fl
FORCE AND PRESSURE OR STRESS FORCE AND PRESSURE OR STRESS
lbf poundforce 4.45 newtons N N newtons 0.225 poundforce lbf
lbf/ in2 poundforce per
square inch
6.89 kilopascals kPa kPa kilopascals 0.145 poundforce per
square inch
lbf/ in2
1
TABLE OF CONTENTS
I. EXECUTIVE SUMMARY.......................................................................................... 1
II. BACKGROUND.......................................................................................................... 3
III. DISCUSSION OF RESULTS ..................................................................................... 5
A. LOSS COSTS......................................................................................................... 5
B. RISK CONTROL METHODS............................................................................... 9
C. LEGAL ENVIRONMENT................................................................................... 10
D. COST SOURCES................................................................................................. 12
IV. DESCRIPTION OF THE CURRENT PROGRAM................................................. 13
V. METHODOLOGY ................................................................................................... 15
VI. FINDINGS AND CONCLUSIONS ......................................................................... 17
EXHIBIT 1 - COST COMPARISON............................................................................... 18
EXHIBIT 2 - RISK CONTROL ....................................................................................... 21
EXHIBIT 3 - LEGAL ENVIRONMENT......................................................................... 23
EXHIBIT 4 - COST SOURCES....................................................................................... 25
APPENDIX 1 - COST COMPARISON........................................................................... 27
APPENDIX 2 - RISK CONTROL ................................................................................... 39
APPENDIX 3 - LEGAL ENVIRONMENT..................................................................... 45
APPENDIX 4 - COST SOURCES ................................................................................... 55
APPENDIX 5 - EXPOSURES.......................................................................................... 57
APPENDIX 6 - CASH VERSUS ACCRUAL ................................................................. 61
APPENDIX 7 - RESPONSES FOR ALL LINES ............................................................ 62
APPENDIX 8 - ORIGINAL SURVEY ............................................................................ 76
APPENDIX 9 - AGRIP .................................................................................................... 83
2
List of Tables
Page
Table 1: Estimated 2008- 09 Claims Cost / Composite Exposure 1
Table 2: Estimated 2008- 09 Claims Cost / Composite Exposure 5
Table 3: Percent of WC, GL, and AL Estimated Losses for 2008- 09 By Line 7
Table 4: Department of Transportation Statewide Losses as a Percent of Average 8
Table 5: Weighted Risk Control Methods Use 9
Table 6: Legal Environment and General Liability Losses as a Percent of Mean 11
Table 7: Cost Sources 12
List of Graphs
Page
Graph 1: Dollars of Loss Per Unit of Composite Exposure: ADOT vs. Other States 2
Graph 2: Dollars of Loss Per Unit of Composite Exposure: ADOT vs. Other States 6
Graph 3: Percent of Losses Attributed to Each Line: ADOT vs. Other States 7
Graph 4: Department of Transportation versus Statewide Losses as a Percent of
Average 8
Graph 5: Risk Control and Workers’ Compensation Losses as a Percent of Mean:
ADOT vs. Other States 10
Graph 6: ADOT – Legal Environment and General Liability Losses as a Percent of
Mean 11
Graph 7: All Lines Costs per Exposure 19
Graph 8: Percent of Losses Attributed to Major Loss Components 20
Graph 9: Risk Control Measures and Workers’ Compensation Losses 22
Graph 10: Legal Environment and General Liability Costs per Exposure 24
Graph 11: Estimated Cost for 2008- 09 Per Composite Exposure: Workers’
Compensation 28
Graph 12: Estimated Cost for 2008- 09 Per Composite Exposure: General Liability 32
Graph 13: Estimated Cost for 2008- 09 Per Composite Exposure: Auto Liability 36
3
Glossary of Acronyms
Abbreviations – 17 Surveyed States
ADOT Arizona Department of Transportation
BRS ( BRSC) Bickmore Risk Services and Consulting
OSHA Occupational Safety & Health Administration
AGRiP Association of Governmental Risk Pools
AL Auto Liability
DOT Department of Transportation
EPA Environmental Protection Agency
EPL Employment Practices Liability
GL General Liability
RC Risk Control
RMS Risk Management Section
SIR Self Insured Retention
WC Workers' Compensation
AK Alaska
AZ Arizona
AR Arkansas
CA California
HI Hawaii
IL Illinois
IA Iowa
ME Maine
MI Michigan
MN Minnesota
MS Mississippi
MO Missouri
OK Oklahoma
SC South Carolina
TN Tennessee
WI Wisconsin
WY Wyoming
1
I. EXECUTIVE SUMMARY
This report presents a comparison of the Arizona Department of Transportation’s
( ADOT) cost of risk, risk control measures, legal environment and other program infor-mation
with that of a number of other states’ departments of transportation ( DOTs).
The information from other states is based on responses to a survey conducted in early
2008 by Bickmore Risk Services and Consulting ( BRS) on behalf of ADOT. In order to
improve the response rate and to ensure openness with regard to costs, the project made a
commitment of confidentiality for all survey data. Therefore, each responding state was
assigned a letter code, at random, for use in the tables and graphs of this report.
This report compares four major areas concerning ADOT’s loss costs to that of other
state DOTs, with 17 states responding to all or part of the survey:
1. Cost of claims
2. Risk control methods
3. Legal environment
4. Other program cost sources
Each of these cost areas is summarized in an Exhibit section as well as in a more detailed
Appendix, each identified by the numbers indicated above.
Table 1 summarizes the cost per exposure for workers’ compensation, general liability,
and auto liability claims for 11 states responding on this question. While ADOT’s work-ers’
compensation costs are lower than average, ADOT’s general liability claims are
higher than those of the other respondents. This can be seen graphically in the figure on
the following page, and in greater detail in Exhibit 1 and Appendix 1 of the report.
Table 1
Estimated 2008- 09 Claims Cost / Composite Exposure
State Identifier WC GL AL
AZ 0.14 0.49 0.06
B 0.78 0.01 0.01
D 0.33 0.05 0.10
E 1.00 0.14 0.08
F 0.01 0.02
I 0.03
M 0.01 0.01
N 0.39 0.10 0.06
O 0.07
P 0.37 0.03
Q 0.12 0.17 0.05
Average 0.40 0.11 0.05
Key: WC: workers’ compensation, GL: general liability, AL: auto liability
2
Graph 1
Dollars of Loss per Unit of Composite Exposure
ADOT vs. Other States
0
0.2
0.4
0.6
0.8
1
1.2
1.4
AZ B D E F I M N O P Q
Program Year
WC GL AL
Based on the results of the project survey, it is recommended that ADOT examine the
cost of general liability claims in particular. It appears that the costs of ADOT’s general
liability claims are driving loss costs for the program, and are at a higher rate than other
responding departments of transportation.
This research effort has also been able to quantify ADOT’s risk control and legal envi-ronment
and examine the issues driving costs. Specifically, we found that ADOT utilizes
slightly more risk control methods than the average DOT that responded to our survey.
We also found that ADOT’s legal environment appears to be less favorable than the aver-age
for all respondents.
Lastly, we found that survey respondents identified signage and maintenance as the major
issues driving claims costs, which is similar to ADOT’s experience.
3
II. BACKGROUND
ADOT bears the responsibility of designing, building, and maintaining the highway sys-tem
for the state of Arizona. The safe movement of people and goods throughout Ari-zona
is dependent on the quality performance of ADOT. The Department strives to fulfill
this duty by utilizing all resources available to provide a high level of customer service.
In order to ensure that ADOT efficiently utilizes its resources, it has commissioned an
analysis of its cost of risk.
The purpose of the study is to provide ADOT with information regarding the cost of risk,
as compared to that of other states’ DOTs. A cost of risk study, by definition, involves
the aggregation of costs associated with several types of risk. This study addresses steps
three, four, and five below; BRS has examined the reasonability of the data collected,
compared the responses with ADOT’s, and drawn some preliminary conclusions.
This “ comparison cost of risk” study required a number of sequential steps, as key com-ponents
of the overall project plan as developed by BRS. In this study, costs are tracked
by the type of coverage so that the major drivers affecting total cost can be more easily
identified.
The overall project workplan submitted by BRS and approved by ADOT was as follows:
1. Determine ADOT’s Annual Cost of Risk
Based on information provided by ADOT, BRS will determine ADOT’s an-nual
cost of risk. Costs will be identified by type of coverage and adjusted for
cash flow versus ultimate accrued cost.
2. Contact Other States
The next step of the project involves contacting the Departments of Transpor-tation
of the other states. In contacting the other DOTs, we will be providing
them with ADOT annual cost of risk data and soliciting information from
them on their cost of risk, as well as any successful changes that they have
implemented in their states.
3. Data Analysis
As information from the other DOTs is collected, BRS will be reviewing the
reported information for viability and reasonableness.
4. Comparison of Cost of Risk
BRS will compare ADOT’s cost of risk data with the information gathered
from the other states. BRS will normalize the information and ensure that the
comparison of ADOT’s cost of risk and that of the other responding states is a
valid comparison.
4
5. Draw Conclusions and Determine Recommendations
BRS will provide ADOT with conclusions drawn regarding the most effective
areas to target for improvement and provide recommendations as to how
ADOT can reduce its cost of risk.
6. Submission of Final Report and Four- Page Research Note
A final report and research note documenting the results of the project will be
submitted to ADOT, with a presentation of the final report to be made to an
audience as designated by ADOT.
5
III. DISCUSSION OF RESULTS
This section provides a more detailed discussion of the results of the survey and conclu-sions
based on these results.
A. LOSS COSTS
Three “ lines” or insurance types – workers’ compensation, general liability, and auto
liability – had a sufficient number of responses to compare. Chapter V, the methodology
section, provides information on how these losses were put on the same level.
The following table indicates that ADOT has a lower than average rate for workers’
compensation claims, a higher than average rate for general liability claims, and an
average rate for auto liability claims.
Table 2
Estimated 2008- 09 Claims
Cost / Composite Exposure
State Identifier WC GL AL
AZ 0.14 0.49 0.06
B 0.78 0.01 0.01
D 0.33 0.05 0.10
E 1.00 0.14 0.08
F 0.01 0.02
I 0.03
M 0.01 0.01
N 0.39 0.10 0.06
O 0.07
P 0.37 0.03
Q 0.12 0.17 0.05
Average 0.40 0.11 0.05
Key: WC: workers’ compensation, GL: general liability, AL: auto liability
6
Note: The vertical axis in Graph 2 below shows the dollars spent per unit of composite
exposure. Composite exposure is a weighted average of population per square mile, vehi-cle
miles per capita, personal income per capita, rural lane miles and urban lane miles.
This is shown in further detail in Appendix 5 on Page 58.
Graph 2
Dollars of Loss per Unit of Composite Exposure
ADOT vs. Other States
0
0.2
0.4
0.6
0.8
1
1.2
1.4
AZ B D E F I M N O P Q
Program Year
WC GL AL
7
We also examined the percentage that these three lines or insurance types ( workers’ compen-sation,
general liability, and auto liability) constitute, compared to the sum of these lines.
General Liability seems to generate more claims costs for ADOT than for any of the com-parative
transportation departments. This can be seen in Table 3 and visually in Graph 3.
Table 3
Percent of WC, GL, and AL Estimated Losses for 2008- 09 by Line
State Identifier WC GL AL
AZ 0.21 0.70 0.09
B 0.96 0.02 0.02
D 0.66 0.11 0.23
E 0.82 0.12 0.06
N 0.73 0.18 0.09
Q 0.35 0.49 0.16
Key: WC: workers’ compensation, GL: general liability, AL: auto liability
Graph 3
Percent of Losses Attributed to Each Line
ADOT vs. Other States
0%
25%
50%
75%
100%
AZ B D E N Q
State Identifier
Percent of Losses
WC GL AL
We have also compared the results for DOT workers’ compensation cost estimates with
a study done for the state of Oregon in 2006 which examined relative costs on a
8
statewide basis. The losses are shown in Table 4 as a percentage of the mean average
and are listed from low to high based on the DOT losses estimated for 2008- 09. Table 4
and Graph 4 show that on a statewide basis Arizona’s workers’ compensation loss costs
tend to be about 68% of the average loss costs of all states. ADOT’s average loss costs
are only 36% of the average loss costs of those that participated in this study.
Table 4
Department of Transportation
Statewide Workers’ Compensation Losses as a Percent of Average
State DOT WC Study Statewide WC Study
O 17% 69%
Q 29% 98%
AZ 36% 68%
D 82% 90%
P 92% 98%
N 98% 196%
B 172% 105%
E 251% 97%
On a state by state basis there is a positive correlation between the DOT and Oregon
studies, but it would appear that the environment within the states is not likely the most
significant driver of the differences in loss rates for the DOTs
Graph 4
‐ 0.20
0.20
0.60
1.00
1.40
1.80
2.20
2.60
3.00
O Q AZ D P N B E
Percent of Losses State Identifier
Department of Transportation versus
Statewide Losses as a Percent of Average
Statewide DOT
9
B. RISK CONTROL METHODS
Table 5 and Graph 5 indicate that ADOT appears to use a fairly average mix of risk con-trol
methods, which appear to be effective in controlling workers’ compensation costs.
BRS’s risk control department provided a list of typical risk management methods and
weighted them by effectiveness. Then each DOT was awarded points for the risk man-agement
techniques outlined in their survey responses. Finally, these totaled points have
had their average set to 1.00 and the total scores were scaled based on this. As can be
seen, ADOT is close to the average. Further detail is shown in both Exhibit 2 and
Appendix 2 of this report. Not surprisingly, there appears to be a negative correlation
between risk control and workers’ compensation losses.
Table 5
Weighted Risk Control Methods Use
State
Risk Control
as a Percent of
the Mean
Workers’ Compensation
Losses as a Percent of the
Mean
AZ 1.05 0.36
D 0.90 0.82
E 0.60 2.51
N 0.60 0.98
O 1.21 0.17
P 2.26 0.92
Q 1.21 0.29
Normally one would expect an inverse relationship between risk control effort and work-ers’
compensation costs. In other words, more risk control leads to lower losses.
Graph 5, on the following page, shows that the states surveyed do generally show this
inverse relationship: the line representing losses generally declines as the line represent-ing
risk control increases.
10
Graph 5
C. LEGAL ENVIRONMENT
According to our research related to survey responses, the legal environment for ADOT
is not as favorable as most of the comparative transportation departments, and the cost of
ADOT general liability claims is very much higher than normal.
Table 6 shows a comparison of a weighted legal environment in the responding states.
BRS’s legal department provided the listed legal environmental items and weighted them
by their impact on liability exposures. Each DOT was then awarded points for the legal
environment outlined in their survey responses. Finally the score for each respondent is
based on the respondent’s points divided by the average number of points for all respon-dents
combined.
In general, a “ Legal Environment” score less than 1.0 indicates an environment that is
less friendly to DOTs than average, and a score greater than 1.0 indicates a legal envi-ronment
that is friendlier to DOTs. Further detail is shown in both Exhibit 3 and Appen-dix
3 of this report.
11
Table 6
Legal Environment and General Liability Losses as a Percent of Mean
State
Identifier
Legal Environment as
a Percent of the Mean
General Liability as a
Percent of the Mean
K 0.19 0.24
AZ 0.47 4.36
H 0.75 0.06
I 1.03 0.24
D 1.22 0.46
F 1.22 0.06
L 1.50 0.24
M 1.50 0.10
Normally one would expect an inverse relationship between legal environment scores and
general liability costs. In other words, a friendlier legal environment leads to lower
losses. The following graph shows that the states surveyed do generally show this inverse
relationship: the line representing losses generally declines as the line representing legal
environment increases.
Graph 6
0.00
1.00
2.00
3.00
4.00
5.00
K AZ H I D F L M
Percent
of
Mean
State Identifier
ADOT - Legal Environment and General Liability Losses
as a Percent of Mean
Legal Environment GL losses as percent of mean
12
D. COST SOURCES
Signage and maintenance are overwhelmingly considered the critical cost sources for the
responding departments of transportation. This is based on survey responses and not on
an analysis of claims.
Table 7
Cost Sources
Cost Responses
Signage 7
Maintenance 10
Design 4
Lighting 1
Legal Costs 1
Tort Claims Act 1
Terrorism 0
Natural Catastrophe 0
Other 3
13
IV. DESCRIPTION OF THE CURRENT PROGRAM
At the present time, the state of Arizona is self- insured for its workers’ compensation and
liability programs. The program is self- administered by the Risk Management Section
( RMS). Arizona has a self- insured retention of $ 7 million for liability.
Property and liability claims have been self- administered since the inception of the
program. RMS began administering workers’ compensation claims effective
January 1, 1991. Prior to that date, these claims were handled by the Arizona State Com-pensation
Fund.
Legal services are provided by the Attorney General’s office. The costs of these services
are not included in this report.
The current legal climate in Arizona provides for some governmental immunity; how-ever,
this is not enforced in a consistent and reliable manner. Public entities such as Ari-zona
spend millions of dollars each year on liability indemnity and legal costs.
A. R. S. Section 12- 820.01, Absolute Immunity, of the Arizona Revised Statutes states that
a public entity shall not be liable for acts and omissions of its employees constituting any
of the following:
• The exercise of a judicial or legislative function.
• The exercise of an administrative function involving the determination of funda-mental
governmental policy.
• The determination of a fundamental governmental policy involves the exercise of
discretion and shall include, but is not limited to:
A determination of whether to seek or whether to provide the resources
necessary for any of the following:
o The purchase of equipment
o The construction or maintenance of facilities
o The hiring of personnel
o The provision of governmental services
• A determination of whether and how to spend existing resources, including those
allocated for equipment, facilities, and personnel.
• The licensing and regulation of any profession or occupation.
• The establishment, implementation, and enforcement of minimum safety stan-dards
for light rail transit systems.
According to A. R. S. Section 12- 820.02, Qualified Immunity, of the Arizona Revised
Statutes, unless a public employee acting within the scope of that public employee's
14
employment intended to cause injury or was grossly negligent, neither a public entity nor
a public employee is liable for the following:
• An injury to the driver of a motor vehicle that is attributable to the violation by
the driver of A. R. S. Sections 28- 693, 28- 1381, or 28- 1382.
• The qualified immunity provided in this section applies to a public entity or pub-lic
employee if the injury or damage was caused by a contractor's employee, or a
contractor of a public entity acting within the scope of the contract. The qualified
immunity provided in this section does not apply to the contractor.
15
V. METHODOLOGY
This report is based on data collected for the Arizona Department of Transportation by
BRS in the form of a survey. Seventeen state departments of transportation responded:
Alaska, Arizona, Arkansas, California, Hawaii, Illinois, Iowa, Maine, Michigan, Minne-sota,
Mississippi, Missouri, Oklahoma, South Carolina, Tennessee, Wisconsin, and
Wyoming. A relatively small number of responses were given to any particular set of
questions, adding a degree of uncertainty to the conclusions of this report. However, the
responding states are geographically and demographically diverse.
The following sections discuss the methodology employed for each step of the analysis,
and the factors involved in the process.
1. Regarding comparisons of cost per exposure ( see Exhibit 1 and Appendix 1):
We noted the cost information we received from other state DOTs is not typically on
the same basis as that provided for ADOT. Most, but not all, of the cost information is
in the form of projected or actual cash flow as opposed to accrual estimates. DOTs
provided us with projected cash disbursements during a variety of fiscal years. In ad-dition,
different costs are included in these estimates; we consider loss, legal, and
claims adjusting to be “ all costs.” In addition some programs have SIR limits and oth-ers
do not. We have made estimates to bring each response to the same year level, be
on a cash flow basis, include the same costs, and have an unlimited self- insured reten-tion
( SIR), as can be seen on page 1 of Appendices 1 – WC, 1 – GL, and 1 – AL of
this report. We did not have sufficient information to quantify the impact of the inclu-sion
or exclusion of excess insurance costs. All of this adds some uncertainty to the
conclusions of this report. Exposures were selected based on what would in our ex-perience
to track each line, as can be seen in Appendix 5.
2. Regarding Risk Control Methods ( see Exhibit 2 and Appendix 2):
A large number of risk control methods were listed in the survey conducted by BRS.
BRS’s risk control department listed typical risk control methods and rated their effec-tiveness
on a scale of 1 to 3 ( see Appendix 2, page 44). The narratives were then
scored for mention of specific risk control methods and the responses were weighted
using the scale above. While this scoring was performed by public agency loss control
experts, it is subjective and does not reflect the funding amount for each loss control
measure nor the effectiveness of implementation. This adds a level of uncertainty to
the conclusions.
3. Regarding Legal Environment ( see Exhibit 3 and Appendix 3):
Legal environment factors were listed in the survey conducted by BRS. BRS’s risk
control department listed typical risk control methods and rated their effectiveness on
a scale of 1 to 3 ( see Appendix 3, page 54). The DOTs were then scored for mention
of specific legal environmental factors and the responses were weighted using the
scale above ( see Appendix 3, page 45).
16
4. Regarding Loss Causes ( see Exhibit 4 and Appendix 4):
The responses were tallied and are presented without any weights.
5. Regarding Exposures ( see Appendix 5):
Exposures were obtained from the United States Department of Transportation, includ-ing:
Population per Square Mile, Vehicle Miles per Capita, Personal Income per
Capita, Rural Lane Miles, and Urban Lane Miles. These were brought to a common
level and then differently weighted averages were used as the exposure for each line.
17
VI. FINDINGS AND CONCLUSIONS
This research effort identified Arizona’s annual cost of risk, and compared ADOT’s loss
costs in four major areas of concern with those of 16 other state DOTs:
1. Cost of claims
3. Legal environment
2. Risk control methods
4. Other program cost sources
The goals were to quantify Arizona’s relative costs of risk compared to the range of na-tional
costs, and to develop practical recommendations for ADOT to better manage its
cost of risk. This project report will assist ADOT in comparing Arizona’s cost of risk
with other responding transportation agencies, and in the evaluation of current Arizona
practices.
Based on the results of the project survey, it is recommended that ADOT examine the
cost of general liability claims in particular. It appears that the costs of ADOT’s general
liability claims are driving loss costs for the program, and are at a higher rate than other
responding departments of transportation.
Table 1, on Page 1 of this report, summarizes the cost per exposure for workers’ compen-sation,
general liability, and auto liability claims for 11 states responding with that data.
While ADOT’s workers’ compensation costs are lower than average, ADOT’s general
liability claims are higher than those of the other respondents. This can also be seen in
Graph 1 on Page 2, and in greater detail in Exhibit 1 and Appendix 1 of the report.
This research effort has also been able to quantify ADOT’s risk control and legal envi-ronment,
and has examined the issues which are driving costs.
Specifically, we found that ADOT utilizes slightly more risk control methods than the
average DOT that responded to our survey. We also found that ADOT’s legal environ-ment
appears to be less favorable than the average for all respondents. Lastly, we found
that survey respondents identified the majority of claims filed as alleging signage and/ or
maintenance issues, which is similar to ADOT’s experience.
18
EXHIBIT 1 - Cost Comparison
Exhibit I
Page 1
Cost Per Exposure:
By Major Line and as a Percent of Line
ST
Workers
Compensa-tion
Cost per
Exp.
General
Liability
Cost per
Exp.
Auto
Liability
Cost per
Exp.
WC%
of
Total
GL% of
Total
AL% of
Total
2008- 09
Esti-mated
Total
Costs
From
WC, GL,
and AL
( in 000s)
( A) ( B) ( C) ( D) ( E) ( F) ( G) ( H)
AZ 0.14 0.49 0.06 0.21 0.70 0.09 17,324
B 0.78 0.01 0.01 0.96 0.02 0.02 36,523
C
D 0.33 0.05 0.10 0.66 0.11 0.23 12,506
E 1.00 0.14 0.08 0.82 0.12 0.06 41,769
F 0.01 0.02
G
H
I 0.03
J
K
L
M 0.01 0.01
N 0.39 0.10 0.06 0.73 0.18 0.09 8,924
O 0.07
P 0.37 0.03
Q 0.12 0.17 0.05 0.35 0.49 0.16 10,756
Notes
( A) States are given a letter for identification.
( B) From Appendix 1 - WC, Page 1, Cost/ exposure, Item ( I)
( C) From Appendix 1 - GL, Page 1, Cost/ exposure, Item ( I)
( D) From Appendix 1 - AL, Page 1, Cost/ exposure, Item ( I)
( E) Appendix 1 - WC, Page 1, Item ( I)/( I).
( F) Appendix 1 - GL, Page 1, Item ( I)/( I).
( G) Appendix 1 - AL, Page 1 Item, ( I)/( I).
( H) Summed from WC, GL and AL Appendix 1, Page 1, Item G.
See Appendix 1 for further detail.
19
Graph 7
Key: WC: workers’ compensation, GL: general liability, AL: auto liability
20
Graph 8
Key: WC: workers’ compensation, GL: general liability, AL: auto liability
21
Exhibit 2 - Risk Control
Exhibit 2
Page 1
Abbreviations:
ST = State Risk Mngmt. = Risk Management Engr. = Engineering Inspt. = Inspection
Trng = Training Compl. = Compliance Prgms. = Programs Invstgt. = Investigations
Clt. = Control WC = Workers’ Compensation Ttl. = Totals Avg. = Average
Risk Controls - Techniques in Place
ST
Risk
Mngmt. Engr. Inspct. Trning. Compl. Prgms. Invstgt. Clt. WC Ttl.
Risk
Mngmt.
Scores
with
1.00 as
Avg.
WC
Losse
s with
1.00
as
Avg.
AZ 3 0 0 2 0 0 0 2 0 7.00 1.05 0.36
D 0 0 2 2 0 0 0 0 2 6.00 0.90 0.82
E 0 0 0 0 0 0 0 2 2 4.00 0.60 2.51
H 0 0 0 2 0 2 0 0 0 4.00 0.60
I 0 0 0 4 0 0 0 0 0 4.00 0.60
L 0 0 0 4 0 0 0 0 0 4.00 0.60
M 3 0 2 2 0 0 2 0 0 9.00 1.36
N 0 0 0 2 0 0 2 0 0 4.00 0.60 0.98
O 3 0 0 0 3 0 0 0 2 8.00 1.21 0.17
P 0 3 2 4 6 0 0 0 0 15.00 2.26 0.92
Q 0 0 0 2 0 0 2 0 4 8.00 1.21 0.29
average 6.64 1.00
Notes:
Risk control measures are weighted as shown in Appendix 2.
Weights have been provided by Bickmore Risk Services Risk Management Department.
Each risk control item is awarded the number of points in the weight and summed to arrive at the total.
The last two columns set the averages for all responding states to 1.00 for comparative purposes.
22
Graph 9
23
Exhibit 3 – Legal Environment
Exhibit 3
Page 1
Legal Environment
ST
Comp.
Neg.
Defns.
Caps
on
Legal
fees Bfur.
Caps
on
Rec.
Caps
Rstrct.
on
Lia.
Tort
Clms
Act
Attny.
Gen.
Handles
Claims
Open or
Public
Rcrds
Act
Legal
Envir.
Legal
Envir.
with
1.00 as
Average
GL Costs
with 1.00
as Ave.
Weight 2 3 2 3 3 3 0 0
AZ 2 0 0 0 3 0 0 0 5 0.47 4.36
B 0.13
C 0.13
D 2 0 2 3 3 3 0 0 13 1.22 0.46
E 1.29
F 2 0 2 3 3 3 0 0 13 1.22 0.06
G 0 0 0 0 0 0 0 0 0.06
H 2 0 0 0 3 3 0 0 8 0.75 0.06
I 2 0 0 3 3 3 0 0 11 1.03 0.24
J 0.24
K 2 0 0 0 0 0 0 0 2 0.19 0.24
L 2 3 2 3 3 3 0 0 16 1.50 0.24
M 2 3 2 3 3 3 0 0 16 1.50 0.10
N 2 0 2 0 3 0 0 0 7 0.66 0.86
O 2 0 2 0 3 3 0 0 10 0.94 0.86
P 2 3 2 3 3 3 0 0 16 1.50 0.86
Q 2 3 0 3 3 0 0 0 11 1.03 1.48
Average 10.67 1.00
Notes: Weights have been provided by Bickmore Risk Services Legal Department.
Each legal item is awarded the number of points in the weight and summed to arrive at the legal environment.
The last two columns set the averages for all responding states to 1.00 for comparative purposes.
Abbreviations:
ST = State Comp. Neg. Defns. = Comparative Negligence Defense Bfur. = Bifurcation
Caps on Rec. = Caps on Recoveries Caps Rstrct. on Lia.= Caps Restrictions on Liabilities
Tort Clms Act = Tort Claims Act Attny. Gen. Handles Claims = Attorney General Handles Claims
24
Graph 10
25
Exhibit 4 – Cost Sources
Exhibit 4
Page 1
Cost Sources
State Signage Maintenance Design Lighting Legal Costs
Tort
Claims
Act Terrorism
Natural
Catastrophe Other
weight
AZ 1 1 1
B
C
D 1
E
F 1 1 1
G
H 1 1 1 1
I 1 1
J
K 1 1 1
L 1
M
N 1 1 1
O 1 1 1
P 1
Q 1 1 1
Totals 7 10 4 1 1 1 0 0 3
Notes: Summarized from Appendix 4 ( Q: states’ three biggest sources of loss costs)
26
Exhibit 4
Page 2
Property Liability Cost Sources
State
Legal
Structure
Legal
Limits
Insurance
Costs
Loss
Control
Claims
Adm.
Excess
Insurance SIR
Cov-erage
Limits
State
Laws Other
AZ
B
C
D
E
F
G
H
I 3 1 2
J
K
L
M
N 2 3 1
O 1
P
Q 3 2 1
Notes: Summarized from Appendix 4.
This shows the rankings for the responding state's departments of transportation of property
and liability cost sources, with 1 being the most costly.
27
Appendix 1 – Cost Comparison
Appendix 1 – WC
Page 1
Workers’ Compensation
Loss Costs Brought to a Common Level
State
Identifier
Cost
per
year
( in
000s)
Put on
Cash
Flow
Basis
Factor
to Bring
to All
Costs
Level
All
Costs
Level
Cost
Esti-mated
on
2008- 09
basis
Brought to
Unlimited
SIR
Composite
Exp.
2008- 09
Estimated
Cost/ Exp.
2008/ 09
Cost/ Exp
as a
Percent
of
Mean
( A) ( B) ( C) ( D) ( E) ( F) ( G) ( H) ( I) ( J)
AZ 3,323 3,323 1.00 3,323 3,663 3,663 25,287 0.14 0.36
B 28,500 28,500 1.15 32,775 32,775 35,233 45,253 0.78 1.95
D 7,300 7,300 1.00 7,300 7,665 8,240 25,292 0.33 0.82
E 33,000 33,000 1.04 34,155 34,155 34,155 34,117 1.00 2.51
N 6,500 6,500 1.00 6,500 6,500 6,500 16,684 0.39 0.98
O 2,000 1,852 1.04 1,917 1,917 1,917 27,986 0.07 0.17
P 11,167 11,167 1.00 11,167 11,167 11,167 30,238 0.37 0.92
Q 3,500 3,241 1.12 3,630 3,811 3,811 32,521 0.12 0.29
aver-age:
11,911 11,860 12,596 12,707 13,086 29,672 0.40 1.00
Notes: Italics indicate an estimate.
( A) Only DOTs that responded with costs are included.
( B) From Appendix 1 - WC, Page 3.
( C)
Accrual estimations are assumed to be 7% greater than Cash Flow estimates, based on ADOT's Cost of Risk
Study, dated August 9, 2007. DOT costs are assumed to be on a cash flow basis unless otherwise stated.
( D) From Appendix 1 - WC, Page 4, Item ( H), estimating the cost if all components were included.
( E) ( C) x ( D).
( F) We assume costs are increasing by 5% per year.
( G) A factor has been applied to the State that had limited SIR to bring to unlimited assuming that
losses above the DOTs SIR will cost an additional
7.5%.
( H) From Appendix 5, Page 2, Item ( F) .
( I) ( G)/( H)
( J) ( I)/ Average ( I)
28
Graph 11
29
Appendix 1 - WC
Page 3
Survey Replies Summary – Workers’ Compensation
ST
Coverage:
Guaranteed
Cost or
Self-
Insured
Prem. Cost Prg.
Year
Self-
Insured
Retention
Limit Cost Year Claims
Adm.
Cash
flow or
accrual
basis
( A) ( B) ( C) ( D) ( E) ( F) ( G) ( H) ( I) ( J)
AZ Self- insured unlimited unlimited 3,322,736 2006- 07
In-house
Cash
flow
B Self- insured n/ a n/ a 28,500,000
FY
2008
In-house
Cash
flow
C Self- insured
D Self- insured 1 MIL 7,300,000 2007 TPA
Cash
flow
E Self- insured 33,000,000 08- 09 TPA
F Self- insured
G Self- insured 1,650,000
In-house
Cash
flow
H Self- insured TPA
Cash
flow
I Self- insured
In-house
Cash
flow
J Self- insured
K
Guaranteed
cost
L Self- insured unknown unknown unknown
un-known
In-house
M
no re-sponse
N Self- insured unlimited 6,500,000 2009 TPA
Cash
flow
O Self- insured NA
150,000/
agency 2,000,000
each
year TPA Accrual
P
Guaranteed
cost 11,167,180 2007
Q Self- insured first dollar none 3,500,000 2007
In-house
Accrual
Self- ins:
unweighted
average: TPA:
Cash
Flow:
88% 5,155,684 55% 78%
Notes: From ADOT 2007 survey conducted by BRS Risk and Consulting Services.
Participants are assigned a letter to maintain confidentiality.
Definitions: For In- house claims administration the claims are tracked, paid and reserved by DOT personnel. A
TPA is a Third Party Claims Administrator who is contracted to track, pay and reserve claims by DOT but is not
a direct employee.
30
Appendix 1 - WC
Page 4
Survey Replies Summary – Workers’ Compensation
ST Losses
Included
Legal
costs
Included
Loss control
Included
Claims Administration
Included
Excess
Insurance
Included
Other
Included
Medical
Expenses
Included
Factor
to
bring
to All
Costs
Level
( A) ( B) ( C) ( D) ( E) ( F) ( G) ( H)
AZ
Losses
Legal
costs Loss control Claims adm.
Excess
insurance 1.000
B
Losses - - - - - 1.150
C
- - - - - -
D
Losses
Legal
costs Loss control Claims adm.
Excess
insurance - 1.000
E
Losses
Legal
costs - Claims adm. - - 1.035
F
- - - - - - 1.000
G
Losses
Legal
costs Loss control Claims adm.
Excess
insurance - 1.000
H
Losses
Legal
costs Loss control Claims adm. - - 1.000
I
Losses
Legal
costs - Claims adm. - - 1.035
J
K
L
- - - - - -
M
N
Losses
Legal
costs Loss control Claims adm. - - 1.000
O
Losses
Legal
costs - Claims adm. - Other
medical
expenses 1.035
P
1.000
Q
Losses
Legal
costs - - - - 1.120
( J) Typical Percent of Total Costs
85.0% 3.5% 3.5% 8.0% 100%
Item H estimates the costs of missing components of each program to set them at the same level.
These are based on Best's 2005
1
losses by line, legal and loss control are assumed to be 1/ 2 of the Best
combined category. Most lines have no Excess Insurance.
Notes: From ADOT 2007 survey conducted by BRS Risk and Consulting Services.
1 Best’s Aggregates & Averages, 2005 Edition
31
Appendix 1 – GL
Page 1
General Liability
Loss Costs Brought to a Common Level
ST
Cost
per
year
( 000s)
Put on
Cash
Flow
Basis
Factor
to Bring
to All
Costs
Level
All
Costs
Level
Cost
Estimated
on
2008- 09
basis
Brought to
Unlimited
SIR
Composite
Exposure
2008- 09
Estimated
Cost/ Exposure
Percent
of Mean
( A) ( B) ( C) ( D) ( E) ( F) ( G) ( H) ( I) ( J)
AZ 10,973 10,973 1.00 10,973 12,098 12,098 24,854 0.49 436%
B 500 500 1.19 595 656 656 44,131 0.01 13%
D 1,100 1,100 1.00 1,100 1,155 1,380 26,793 0.05 46%
E 3,888 3,888 1.07 4,160 4,160 5,043 34,878 0.14 129%
F 107 107 1.07 115 115 142 21,703 0.01 6%
I 754 754 1.07 806 889 889 32,669 0.03 24%
M 204 182 1.14 207 218 327 28,502 0.01 10%
N 1,500 1,500 1.07 1,605 1,605 1,605 16,695 0.10 86%
Q 5,000 4,464 1.12 5,000 5,250 5,250 31,680 0.17 148%
avg: 2,670 2,608 2,905 3,043 29,101 0.11 100%
Notes Italics indicate an estimate.
( A) Only DOTs that responded with costs are included.
( B) From Appendix 1 - GL, Page 3.
( C) Accrual estimations are assumed to be 12% greater than Cash Flow estimates, based on ADOT's Cost
of Risk Study. DOT costs are assumed to be on a cash flow basis unless otherwise stated.
( D) From Appendix 1 - GL, Page 4, Item ( H).
( E) ( C) x ( D).
( F) We assume costs are increasing by 5% per year.
( G) A factor has been applied to the State that had limited SIR to bring to unlimited.
( H) From Appendix 5, Page 2 Item ( G).
( I) ( G)/( H)
( J) ( I)/ Average ( I)
We have assumed that losses are given on a cash flow basis unless the respondent indicated otherwise.
32
Graph 12
33
Appendix 1 – GL
Page 3
Definitions: For in- house claims administration the claims are tracked, paid and reserved by DOT personnel. A TPA is a
Third Party Claims Administrator who is contracted to track, pay and reserve claims by DOT but is not a direct employee.
Survey Replies Summary – General Liability
ST
Coverage:
Guaranteed
Cost or
Self-
Insured
Premium
Cost
Program
Year
Self-
Insured
Retention
Limit
Cost Year Claims
Adm.
Cash
flow or
accrual
basis
( A) ( B) ( C) ( D) ( E) ( F) ( G) ( H) ( I) ( J)
AZ
Self-insured
7,000,000
Purchased
125 Mil
unlimited
over that
amount 10,973,392 2006- 07
In-house
Cash
flow
B
Self-insured
n/ a none 500,000 2006
In-house
Cash
flow
C
D
Self-insured
$ 500,000 Cap 1,100,000 2007
In-house
Cash
flow
E
Self-insured
300k/ 1m 3,888,300 08- 09
In-house
F
Self-insured
1,000 400,000 107,087 FY2008
In-house
Cash
flow
G
Self-insured
1,000,000 1,000,000
In-house
Accrual
H
Self-insured
In-house
Cash
flow
I
Self-insured
4,000,000 50 million 753,500
2006 for
excess
In-house
Cash
flow
J
K
Guaranteed
cost
Incomplete
Answer
Incomplete
Answer
L
Self-insured
$ 1,000,000 $ 5,000,000
In-house
Cash
flow
M
Self-insured
$ 175,000/
claimant/
claim 203,977 7/ 1/ 07- 08
In-house
Accrual
N
Self-insured
unlimited 1,500,000
2009
projection
In-house
Cash
flow
O
Self-insured
In-house
Cash
flow
P
Guaranteed
cost 6,751,536 2007
Q
Self-insured
first dollar none 5,000,000 2007
In-house
Accrual
Self-insured
unweighted
average
In-house
Cash
Flow
87% 2,585,862 100% 78%
Notes: From ADOT 2007 survey conducted by BRS Risk and Consulting Services.
Participants are assigned a letter to maintain confidentiality.
34
Appendix 1 - GL
Page 4
2 Best’s Aggregates & Averages, 2005 Edition
Survey Replies Summary – General Liability
State
Identifier
Losses
Included
Legal
costs
Included
Loss
control
Included
Claims Admini-stration
Included
Excess
Insurance
Included
Other
Included
Other
Response
Factor
to
bring
to All
Costs
Level
( A) ( B) ( C) ( D) ( E) ( F) ( G) ( H)
AZ Losses
Legal
costs
Loss
control Claims adm.
Excess
insurance 1.00
B Losses - - - - - 1.19
C
D Losses
Legal
costs
Loss
control Claims adm. - - 1.00
E Losses
Legal
costs - Claims adm. - - 1.07
F Losses
Legal
costs - Claims adm. - - 1.07
G Losses
Legal
costs - Claims adm.
Excess
insurance Other
Admin
costs/ Dividends 1.00
H Losses
Legal
costs
Loss
control Claims adm. - - 1.00
I Losses
Legal
costs - Claims adm.
Excess
insurance - 1.07
J
K
L Losses
Legal
costs
Loss
control Claims adm. - - 1.00
M Losses - - Claims adm. - - 1.14
N Losses
Legal
costs - Claims adm. - - 1.07
O Losses
Legal
costs - - - - 1.12
P 1.00
Q Losses
Legal
costs - - - - 1.12
( J) Typical Percent of Total
Costs
81.0% 7.0% 7.0% 5.0% 100%
Item H estimates the costs of missing components of each program to set them at the same level.
These are based on Best's 2005
2
losses by line, legal and loss control are assumed to be 1/ 2 of the Best
combined category.
Notes: From ADOT 2007 survey conducted by BRS Risk and Consulting Services.
35
Appendix 1 – AL
Page 1
Auto Liability
Loss Costs Brought to a Common Level
ST
Cost per
year
( 000s)
Put on
Cash
Flow
Basis
Factor
to Bring
to All
Costs
Level
All Costs
Level
Cost
Estimated
on 2008- 09
basis
Brought
to
Unlimited
SIR
Composite
Exposure
2008- 09
estimated
Cost/ Exp
Percent
of
Mean
( A) ( B) ( C) ( D) ( E) ( F) ( G) ( H) ( I) ( J)
AZ 1,418 1,418 1.00 1,418 1,563 1,563 26,669 0.06 123%
B 500 500 1.15 575 634 634 42,722 0.01 31%
D 2,300 2,300 1.00 2,300 2,415 2,886 28,406 0.10 214%
E 2,472 2,472 1.04 2,571 2,571 2,571 33,870 0.08 160%
F 254 254 1.04 264 264 329 18,378 0.02 38%
M 236 215 1.08 232 244 366 32,278 0.01 24%
N 750 750 1.04 780 819 819 12,958 0.06 133%
P 1,005 1,005 1.00 1,005 1,005 1,005 29,383 0.03 72%
Q 1,600 1,455 1.11 1,615 1,696 1,696 34,234 0.05 104%
Avg. 1,171 1,152 1,246 1,319 28,766 0.05 100%
Notes: Italics indicate an estimate.
( A) Only DOTs that responded with costs are included.
( B) From Appendix 1 - AL, Page 3.
( C) Accrual estimations are assumed to be 10% greater than Cash Flow estimates, based on ADOT's Cost of Risk
Study, dated August 9, 2007. DOT costs are assumed to be on a cash flow basis unless otherwise stated.
( D) From Appendix 1 - AL, Page 4, Item ( H).
( E) ( C) x ( D).
( F) We assume costs are increasing by 5% per year.
( G) A factor has been applied to the State that had limited SIR to bring to unlimited.
( H) From Appendix 5, Page 2, Item ( G).
( I) ( G)/( H)
( J) ( I)/ Average ( I)
We have assumed that losses are given on a cash flow basis unless the respondent indicated otherwise.
36
Graph 13
37
Appendix 1 – AL
Page 3
Survey Replies Summary – Auto Liability
ST
Coverage:
Guaranteed
Cost or
Self-
Insured
Premium
Cost
Prgm.
Year
Self-
Insured
Retention Limit Cost Year Claims Adm.
Cash
Flow or
Accrual
Basis
( A) ( B) ( C) ( D) ( E) ( F) ( G) ( H) ( I) ( J)
AZ
Self-insured
7,000,000
Purchased
125 Mil
unlimited
over that
amount 1,417,819 2006- 07 In- house
Cash
flow
B
Self-insured
n/ a none 500,000 2006 In- house
Cash
flow
C
D
Self-insured
500,000 2,300,000 2007 In- house
Cash
flow
E
Self-insured
2,472,400 08- 09 In- house
F
Self-insured
0 400,000 254,185 FY2008 In- house
Cash
flow
G
Self-insured
1,000,000
300,000/
1,000,000
Third party
claims ad-ministrator
Accrual
H
I
Self-insured
2500 In- house
Cash
flow
J
K
Guaranteed
cost
Incomplete
Answer
Incomplete
Answer
L
Self-insured
same as
GL In- house
Cash
flow
M
Self-insured
$ 175,000/
claimant
/ claim 236,437 7/ 1/ 07- 08 In- house Accrual
N
Self-insured
unlimited 750,000
2009
projection In- house
Cash
flow
O
Self-insured
In- house
Cash
flow
P
Guaranteed
cost 1,005,120 2007
Q
Self-insured
first dollar none 1,600,000 2007 In- house Accrual
Recap
Self-insured
unweighted
average in- house
Cash
Flow
87% 1,058,982 100% 78%
Notes: From ADOT 2007 survey conducted by BRS Risk and Consulting Services.
Participants are assigned a letter to maintain confidentiality.
Definitions: For in- house claims administration the claims are tracked, paid and reserved by DOT personnel. A TPA is a
Third Party Claims Administrator who is contracted to track, pay and reserve claims by DOT but is not a direct employee.
38
Appendix 1 - AL
Page 4
Survey Replies Summary – Auto Liability
State
Identifier
Losses
Included
Legal
Costs
Included
Loss
Control
Included
Claims
Administration
Included
Excess
Insurance
Included
Other
Included
Other
Response
Factor to
Bring to
All Costs
Level
( A) ( B) ( C) ( D) ( E) ( F) ( G) ( H)
AZ Losses
Legal
costs
Loss
control Claims adm.
Excess
Insurance 1.00
B Losses - - - - - 1.15
C
D Losses
Legal
costs
Loss
control Claims adm. - - 1.00
E Losses
Legal
costs - Claims adm. - - 1.04
F Losses
Legal
costs - Claims adm. - - 1.04
G Losses
Legal
costs - Claims adm.
Excess
Insurance Other
Admin &
Dividends 1.04
H 1.00
I Losses
Legal
costs - Claims adm. - - 1.04
J
K
L Losses
Legal
costs
Loss
control Claims adm. - - 1.00
M Losses - - Claims adm. - - 1.08
N Losses
Legal
costs - Claims adm. - - 1.04
O Losses
Legal
costs - - - - 1.11
P 1.00
Q Losses
Legal
costs - - - - 1.11
( J) Typical Percent of Total Costs
85.0% 4.0% 4.0% 7.0% 100%
Items J and H: estimates the costs of missing components of each program to set them at the same level.
These are based on Best's 2005 losses by line, legal and loss control are assumed to be 1/ 2 of the Best
3
combined category.
Notes: From ADOT 2007 survey conducted by BRS Risk and Consulting Services.
3 Best’s Aggregates & Averages, 2005 Edition
39
Appendix 2 – Risk Control
Appendix 2
Page 1
Risk Control Measures
Risk Management Engineering Inspections
Risk Identifi-cation
and
Assessment
Behaviorally
Based Safety
and Work
Comp Pro-grams.
Best
Practices
Engineering
Practices
Inspection
of Proper-ties
Safety
Inspections
Property
Inspections
Weight 3 3 3 3 2 2 2
AZ 1
B
C
D 1
E
F
G
H
I
J
K
L
M 1 1
N
O 1
P 1 1
Q
40
Appendix 2
Page 2
Risk Control Measures
Training
Compliance Programs
Loss
Control
Training
Safety Training
Programs/ meetings
Highway
Safety
Occupational
Safety Pro-gram.
OSHA/ EPA
Compliance Legislation
Safety
Manual
Available
Plans
Re-view
Weight 2 2 2 2 3 3 2 2
AZ 1
B
C
D 1
E
F
G
H 1 1
I 1 1
J
K
L 1 1
M 1
N 1
O 1
P 1 1 1 1
Q 1
41
Appendix 2
Page 3
Risk Control Measures
Investigation Culture Workers' Compensation
Claims
Investigation
Accident
Investigation
Agency
Driven
WC
Assessments
Temporary
Modified
Duty
Fit for Duty Total
Weight 1 2 2 2 2 2
AZ
1 7
B
0
C
0
D
1 6
E
1 1 4
F
0
G
0
H
4
I
4
J
0
K
0
L
4
M
1 9
N
1 4
O
1 8
P
15
Q
1 1 1 8
42
Appendix 2
Page 4
Description of the Safety and Loss Control Practices
Please provide a brief, general description of your safety and loss control practices.
AZ The Arizona Revised Statutes require each agency to conduct risk identification and assessment, and implement a
Loss Prevention Program to reduce the frequency and severity of losses in:
Employee safety in the workplace
Real and personal property protection
Industrial Hygiene and Environmental Protection as required by Federal and State standards
Negligent acts that cause third- party claims
B
C
D Inspection of all state properties, driver training, WC assessments
E Agency Driven
F
G
H Safety office maintains and publishes a safety manual that is available on- line to all employees. Safety officers
conduct safety training statewide in all facets of the Department's duties.
I Have two internal safety specialists that provide safety and loss control and training for all regions. In addition, have
a safety coordinator within each bureau that provides safety training and inspections for their facility and/ or site.
J
K Incomplete Answer
L We will tailor a safety and loss control presentation for the specific agencies that request it. The State’s Department
of Transportation has a comprehensive safety program for its employees.
M Education including seminars, presentations, and onsite meetings. Provides consultation and resources for " best
practices", plans review, property inspections, and claims investigation. Respond to large property losses to assist
agencies with mitigation.
N DOT safety officers administer training and accident review of employee injury claims, hold safety meetings, etc.,
O In- house safety team, focused on OSHA responses, developing behaviorally based safety and work comp pro-grams.
P The state’s DOT has a comprehensive highway safety and occupational safety program. Highway safety initiatives
include legislation, driver education, and engineering practices and inspections. Occupational safety initiatives
include efforts within industrial, fleet and chemical safety components, such as OSHA/ EPA compliance, employee
training, inspections, accident investigations, etc.
Q Each of the 10 districts and central office has safety and health managers. They are very aggressive in training and
incident investigation. We have really pushed temporary modified duty ( TMD) and a new fit for duty program.
Appendix 2
Page 5
43
Description of the Safety and Loss Control Practices
Please briefly describe any special or particularly effective programs your state has and how they have contributed
to a reduction in the cost of risk for your state.
AZ N/ A
B
C
D driver training programs
E pilot program with return to work
F
G
H This question is too vague to frame a proper response.
I Owner Controlled Insurance Programs ( OCIPS) for large construction projects
J
K Incomplete Answer
L
M Human resource and development training for any state agency personnel in safety management and/ or Risk
Management. These classes are vital to individuals and divisions assigned those duties. This program has pro-vided
assistance in risk identification and the implementation of a continuous risk improvement process at all levels
of state government.
N enhance safety program last few years has shown diminished workplace accidents.... that decrease reduces the
cost of risk allocation by Risk Management as it is based on both exposure and experience ( loss history)
O Aggressive return to duty/ light duty program resulted in reduction of lost days by 1500 + last year.
P
Q Temporary modified due and fit for duty. TMD returns injured employees back to meaningful work much quicker
than usual. Fit for duty assists in protecting employees and the traveling public if we have an employee not capa-ble
of doing his job.
44
Appendix 2
Page 6
Risk Control Measures Effectiveness Ranking
Risk Control Measures Relative Effectiveness
Risk Management:
Risk Identification and Assessment 3
Behaviorally Based Safety and Work Comp Programs. 3
Best Practices 3
Engineering:
Engineering Practices 3
Inspections:
Inspection of Properties 2
Safety Inspections 2
Property inspections 2
Training:
Driver Training/ driver Education 2
Loss Control Training 2
Safety Training Programs/ meetings 2
Highway Safety 2
Occupational Safety Program. 2
Compliance:
OSHA/ EPA Compliance 3
Legislation 3
Programs:
Safety Manual Available 2
Plans Review 2
Investigations:
Claims Investigation 1
Accident Investigation 2
Culture:
Agency Driven 2
Workers Compensation:
WC Assessments 2
Temporary Modified Duty 2
Fit for Duty 2
Provided by Bickmore Risk Services Risk Control Department
45
Appendix 3 – Legal Environment
Appendix 3
Page 1
Legal Environment Summary of Responses
S
T
Com-pensa-tory
Negli-gence
Defense
Caps
on
legal
fees
Bifur-cation
Caps on
Recov-eries
State
Restric-tions
on
Liabilities
Tort
Claims
Act
Attorney
General
Handles
Claims
Open or
Public
Record
Act
Legal
Envi-ronment
Legal
Environ-ment.
as
Percent
of Mean
General
Liability
Costs
as a
Percent
of Mean
weights
2 3 2 3 3 3 0 0
A
Z 1 0 0 0 1 0 1 1 5 0.47 4.36
B 0.13
C 0.13
D 1 1 1 1 1 1 0 13 1.22 0.46
E 0 1 1.29
F 1 1 1 1 1 1 1 13 1.22 0.06
G 0.00
H 1 1 1 1 0 8 0.75
I 1 1 1 1 1 1 11 1.03 0.24
J 0.24
K 1 0 0 2 0.19
L 1 1 1 1 1 1 1 1 16 1.50
M 1 1 1 1 1 1 1 1 16 1.50 0.10
N 1 1 1 0 1 1 7 0.66 0.86
O 1 1 1 1 1 1 10 0.94 0.86
P 1 1 1 1 1 1 0 0 16 1.50 0.86
Q 1 1 1 1 0 0 0 11 1.03 1.48
Average 10.67
Note: Weights are from Appendix 3, Page 3 on page 54.
46
Appendix 3 –
actual responses
Legal Environment – Actual Responses
Note – specific state law citations deleted to maintain respondent anonymity
Does your
state's judicial
system allow
comparative or
contributory
negligence
defenses?
Please briefly explain any recent
changes in the legal handling of
claims in your state.
If your state limits legal fees in any
way, please indicate the limits and
cite the specific statute or law.
AZ
Arizona follows
the doctrine of
pure compara-tive
negligence
none not limited - done by bid to repre-sent
the State
B
C
D Yes
2004 tort reform corrected venue
problems, strengthened statute of
limitations & capped non-economic
damages.
E
F Yes None known unknown
G
H Yes
None. All claims against the De-partment
are processed through
the State Claims Commission
because state agencies are im-mune
from suit.
N/ A. See previous response.
I Yes
J
K Yes
Incomplete Answer Incomplete Answer
L Yes none
Attorney fees are not allowed
except pursuant to contract or
statutory allowance; not allowed
under our governmental claims
act.
M Yes
The answer to first question is
" Combination". Effective 11/ 1/ 07,
the law requires exchange of data
with Child Support Enforcement
Division before paying any claim
for personal injury, wrongful death,
or workers compensation.
Legal fees limited. The State's
limit of liability also applies to at-torney
fees and litigation cost
recovery, if any.
47
Appendix 3 –
actual responses
Legal Environment – Actual Responses
Does your
state's judicial
system allow
comparative or
contributory
negligence
defenses?
Please briefly explain any recent
changes in the legal handling of
claims in your state.
If your state limits legal fees in any
way, please indicate the limits and
cite the specific statute or law.
N Yes pure comparative no statutory caps
O Yes State employs a comparative fault
system
The attorney fees and expenses
are paid out of but not in addition
to the amount of judgment or
award recovered, to the attorneys
representing the claimant. Code
Ch 669.15
P Yes Comparative
Yes, Attorney General must ap-prove
fees of outside attorneys.
Generally limited to $ 125 per hour,
by law
Q Yes
Comparative fault. Joint and sev-eral
liability threshholds have been
increased from 1 percent to 51
percent or greater.
Yes, in workers' compensation
they are limited to 25 percent of
settlement.
48
Appendix 3 –
actual responses
Legal Environment – Actual Responses
To what extent does your state permit bi-furcation
of liability and damages in trial?
Please briefly describe any state- imposed caps on
recovery designed to protect governmental entities
in your state.
AZ Can be granted by the judge. none
B
C
D Only in punitive damage awards $ 500,000 per occurrence
E
F Any claim with multiple counts or de-fendents
can be bifurcated. Tort Claims Act spells out
G
H N/ A. See previous response. N/ A. See previous response.
I 250,000 per claimant per negligent State officer,
employee and agent involved - by statute.
J
K Incomplete Answer
Incomplete Answer
L At the discretion of the trial court under
limited circumstances. $ 250,000 per person/ $ 500,000 per occurrence
M At discretion of court
$ 25,000 limit in property damage, $ 175,000 in other
non- U. S. Constitutional claims, with a limit of
$ 1,000,000 per occurance for any number of claims.
49
Appendix 3 –
actual responses
Legal Environment – Actual Responses
To what extent does your state permit bi-furcation
of liability and damages in trial?
Please briefly describe any state- imposed caps on
recovery designed to protect governmental entities
in your state.
N
upon motion to the court
no statutory caps
O
Yes Liability and damages are generally
tried together; The trial court may allow
bifurcation in the exercise of its sound dis-cretion.
No
P
A motion seeking bifucation of the issues of
liability and damamges in a personal injury
case is addressed to the sound discretion
of the trial court pursuant to state Rules of
Civil Procedure.
$ 300, per person / $ 600,000 per occurance.
Q $ 355,396 per person, $ 2,369,306 per occurance,
Changes annually based on price index.
50
Appendix 3
- actual responses
Legal Environment – Actual Responses
Please briefly explain any state- imposed restrictions
that are designed to limit the liability of governmental
entities in your state.
Does your state
have a " Govern-ment
Tort Claims
Act" that outlines
the legal process
for making a tort
claim or filing a
lawsuit against
your state?
Please provide the
specific statute or
law.
AZ Section 12- 820.01, Absolute Immunity, of the Ari-zona
Revised Statutes states that a public entity
shall not be liable for acts and omissions of its em-ployees
constituting any of the following:
• The exercise of a judicial or legislative function.
• The exercise of an administrative function involving
the determination of fundamental governmental
policy.
• The determination of a fundamental governmental
policy involves the exercise of discretion and shall
include, but is not limited to:
• A determination of whether to seek or whether to
provide the resources necessary for any of the fol-lowing:
• The purchase of equipment.
• The construction or maintenance of facilities.
• The hiring of personnel.
• The provision of governmental services.
• A determination of whether and how to spend ex-isting
resources, including those allocated for
equipment, facilities, and personnel.
• The licensing and regulation of any profession or
occupation.
• The establishment, implementation, and enforce-ment
of minimum safety standards for light rail tran-sit
systems.
According to Section 12- 820.02, Qualified Immunity,
of the Arizona Revised Statutes, unless a public
employee acting within the scope of the public em-ployee's
employment intended to cause injury or
was grossly negligent, neither a public entity nor a
public employee is liable for the following:
• An injury to the driver of a motor vehicle that is
attributable to the violation by the driver of section
28- 693, 28- 1381 or 28- 1382.
• The qualified immunity provided in this sec-tio+
FN2n applies to a public entity or public em-ployee
if the injury or damage was caused by a con-tractor's
employee or a contractor of a public entity
acting within the scope of the contract. The qualified
immunity provided in this section does not apply to
the contractor or the contractor's employee.
no Section 12- 820.01
B
C
D Sovereign immunity is waived in certain instances
only. Yes State law.
E
51
Appendix 3 –
actual responses
Legal Environment – Actual Responses
F
Tort Claims Act spells out Yes State law.
G
Please briefly explain any state- imposed restrictions
that are designed to limit the liability of governmental
entities in your state.
Does your state
have a " Govern-ment
Tort Claims
Act" that outlines
the legal process
for making a tort
claim or filing a
lawsuit against
your state?
Please provide the
specific statute or
law.
H
All claims against the Department are processed
through the State Claims Commission because
state agencies are immune from suit.
Yes State law.
I Liability for tort claims in the state of is limited to
negligent and casual acts of specific individual em-ployees,
officers and agents. The State agencies
retain sovereign immunity and are not subject to tort
claims filed in state courts.
Yes State law.
J
K
Incomplete Answer
No Incomplete Answer
L Limited and specific waivers of immunity, some ap-plication
of good faith immunity Yes State law.
M
See Governmental Tort Claims Act, and exemptions Yes State law.
N some limitations within relevant state law and related
statutes No
O State code provides exemptions related to highway
signing and snow and ice control. Yes State law.
P
State code provides statutory immunities. Yes State law.
Q
Yes, Sovereign immunity is waived only for negligent
operation of a motor vehicle and the dangerous
condition of property.
No
52
Appendix 3 –
actual responses
Legal Environment – Actual Responses
Does your
state's Attor-ney
Gen-eral's
office
handle the
litigation or
settlement of
claims
against the
Department
of Transpor-tation
in your
state?
Please briefly explain how or by whom
the legal aspects of claims against your
state are handled.
Does your
state have a
" Public Re-cords
Act"
or " Open
Records
Law?
Please provide the
specific statute or
law:
AZ Yes Attorney General
Public re-cords
and
other mat-ters
in the
custody of
any officer
shall be
open to
inspection
by any per-son
at all
times during
office hours.
Law - Inspection of
public records
B
C
D No
Defense is assigned to a list of attor-neys
pre- approved by the Tort Claims
Board.
Yes
E Yes
F Yes
Until 2007, DOT had its own legal de-fense
team, did not participate in the
State's Risk management fund for tort
claims. Now, the AG's Office litigates;
Risk Mgmt has final say in settlement.
Yes State law.
G
H No
Office of the Chief Counsel
State Highway & Transportation De-partment
Yes State law.
I Yes Department of Justice provides legal
defense for all liability claims. Yes State law.
J
K No Incomplete Answer No
L Yes AG's office in conjunction with Risk
Management Yes State law.
M Yes Yes State law.
53
Appendix 3 –
actual responses
Legal Environment – Actual Responses
Does your
state's Attor-ney
Gen-eral's
office
handle the
litigation or
settlement of
claims
against the
Department
of Transpor-tation
in your
state
Please briefly explain how or by whom
the legal aspects of claims against your
state are handled.
Does
your
state
have a
" Public
Records
Act" or
" Open
Records
Law?
Please provide the
specific statute or
law:
N Yes
Risk Management funds the special
litigation ( torts and w/ c) section within
the Dept. of Law... with inhouse trial
attys we are more able to cost effec-tively
handle liability claims against all
state agencies... see state’s website for
better description and details of Risk
Management program
Yes State law.
O Yes Yes State law.
P No
State agencies are insured through the
Insurance Reserve Fund (" SCIRF").
The SCIRF provides defense and pays
claims. Defense is handled by local
private attorneys who are hired and
paid by the SCIRF.
Yes
Q No Staff attorneys and contracted private
attorneys. Yes Sunshine Law
54
Appendix 3
Page 3
Legal Environment – Relative Rankings
Legal Environment Item
Scale 0- 3 3 being very helpful, 0 being of
no effect.
Contributory Comparative
Does your state's judicial system allow
comparative or contributory negligence de-fenses?
3 2
To what extent does your state permit bifur-cation
of liability and damages in trial? 2
Joint and
Several
Liability
Caps on
Econ.
Damage
Prohibit
Punitive
Damages
Sovereign
Immunity
State- imposed restrictions that are designed
to limit the liability of governmental entities
in your state. - 1 3 3 3
Does your state have a " Government Tort
Claims Act" that outlines the legal process
for making a tort claim or filing a lawsuit
against your state? 3
Does your state's Attorney General's office
handle the litigation or settlement of claims
against the Department of Transportation in
your state? 0
Who handles the legal aspects of claims
against your state? 0
Does your state have a " Public Records
Act" or " Open Records Law? 0
Note: Legal environment factors were listed in the survey conducted by BRS. The BRS risk control
department listed typical risk control methods and rated their effectiveness on a scale of 1 to 3. One factor,
State- imposed restrictions with joint and several liability, was actually deemed harmful, hence it was rated as
a - 1. These ratings were made based on the years of expertise of BRS’s risk control department in this field.
55
Appendix 4 – Cost Sources
Appendix 4
Page 1
Sources of Loss
Q: What are the three biggest sources of loss for your state's Department of Transportation?
AZ Signage Maintenance Design
B
C
D
E - - - - - - - -
F - Maintenance Signage - - - - Other: Vehicle Operation
G
H Design Maintenance Signage - - - - -
I - Maintenance Signage - - - - Other:
Highway and Bridge
Damage
J
K - Maintenance Signage - - - - -
L - Maintenance - - - - - -
M - - - - - - - Other: Contact state DOT for data
N - Maintenance Signage Lighting - - - -
O Design Maintenance - -
Legal
costs - - -
P - Maintenance - - - - - -
Q Design Maintenance Signage - - - - -
56
Appendix 4
Page 2
Property Losses – Top Concerns
Q: Please rank the top three concerns for your state's Department of Transportation regarding property
casualty costs?
Legal
Struc-ture
Legal
Limits
Insurance
Costs
Loss
Control
Claims
Admin.
Excess
Ins. Costs SIR Limits of
Coverage
State
Laws Other
A
Z na na na na na na na na na na
B na na na na na na na na na na
C na na na na na na na na na na
D na na na na na na na na na na
E na na na na na na na na na na
F na na na na na na na na na na
G na na na na na na na na na na
H na na na na na na na na na na
I 3 1 5 7 2 9 6 8 4 Liability
J na na na na na na na na na na
K na na na na na na na na na na
L na na na na na na na na na na
M na na na na na na na na na na
N 2 3 1
O 1 2
P na na na na na na na na na na
Q 3 2 1
na = no answer
57
Appendix 5 - Exposures
Appendix 5
Page 1
Unadjusted Exposure Measures
State Identi-fier
Pop/ Square
Mile
Vehicle
Miles per
Capita
Personal
Income
per Capita
Rural
Lane
Miles
Urban
Lane
Miles
( A) ( B) ( C) ( D) ( E)
AZ 52 10,069 28,442 77,080 51,491
B 229 8,471 34,351 204,299 86,220
C 196 8,021 32,160 4,091 5,320
D 62 14,398 24,650 130,578 23,310
E 145 11,876 30,005 141,812 48,946
F 43 11,298 30,566 40,336 6,316
G 65 11,058 35,861 234,665 36,579
H 53 11,505 25,725 177,652 23,592
I 116 9,510 32,157 187,243 48,234
J 263 8,015 35,019 175,726 203,631
K 178 10,284 31,954 174,789 80,565
L 5 17,796 34,306 51,951 5,574
M 52 13,249 28,089 199,467 34,349
N 1 7,664 34,454 24,217 4,906
O 53 10,433 30,560 209,410 25,316
P 141 11,621 27,172 102,511 36,818
Q 85 11,705 30,608 217,006 42,591
Notes: All data is from Appendix 5, Page 3.
58
Appendix 5
Page 2
Adjusted Exposure Measures
ST
Pop/
Square
Mile
Vehicle
Miles
per
Capita
Personal
Income
per
Capita
Rural
Lane
Miles
Urban
Lane
Miles
WC
Composite
Exposure
GL
Composite
Exposure
Auto
Composite
Exposure
Other
Composite
Exposure
( A) ( B) ( C) ( D) ( E) ( F) ( G) ( H) ( I)
AZ 15,856 28,334 28,442 17,266 35,477 25,287 24,854 26,669 25,699
B 69,396 23,839 34,351 45,763 59,406 45,253 44,131 42,722 44,273
C 59,375 22,572 32,160 916 3,665 27,204 30,593 18,153 21,897
D 18,951 40,516 24,650 29,249 16,061 25,292 26,793 28,406 26,964
E 43,893 33,418 30,005 31,766 33,724 34,117 34,878 33,870 34,037
F 12,986 31,793 30,566 9,035 4,352 20,072 21,703 18,378 18,687
G 19,611 31,117 35,861 52,565 25,203 32,806 31,217 33,252 33,447
H 16,193 32,375 25,725 39,794 16,255 25,506 25,464 27,546 26,878
I 35,255 26,761 32,157 41,942 33,233 33,596 32,669 32,804 33,445
J 79,912 22,555 35,019 39,363 140,302 58,572 54,089 62,335 60,562
K 54,041 28,939 31,954 39,153 55,509 40,532 39,797 40,436 40,664
L 1,590 50,077 34,306 11,637 3,840 22,158 24,756 24,404 22,714
M 15,681 37,281 28,089 44,681 23,666 28,812 28,502 32,278 30,960
N 349 21,565 34,454 5,425 3,380 16,684 16,695 12,958 14,095
O 16,166 29,359 30,560 46,908 17,443 27,986 26,984 28,691 28,747
P 42,864 32,700 27,172 22,962 25,368 30,238 31,876 29,383 29,705
Q 25,871 32,937 30,608 48,609 29,345 32,521 31,680 34,234 33,827
Weights:
WC 20.0% 15.0% 35.0% 15.0% 15.0%
GL 25.0% 25.0% 30.0% 10.0% 10.0%
Auto 10.0% 35.0% 10.0% 20.0% 25.0%
Other 15.0% 25.0% 20.0% 20.0% 20.0%
Notes: All exposures from Page 1 have been adjusted to a common level.
59
Appendix 5
Page 3
OCTOBER
2006
( Received
Date)
GENERAL MEASURES
STATE 2004 NET LAND AREA ( SQ. MILES) 2004 POPULATION
TOTAL/
RURAL URBAN PERCENT RURAL URBAN PERCENT SQUARE
URBAN ( 1,000) ( 1,000) URBAN MILE
Alabama 47,545 3,199 6.3 2,105 2,485 54.1 90
Alaska 570,954 997 0.2 250 407 61.9 1
Arizona 111,063 2,572 2.3 1,052 4,887 82.3 52
Arkansas 51,260 808 1.6 1,449 1,330 47.9 53
California 144,632 11,327 7.3 4,800 36,279 88.3 263
Colorado 101,252 2,466 2.4 1,088 3,577 76.7 45
Connecticut 2,773 2,072 42.8 385 3,118 89.0 723
Delaware 1,625 329 16.8 191 653 77.4 432
District Of
Columbia - 61 100.0 - 551 100.0 9,033
Florida 44,389 9,538 17.7 2,102 15,816 88.3 332
Georgia 48,241 9,665 16.7 2,265 6,810 75.0 157
Hawaii 5,661 762 11.9 320 937 74.5 196
Idaho 82,081 666 0.8 624 768 55.2 17
Illinois 50,111 5,473 9.8 2,829 9,885 77.7 229
Indiana 33,774 2,093 5.8 2,096 3,449 62.2 155
Iowa 54,718 1,151 2.1 1,185 1,792 60.2 53
Kansas 80,570 1,245 1.5 805 1,758 68.6 31
Kentucky 38,248 1,480 3.7 1,867 2,305 55.2 105
Louisiana 40,121 3,441 7.9 1,331 3,137 70.2 103
Maine 30,276 586 1.9 776 545 41.3 43
Maryland 7,972 1,802 18.4 763 4,837 86.4 573
Massachusetts 3,989 3,851 49.1 561 5,838 91.2 816
Michigan 52,294 4,510 7.9 2,561 7,557 74.7 178
Minnesota 77,024 2,586 3.2 1,576 3,570 69.4 65
Mississippi 44,899 2,008 4.3 1,644 1,286 43.9 62
Missouri 66,631 2,255 3.3 2,122 3,752 63.9 85
Montana 145,232 320 0.2 493 443 47.3 6
Nebraska 76,354 518 0.7 672 1,107 62.2 23
60
Appendix 5
Page 4
OCTOBER
2006
( Received
Date)
GENERAL MEASURES – Continued
STATE 2004 NET LAND AREA ( SQ. MILES) 2004 POPULATION
TOTAL/
RURAL URBAN PERCENT RURAL URBAN PERCENT SQUARE
URBAN ( 1,000) ( 1,000) URBAN MILE
Nevada 108,599 1,227 1.1 992 1,746 63.8 25
New
Hampshire 8,250 718 8.0 659 656 49.9 147
New Jersey 3,616 3,801 51.2 456 8,262 94.8 1,175
New Mexico 120,622 734 0.6 767 1,205 61.1 16
New York
10/ 41,751 5,463 11.6 3,333 15,825 82.6 406
North Caro-lina
43,232 5,479 11.2 2,847 5,835 67.2 178
North Dakota 68,709 267 0.4 299 335 52.8 9
Ohio 35,377 5,571 13.6 2,315 9,149 79.8 280
Oklahoma 56,567 12,100 17.6 1,358 2,191 61.7 52
Oregon 94,779 1,218 1.3 976 2,665 73.2 38
Pennsylvania 39,370 5,447 12.2 2,822 9,608 77.3 277
Rhode Island 438 607 58.1 56 1,020 94.8 1,030
South Caro-lina
27,245 2,865 9.5 1,612 2,642 62.1 141
South Da-kota
75,635 250 0.3 412 358 46.5 10
Tennessee 38,141 3,076 7.5 1,587 4,376 73.4 145
Texas 253,339 8,458 3.2 6,323 13,810 68.6 77
Utah 80,234 1,910 2.3 308 2,222 87.8 31
Vermont 9,015 235 2.5 387 236 37.9 67
Virginia 35,451 4,143 10.5 2,072 5,483 72.6 191
Washington 64,158 2,386 3.6 1,283 4,973 79.5 94
West Virginia 23,496 582 2.4 975 833 46.1 75
Wisconsin 52,609 1,701 3.1 2,395 3,916 62.1 116
Wyoming 96,570 530 0.5 206 303 59.5 5
U. S. Total 3,390,892 146,549 4.1 72,352 226,528 75.8 84
Puerto Rico 1,453 1,972 57.6 183 3,731 95.3 1,143
Grand Total 3,392,345 148,521 4.2 72,535 230,259 76.0 86
61
Appendix 6 – Cash Versus Accrual
Appendix 6
Ratio of Ultimate Cost Divided by Cash Flow
Coverage 2006/ 07 2007/ 08 2008/ 09
General
Liability 1.23 1.12 1.13
Workers'
Compensation 1.07 1.08 1.07
Auto Liability 1.15 1.1 1.04
Auto Physical
Damage 1.03 1.04 1.04
Other 0.85 0.79 0.78
Total 1.1 1.08 1.09
From the BRS Risk Study dated August 9, 2007
62
Appendix 7 – Responses for all Lines
Appendix 7
Page 1
Workers' Compensation Responses
Definitions: For in- house claims administration, the claims are tracked, paid and reserved by DOT personnel. A TPA is a
Third Party Claims Administrator who is contracted to track, pay and reserve claims by DOT but is not a direct employee.
Workers'
Comp
Cover-age
Guaran-teed
Cost
or Self-
Insured
Premium
Cost
Program
Year SIR Limit Cost Year
Self -
Insured
Adm. of
Claims
Per-formed
In
House or
Third
Party
( TPA)
WC
Program
Work on
Cash
Flow or
Accrual
Basis
A
Z
Self-insured
unlim-ited
unlimited 3,322,736 2006- 07 In- house
Cash
flow
B
Self-insured
n/ a n/ a 28,500,000 FY 2008 In- house
Cash
flow
C
Self-insured
D
Self-insured
1,000,000 7,300,000 2007 TPA
Cash
flow
E
Self-insured
33,000,000 08- 09 TPA
F
Self-insured
G
Self-insured
1.65
MIL In- house
Cash
flow
H
Self-insured
TPA
Cash
flow
I
Self-insured
In- house
Cash
flow
J
Self-insured
K
Guaran-teed
cost
Incomplete
Answer
Incomplete
Answer
L
Self-insured
un-known
unknown unknown unknown In- house
M
no re-sponse
N
Self-insured
unlim-ited
6,500,000 2009 TPA
Cash
flow
O
Self-insured
NA
150,000/
agency 2,000,000 each year TPA Accrual
P
Guaran-teed
cost 11,167,180 2007
Q
Self-insured
first
dollar none 3,500,000 2007 In- house Accrual
63
Appendix 7
Page 2
Workers' Compensation Responses
What Key Elements Are Included In Cost?
What Is
Included
In Cost
- Other?
Other
Response
Is WC
Coverage Part
Of State Pro-gram
Or Stand
Alone?
A
Z Losses
Legal
costs
Loss
control
Claims
adm.
Excess
insurance State program
B Losses - - - - - Stand- alone
C - - - - - -
D Losses
Legal
costs
Loss
control
Claims
adm.
Excess
insurance - State program
E Losses
Legal
costs -
Claims
adm. - - State program
F - - - - - -
G Losses
Legal
costs
Loss
control
Claims
adm.
Excess
insurance - State program
H Losses
Legal
costs
Loss
control
Claims
adm. - - State program
I Losses
Legal
costs -
Claims
adm. - - State program
J
K
L - - - - - - State program
M
N Losses
Legal
costs
Loss
control
Claims
adm. - - State program
O Losses
Legal
costs -
Claims
adm. - Other
medical
expenses State program
P
Q Losses
Legal
costs - - - - Stand- alone
64
Appendix 7
Page 3
General Liability Responses
Is General
Liability
Program
Guaranteed
Cost or
Self-
Insured?
Premium
Cost
Pro- gram
Year SIR Limit Cost Year
Self - Insured
Administration
of Claims
Performed
In House or
Third Party?
GL
Program
Work on
Cash
Flow or
Accrual
Basis?
AZ Self-insured
7,000,000
Purchased
125 Mil
unlimited
over that
amount 10,973,392 2006- 07 In- house
Cash
flow
B
Self-insured
n/ a none 500,000 2006 In- house
Cash
flow
C
D
Self-insured
$ 500,000
Cap 1,100,000 2007 In- house
Cash
flow
E
Self-insured
300k/ 1m 3,888,300 08- 09 In- house
F
Self-insured
1,000 400,000 107,087 FY2008 In- house
Cash
flow
G
Self-insured
1,000,000 1,000,000 In- house Accrual
H
Self-insured
In- house
Cash
flow
I
Self-insured
4,000,000 50 million 753,500
2006 for
excess In- house
Cash
flow
J
K
Guaranteed
cost
Incomplete
Answer
Incomplete
Answer
L
Self-insured
$ 1,000,000 $ 5,000,000 In- house
Cash
flow
M
Self-insured
$ 175,000/
claimant/
claim 203,977 7/ 1/ 07- 08 In- house Accrual
N
Self-insured
unlimited 1,500,000
2009
projection In- house
Cash
flow
O
Self-insured
In- house
Cash
flow
P
Guaranteed
cost 6,751,536 2007
Q
Self-insured
first dollar none 5,000,000 2007 In- house Accrual
Definitions: For in- house claims administration, the claims are tracked, paid and reserved by DOT personnel. A TPA is a
Third Party Claims Administrator who is contracted to track, pay and reserve claims by DOT but is not a direct employee.
65
Appendix 7
Page 4
General Liability Responses
What Key Elements Are Included In Cost?
What Is
Included
In Cost
- Other?
Other
Response
Is GL
Coverage Part
Of State Pro-gram
Or Stand
Alone?
A
Z Losses
Legal
costs
Loss
control
Claims
adm.
Excess
insurance State program
B Losses - - - - - Stand- alone
C
D Losses
Legal
costs
Loss
control
Claims
adm. - - State program
E Losses
Legal
costs -
Claims
adm. - - State program
F Losses
Legal
costs -
Claims
adm. - - State program
G Losses
Legal
costs -
Claims
adm.
Excess
insurance Other
Admin
costs/ Dividends Stand- alone
H Losses
Legal
costs
Loss
control
Claims
adm. - - State program
I Losses
Legal
costs -
Claims
adm.
Excess
insurance - State program
J
K
L Losses
Legal
costs
Loss
control
Claims
adm.
- - State program
M Losses - -
Claims
adm.
- - State program
N Losses
Legal
costs -
Claims
adm.
- - State program
O Losses
Legal
costs - - - - State program
P
Q Losses
Legal
costs - - - - Stand- alone
66
Appendix 7
Page 5
Auto Liability Responses
Is Auto
Liability
Program
Guaranteed
Cost or Self-
Insured?
Premium
Cost
Program
Year SIR Limit Cost Year
Self
- Insured
Admini
tration of
Claims
Performed
In House
or
Third Party?
AL
Program
Work on
Cash
Flow or
Accrual
Basis?
A
Z
Self- insured 7,000,000
Purchased
125 Mil
unlimited
over that
amount 1,417,819 2006- 07 In- house
Cash
flow
B Self- insured n/ a none 500,000 2006 In- house
Cash
flow
C
D Self- insured $ 500,000 2,300,000 2007 In- house
Cash
flow
E Self- insured 2,472,400 08- 09 In- house
F Self- insured 0 400,000 254,185 FY2008 In- house
Cash
flow
G Self- insured 1,000,000
300,000
/ 1,000,000
Third party
claims admin-istrator
Accrual
H
I Self- insured 2500 In- house
Cash
flow
J
K
Guaranteed
cost
Incomplete
Answer
Incomplete
Answer
L Self- insured
same as
GL In- house
Cash
flow
M Self- insured
$ 175,000
/ claimant
/ claim 236,437 7/ 1/ 07- 08 In- house Accrual
N Self- insured unlimited 750,000
2009 pro-jection
In- house
Cash
flow
O Self- insured In- house
Cash
flow
P
Guaranteed
cost 1,005,120 2007
Q Self- insured first dollar none 1,600,000 2007 In- house Accrual
Definitions: For in- house claims administration, the claims are tracked, paid and reserved by DOT personnel. A TPA is a
Third Party Claims Administrator who is contracted to track, pay and reserve claims by DOT but is not a direct employee.
67
Appendix 7
Page 6
Auto Liability Responses
What Key Elements Are Included In Cost?
What Is
Included
In Cost
- Other?
Other
Response
Is Auto Liability
Coverage Part
Of State Pro-gram
Or Stand
Alone?
A
Z Losses
Legal
costs
Loss
control
Claims
adm.
Excess
insurance State program
B Losses - - - - - Stand- alone
C
D Losses
Legal
costs
Loss
control
Claims
adm. - - State program
E Losses
Legal
costs -
Claims
adm. - - State program
F Losses
Legal
costs -
Claims
adm. - - State program
G Losses
Legal
costs -
Claims
adm.
Excess
insurance Other
Admin &
Dividends State program
H
I Losses
Legal
costs -
Claims
adm. - - State program
J
K
L Losses
Legal
costs
Loss
control
Claims
adm. - - State program
M Losses - -
Claims
adm. - - State program
N Losses
Legal
costs -
Claims
adm. - - State program
O Losses
Legal
costs - - - - State program
P
Q Losses
Legal
costs - - - - Stand- alone
68
Appendix 7
Page 7
Auto Physical Liability Responses
Is APD
Liability
Program
Guaranteed
Cost or
Self-
Insured?
Premium
Cost
Pro- gram
Year SIR Limit Cost Year
Self - Insured
Administration
of Claims
Performed In
House or
Third Party?
APD
Program
Work on
Cash
Flow or
Accrual
Basis?
A
Z
Self-insured
Un-limited
897,090 2006- 07 In- house Cash flow
B
Self-insured
0 0
not
available In- house Cash flow
C
D
E 0
F
Self-insured
100%
G
Self-insured
In- house Accrual
H
I
Self-insured
500 In- house Cash flow
J
K
Guaranteed
cost
Incomplete
Answer
Incomplete
Answer
L
Self-insured
same
as GL In- house Cash flow
M
N
Self-insured
O
Self-insured
In- house Cash flow
P
Q
Definitions: For in- house claims administration, the claims are tracked, paid and reserved by DOT personnel. A TPA is a
Third Party Claims Administrator who is contracted to track, pay and reserve claims by DOT but is not a direct employee.
69
Appendix 7
Page 8
Auto Physical Responses
What Key Elements Are Included In Cost?
What Is
Included
In Cost
- Other?
Other
Response
Is Auto Physical
Coverage Part
Of State Pro-gram
Or Stand
Alone?
A
Z Losses
Loss
control
Claims
adm. State program
B Losses - - - - - Stand- alone
C
D
E
F - - - - - -
G Losses
Legal
costs -
Claims
adm. - Other
Administration
costs State program
H
I Losses
Legal
costs -
Claims
adm. - - State program
J
K
L Losses
Legal
costs
Loss
control
Claims
adm. - - State program
M
N - - - - - -
O Losses
Legal
costs - - - - State program
P
Q
70
Appendix 7
Page 9
Employment Practices Liability Responses
Is EPL Liability
Program
Guaranteed
Cost or Self-
Insured?
Premium
Cost
Program
Year SIR Limit Cost Year
Self - Insured
Administration
of Claims
Performed In
House or
Third Party?
EPL
Program
Work on
Cash
Flow or
Accrual
Basis?
A
Z
Self- insured 5 MIL
Pur-chased
125 Mil
unlimited
over that
amount In- house Cash flow
B Self- insured In- house Cash flow
C
D Self- insured
$ 500,000
Cap $ 125,000 2007 In- house Cash flow
E
F Self- insured 1000 400,000
Incl w/ GL
( Tort)
FY
2008 In- house Cash flow
G Self- insured In- house
H
I Self- insured In- house Cash flow
J
K
Guaranteed
cost
Incomplete
Answer
Incomplete
Answer
L Self- insured
same
as GL In- house Cash flow
M
See Other
Section
N Self- insured
O Self- insured In- house Cash flow
P
Q Self- insured N/ A In- house Cash flow
Definitions: For in- house claims administration, the claims are tracked, paid and reserved by DOT personnel. A TPA is a
Third Party Claims Administrator who is contracted to track, pay and reserve claims by DOT but is not a direct employee.
71
Appendix 7
Page 10
Employment Practices Liability Responses
What Key Elements Are Included In Cost?
What Is
Included
In Cost
- Other?
Other
Response
Is Environ-mental
Coverage Part
Of State Pro-gram
Or Stand
Alone?
A
Z Losses
Legal
costs
Loss
control
Claims
adm.
Excess
insurance State program
B Losses - - - - - Stand- alone
C
D Losses
Legal
costs
Loss
control
Claims
adm. - - State program
E
F Losses
Legal
costs -
Claims
adm. - - State program
G - - - - - - Stand- alone
H
I Losses
Legal
costs -
Claims
adm. - - State program
J
K
L Losses
Legal
costs
Loss
control
Claims
adm.
Excess
insurance - State program
M
N - - - - - -
O Losses
Legal
costs - - - - State program
P
Q Losses - - - - - Stand- alone
72
Appendix 7
Page 11
Environmental Liability Responses
Is Environ-mental
Liabil-ity
Program
Guaranteed
Cost or Self-
Insured?
Premium
Cost
Pro- gram
Year SIR Limit Cost Year
Self -
Insured
Admini-stration
of
Claims:
Performed
In House
or Third
Party?
Environmental
Liability
Program
Work on
Cash Flow or
Accrual
Basis?
A
Z Self- insured unlimited unlimited 1,049,899 2006- 07 In- house Cash flow
B Self- insured In- house Cash flow
C
D Self- insured
$ 500,000
Cap - 0- 2007 In- house Cash flow
E Self- insured 5m TPA
F Self- insured 1000 400,000
Incl w/ GL
( Tort) FY2008 In- house Cash flow
G
Guaranteed
cost
H
I Self- insured
2.5 million
/ 2.7
mill/ aggregate
300
million
1.4
million
2006 for
excess TPA Cash flow
J
K
Guaranteed
cost
Incomplete
Answer
Incomplete
Answer
L Self- insured same as GL In- house Cash flow
M Self- insured $ 25,000
$ 1,000
MIL
$ 56,404
( ODOT
only)
8/ 1/ 07-
08 TPA Accrual
N Self- insured
O NA to Iowa
P
Q Self- insured first dollar none 0 2007 In- house Accrual
Definitions: For in- house claims administration, the claims are tracked, paid and reserved by DOT personnel. A TPA is a
Third Party Claims Administrator who is contracted to track, pay and reserve claims by DOT but is not a direct employee.
73
Appendix 7
Page 12
Environmental Liability Responses
What Key Elements Are Included In Cost?
What Is
Included
In Cost
- Other?
Other
Response
Is Environ-mental
Coverage
Part Of State
Program Or
Stand Alone?
A
Z Losses
Legal
costs
Loss
control
Claims
adm. State program
B Losses - - - - - Stand- alone
C
D Losses
Legal
costs
Loss
control
Claims
adm. - - State program
E Losses - - - - - State program
F Losses
Legal
costs -
Claims
adm. - - State program
G
H
I Losses
Legal
costs -
Claims
adm.
Excess
insurance - State program
J
K
L Losses
Legal
costs
Loss
control
Claims
adm. - - State program
M Losses - -
Claims
adm.
Excess
insurance - State program
N - - - - - -
O
P
Q Losses
Legal
costs - - - - Stand- alone
74
Appendix 7
Page 13
Other Liability Responses
Does
Your
Agency
Maintain
Any Other
Coverage
Not Pre-viously
Listed?
Other
Coverages
Is the Other
Coverage
Program
Guaranteed
Cost or Self-insured?
Premium Year
Self-
Insured
Retention
Limit Cost Year
A
Z
Yes
Aircraft,
Medical
Malpractice,
International
Self- insured
and guaran-teed
cost $ 0 to 5M
AirC 200M
medmal
25M 125M
Intl 180,760 2006- 07
B No
C
D No
E Yes
Fine Arts,
Crime, BR,
Boiler
Guaranteed
cost
F No
G
Guaranteed
cost
H
I No
J
K Incomplete
Answer Self- insured Incomplete
Answer
Incomplete
Answer Incomplete
Answer
Incomplete
Answer
L No
M Yes
Public Offi-cials
+ EPL Self- insured $ 150,000
$ 5M
ea/$ 35M
aggreg.
$ 166,265
( ODOT
only) 10/ 30/ 07- 08
N Yes
international
and rural
airport Self- insured 1,000,000 50,000,000 850,000
2009 projec-tion
O
P
Q Yes
Major build-ing
property
insurance
Guaranteed
cost 186,000 2007
75
Appendix 7
Page 14
Other Liability Responses
Self -
Insured
Admin-istrtion
Of Claims
Performed
In
House Or
Third
Party?
Other
Pro-gram
Work
On
Cash
Flow
Or
Accrual
Basis?
What Key Elements Are Included In Cost?
What Is
In-cluded
In Cost
- Other?
Other
Re-sponse
Is Other
Coverage
Part Of
State Pro-gram
Or
Stand
Alone?
A
Z Varies
by prog.
Varies
by
prog. Losses
Legal
costs
Loss
control
Claims
adm.
Excess
ins.
Varies by
Proram
B
C
D
E
F
G
H
I
J
K TPA Accrual - - - - - -
Stand-alone
L
M In- house Accrual Losses - -
Claims
adm.
Excess
ins. -
State
Program
N In- house
Cash
flow Losses
Legal
costs -
Claims
adm.
Excess
ins. -
State
Program
O
P
Q
76
Appendix 8 - Original Survey
ARIZONA DEPARTMENT OF TRANSPORTATION
Cost of Risk Survey
The Arizona Department of Transportation ( AzDOT) has contracted with Bickmore Risk
Services ( BRS) to evaluate the agency’s cost of risk. As part of this effort, we are inter-ested
in learning how other transportation agencies assess their cost of risk. In further-ance
of this objective we are asking you to complete the survey below. This information
will be used to assist AzDOT in improving its current practices.
Person completing this survey:
_____________________________________________________________________
Jurisdiction:
_____________________________________________________________________
Department and Section:
_____________________________________________________________________
Telephone: _____________________ Email: ______________________________________
You may complete the survey electronically by clicking on the following link :
http:// www. bickmoreriskservices. com/ Perseus/ se. ashx? s= 527E842D4A7CF36A
Alternatively, you may complete the attached Microsoft Word version of the survey. You
may return the paper survey via fax; via email; or U. S. Mail to:
Bickmore Risk Services
1831 K Street
Sacramento, CA 95811
If you have any questions or concerns about this letter or survey, please contact Sandra
Spiess.
1. For this study we are using exposure information from the U. S. Department of
Transportation Federal Highway Administration website ( http:// www. fhwa. dot. gov).
If you are aware of any incorrect information for your state housed on that website,
please indicate the correct information below:
_________________________________________________________________
2. Program Structure Information ( by coverage):
A. 1 Workers’ Compensation
Guaranteed Cost Premium__________ Year ____________
Self- Insured SIR ______ Limit ______ Cost______ Year_______
77
A. 2 If self- insured, is the administration of your state’s WC claims performed
in- house or by a third party claims administrator?
Performed in- house Performed by a third party claims administrator
A. 3 Does your state’s WC Program work on a cash flow or accrual basis?
Cash Flow Accrual
. A. 4 What is included in your cost? Please check all that apply:
Losses Legal Costs Loss Control Claims Admin Excess In-surance
Other _________
A. 5 Is your state’s WC coverage part of state program or stand- alone?
State Program Stand Alone
B. 1 General Liability
Guaranteed Cost Premium_________ Year __________
Self- Insured SIR ______ Limit _____ Cost____ Year______
B. 2 If self- insured, is the administration of your state’s General Liability claims
performed in- house or by a third party claims administrator?
Performed in- house Performed by a third party claims administrator
B. 3 Does your state’s General Liability Program work on a cash flow or accrual
basis?
Cash Flow Accrual
. B. 4 What is included in your cost? Please check all that apply:
Losses Legal Costs Loss Control Claims Admin Excess In-surance
Other _________
B. 5 Is your state’s General Liability coverage part of state program or stand-alone?
State Program Stand Alone
C. 1 Auto Liability
Guaranteed Cost Premium___________ Year __________
Self- Insured SIR _____ Limit______ Cost_____ Year_______
C. 2 If self- insured, is the administration of your state’s Auto Liability claims
performed in- house or by a third party claims administrator?
Performed in- house Performed by a third party claims administrator
C. 3 Does your state’s Auto Liability Program work on a cash flow or accrual
basis?
Cash Flow Accrual
78
. C. 4 What is included in your cost? Please check all that apply:
Losses Legal Costs Loss Control Claims Admin Excess In-surance
Other _________
C. 5 Is your state’s Auto Liability Program part of state program or stand-alone?
State Program Stand Alone
D. 1 Auto Physical Damage ( APD)
Guaranteed Cost Premium____________ Year _________
Self- Insured SIR _____ Limit _____ Cost_____ Year_____
D. 2 If self- insured, is the administration of your state’s APD claims performed
in- house or by a third party claims administrator?
Performed in- house Performed by a third party claims administrator
D. 3 Does your state’s APD Program work on a cash flow or accrual basis?
Cash Flow Accrual
. D. 4 What is included in your cost? Please check all that apply:
Losses Legal Costs Loss Control Claims Admin Excess In-surance
Other _________
D. 5 Is your state’s APD Program part of state program or stand- alone?
State Program Stand Alone
E. 1 Employment Practices Liability ( EPL)
Guaranteed Cost Premium___________ Year __________
Self- Insured SIR _____ Limit ______ Cost______ Year___
E. 2 If self- insured, is the administration of your state’s EPL claims performed
in- house or by a third party claims administrator?
Performed in- house Performed by a third party claims administrator
E. 3 Does your state’s EPL Program work on a cash flow or accrual basis?
Cash Flow Accrual
. E. 4 What is included in your cost? Please check all that apply:
Losses Legal Costs Loss Control Claims Admin Excess In-surance
Other _________
E. 5 Is your state’s EPL Program part of state program or stand- alone?
State Program Stand Alone
F. 1 Environmental Liability & Property
Guaranteed Cost Premium__________ Year __________
Self- Insured SIR _____ Limit _____ Cost_____ Year______
79
F. 2 If self- insured, is the administration of your state’s Environmental Cover-age
Program claims performed in- house or by a third party claims admin-istrator?
Performed in- house Performed by a third party claims administrator
F. 3 Does your state’s Environmental Coverage Program work on a cash flow or
accrual basis?
Cash Flow Accrual
. F. 4 What is included in your cost? Please check all that apply:
Losses Legal Costs Loss Control Claims Admin Excess In-surance
Other _________
F. 5 Is your state’s Environmental Coverage Program part of state program or
stand- alone?
State Program Stand Alone
G. 1 Other Coverage _______________________________
( Please Specify)
Guaranteed Cost Premium___________ Year __________
Self- Insured SIR _____ Limit ______ Cost______ Year______
G. 2 If self- insured, is the administration of claims for this program performed
in- house or by a third party claims administrator?
Performed in- house Performed by a third party claims administrator
G. 3 Does this Program work on a cash flow or accrual basis?
Cash Flow Accrual
. G. 4 What is included in your cost? Please check all that apply:
Losses Legal Costs Loss Control Claims Admin Excess In-surance
Other _________
G. 5 Is this program part of a state program or stand- alone?
State Program Stand Alone
3. Safety and Loss Control
A. Please provide a brief, general description of your safety and loss control
practices.
__________________________________________________________
__________________________________________________________
B. Does your state have any special or particularly effective programs?
Yes No
C. If yes, please briefly describe the program( s):
__________________________________________________________
__________________________________________________________
80
E. Please briefly describe how the program( s) have contributed to a reduc-tion
in the cost of risk for your state:
__________________________________________________________
________________________________________________
4. Legal Environment
A. Does your state employ a comparative or contributory negligence court sys-tem?
____________________________________________________________
____________________________________________________________
B. Have there been any recent changes in the legal handling of claims in your
state? Yes No
C. If yes, please briefly explain the change( s)
____________________________________________________________
____________________________________________________________
D. Does your state limit legal fees in any way? Yes No
E. If yes, please indicate the limits and cite the specific statute or law.
____________________________________________________________
____________________________________________________________
F. Do your state laws permit bifurcation of liability and damages in trial?
Yes No
G. If so, to what extent is bifurcation permitted?
____________________________________________________________
____________________________________________________________
I. Does your state impose caps on recovery to help protect governmental en-tities
in your state?
Yes No
J. If so, please briefly describe the caps on recovery in place
____________________________________________________________
____________________________________________________________
K. Does your state impose restrictions in any way to help restrict the extent of
liability to your state? ( legal, political, statutory, or immunities)
Yes No
L. If yes, please provide a brief explanation.
____________________________________________________________
____________________________________________________________
81
M. Does your state have a ‘ government tort claims act” that outlines the legal
process for making a tort claim or filing for a lawsuit against your state?
Yes No
N. If yes, please provide the specific statutory section or law.
____________________________________________________________
____________________________________________________________
O. If so, please briefly describe the restrictions in place
____________________________________________________________
____________________________________________________________
P. Does the attorney general’s office handle the litigation or settlement of
claims against the DOT in your state? Yes No
Q. If No, please explain who handles the legal aspects of claims for your
state?
____________________________________________________________
____________________________________________________________
5. Public Records
A. Does your state have an “ open records law” or public records act” in place?
Yes No
B. If yes, what is that law?
____________________________________________________________
____________________________________________________________
C. Is there a category( s) of information that is restricted? Yes No
D. If yes, what category( s) is restricted?
____________________________________________________________
____________________________________________________________
6. General Information
A. What are the three biggest sources of loss for your state’s DOT?
Design Maintenance Signage Lighting
Legal Costs Terrorism Natural Catastrophe Other ________
B. Please rank the top three concerns for your state’s DOT regarding property
casualty costs:
_____ Legal Structure _____ Legal Limits ______ Insurance Costs
_____ Loss Control _____ Claims Administration _____ Excess Insurance
Costs _____ Self- Insured Retention _____ Limits of Coverage
_____ State Laws _____ Other _____________
82
C. Would you be interested in joining a Department of Transportation risk
management association if one was formed? Yes No
7. Contact Information
A. 1 Name of person completing survey _________________________
A. 2 Section of the survey completed ___________________________
A. 3 Phone Number ________________________________________
A. 4 E- mail address _________________________________________
B. 1 Name of person completing survey _________________________
B. 2 Section of the survey completed ___________________________
B. 3 Phone Number ________________________________________
B. 4 E- mail address _________________________________________
C. 1 Name of person completing survey _________________________
C. 2 Section of the survey completed ___________________________
C. 3 Phone Number ________________________________________
C. 4 E- mail address _________________________________________
D. 1 Name of person completing survey _________________________
D. 2 Section of the survey completed ___________________________
D. 3 Phone Number ________________________________________
D. 4 E- mail address ________________________________________
E. 1 Person to contact regarding questions on this survey __________
E. 2 Phone Number ________________________________________
E. 3 E- mail address ________________________________________
If you would like a copy of the final report for this project, please provide a name and
e- mail or postal address for the person who should receive the report.
THANK YOU FOR YOUR ASSISTANCE!
John Semmens
Project Manager
Arizona Department of Transportation
Arizona Transportation Research Center
206 S. 17 Ave., MD 075R
Phoenix, AZ 85007
83
Appendix 9 AGRiP
Appendix 9
Page 1
2008 STATE TORT CAP AND GOVERNMENTAL IMMUNITY SURVEY – AGRiP4
State As Of Tort Cap Per
Claimant
Tort Cap
Per Occur-rence
Gov Immunity
( No - Yes)
If Yes,
Excep-tions
to
Immunity
Liability Standard,
i. e., Comparative
Negligence, Joint
& Several Liability,
Etc.
Pro-posed
Legisla-tion
Additional
Comments
AL 4/ 25/ 08 100,000 300,000 Yes
Joint and Several
Liability No
AK 2/ 19/ 08 400,000 none No response No See notes
AZ 2/ 26/ 08 0 0 Yes Comparative Neg.
AR 0 0
CA 6/ 9/ 08 0 0 See Notes See notes
CO 2/ 19/ 08 150,000 600,000 Yes See Notes n/ a No See notes
CT 0 0
DE 300,000
FL 2/ 27/ 08 100,000 200,000
GA 2/ 15/ 08 n/ a n/ a Yes See Notes Comparative Neg.
See
Notes See notes
ID 2/ 14/ 08 n/ a 500,000
Lim-ited
Comparative Neg.
IL 2/ 28/ 08 0 0 Yes See Notes
Joint and Several
and Comparative
See
Notes
IN 3/ 26/ 08
300000 on
or before
12/ 31/ 05;
500,000
between
1/ 1/ 06 and
12/ 31/ 07;
700,000 on
and after
1/ 1/ 08 5,000,000 Yes See Notes Contributory See notes
IA 2/ 14/ 08 unlimited unlimited No Comparative Neg.
KS 2/ 19/ 08 n/ a 500,000 Yes See Notes
Joint and several
and comparative
See
Notes
KY 2/ 19/ 08 200,000 350,000 Yes See Notes Comparative Neg.
See
Notes
LA 2/ 14/ 08 n/ a
$ 500,000
non
economic
damages No See Notes Comparative No See notes
ME 2/ 27/ 08 400,000 Yes See Notes
Joint and several
and Comparative
See
Notes See Notes
MD 2/ 27/ 08 200,000 500,000 no Contributory
see
notes
MA 100,000
MI 2/ 19/ 08 n/ a n/ a Yes See Notes See Notes No
4
4 AGRiP ( Association of Government Risk Pools) 2008 State Tort Cap and Governmental Immunity Survey
84
Appendix 9
Page 2
2008 STATE TORT CAP AND GOVERNMENTAL IMMUNITY SURVEY – AGRiP
State As Of
Tort Cap
Per Claim-ant
Tort Cap
Per Occur-rence
Gov Immunity
( No - Yes)
If Yes,
Excep-tions
to
Immunity
Liability Standard,
i. e., Comparative
Negligence, Joint
& Several Liabil-ity,
Etc.
Proposed
Legislation
Additional
Comments
MN 2/ 14/ 08 400,000 1,200,000 No See Notes See Notes See notes
MN 2/ 14/ 08 400,000 1,200,000 No See Notes See Notes See notes
MS 500,000
MO 4/ 4/ 08 362,849 2,418,992 Yes See Notes
Joint and Several
and comparative No
MT 2/ 19/ 08 750,000 1,500,000 No See Notes
Joint and several
and comparative See Notes See notes
NE 2/ 14/ 08 1,000,000 5,000,000 Yes See Notes See Notes See Notes
NV 2/ 14/ 08 75,000 n/ a No
Comparative neg.
Joint and several See Notes See notes
NH 3/ 26/ 08 275,000 925,000
Lim-ited
See Notes Comparative Neg. No See Notes
NJ 2/ 14/ 08 n/ a n/ a Yes
Defined in
Statue Comparative No
NM 2/ 22/ 08 750,000 1,050,000 Yes See Notes Comparative Neg. No See notes
NY 0 0
NC 2/ 19/ 08 n/ a n/ a Yes See Notes
Comparative neg.
Joint and several See Notes See notes
ND 2/ 20/ 08 250,000 500,000 No Comparative Fault See notes
OH 2/ 14/ 08
$ 250,000
( non-economic
damages) n/ a Yes See Notes Comparative Neg. No See notes
OK 2/ 26/ 08 See Notes 1,000,000 Yes See Notes See Notes No
OR 3/ 4/ 08 100,000 500,000 Yes See notes
Joint and several
and comparative See notes See notes
PA 5/ 8/ 08
500,000
and delay
damages
500,000
and delay
damages Yes
See
Notes- 8
Excep-tions
Modified Com-parative
Fault ( if
over 50% Plaintiff
is barred); Jt. and
Several Liability No See notes
RI 2/ 29/ 08 100,000
Lim-ited
See Notes
" Pure" Compara-tive
negligence
and Joint and
several liability See notes See notes
SC 4/ 3/ 08 300,000 600,000
Lim-ited
There are
40 excep-tions
- too
numerous
to list, see
the link:
http:// www
. scstateho
use. net/ C
ODE/ t15c
078. htm
Comparative neg-ligence
generally -
Joint and Several
applies only to
private de-fendents
No
85
Appendix 9
Page 3
2008 STATE TORT CAP AND GOVERNMENTAL IMMUNITY SURVEY – AGRiP
State As Of
Tort Cap
Per Claim-ant
Tort Cap
Per Occur-rence
Gov Immunity
( No - Yes)
If Yes,
Excep-tions
to
Immunity
Liability Standard,
i. e., Comparative
Negligence, Joint
& Several Liabil-ity,
Etc.
Proposed
Legislation
Additional
Comments
SD 0 0
TN 4/ 14/ 08 300,000 700,000 Yes See Notes Comparative Neg. No
TX 3/ 13/ 08 250,000 500,000 No See notes
TX
Co. 3/ 4/ 08
100,000
In-jury/
100,00
0 PD 300,000 Yes See notes See notes No
UT 3/ 25/ 08
General
Liability
583,900
Property
Damage
limit
233,600 2,000,000 Yes
Questions
regarding
proprietary
functions
Comparative Neg-ligence
no
VT 2/ 14/ 08 n/ a n/ a Yes
proprietary
functions Joint & Several No See notes
VA 2/ 19/ 08 n/ a n/ a Yes See Notes Joint & Several No See notes
WA 2/ 14/ 08 n/ a n/ a No n/ a Joint & Several
WV 2/ 19/ 08 n/ a n/ a Yes Comparative
WI 5/ 6/ 08
GenLiab.
50,000
AutoLiab.
250,000 n/ a Yes
ministerial
or non-discretion-ary
acts Comparative No See notes
WY 3/ 6/ 08 250,000 500,000 Yes See Notes Comparative Neg. No
86
Appendix 9
2008 STATE TORT CAP AND GOVERNMENTAL IMMUNITY SURVEY - AGRiP
AL
AK
AS09.17.010- The $ 400K cap can be pierced by " severe disfigurement" or " severe
permanent physical impairment". In Peters v. City of Barrow, ' disfigurement is
severe if a reasonable person would find that the injury mars the plaintiff's physical
appearance and causes a degree of unattractiveness sufficient to bring negative
attention or embarrassment", thus lowering the bar to a point where the $ 400K
cap is meaningless. However, in no event should non- economic damages exceed
$ 1 million or the person's life expectancy X $ 25K per person.
AZ
12- 820.01. Absolute immunity. A. A public entity shall not be liable for acts and
omissions of its employees constituting either of the following: 1. The exercise of a
judicial or legislative function. 2. The exercise of an administrative function involv-ing
the determination of fundamental governmental policy. B. The determination of
a fundamental governmental policy involves the exercise of discretion and shall
include, but is not limited to: 1. A determination of whether to seek or whether to
provide the resources necessary for any of the following: ( a) The purchase of
equipment. ( b) The construction or maintenance of facilities. ( c) The hiring of per-sonnel.
( d) The provision of governmental services. 2. A determination of whether
and how to spend existing resources, including those allocated for equipment,
facilities and personnel. 3. The licensing and regulation of any profession or occu-pation.
AZ
4. The establishment, implementation and enforcement of minimum safety stan-dards
for light rail transit systems. 12- 820.02. Qualified immunity A. Unless a pub-lic
employee acting within the scope of the public employee's employment in-tended
to cause injury or was grossly negligent, neither a public entity nor a public
employee is liable for: 1. The failure to make an arrest or the failure to retain an
arrested person in custody. 2. An injury caused by an escaping or escaped pris-oner
or a youth committed to the department of juvenile corrections. 3. An injury
resulting from the probation, community supervision or discharge of a prisoner or
a youth committed to the department of juvenile corrections, from the terms and
conditions of the prisoner's or youth's probation or community supervision or from
the revocation of the prisoner's or youth's probation, community supervision or
conditional release under the psychiatric security review board. 4. An injury
caused by a prisoner to any other prisoner or an injury caused by a youth commit-ted
to the department of juvenile corrections to any other committed youth.
AZ
5. The issuance of or failure to revoke or suspend any permit, license, certificate,
approval, order or similar authorization for which absolute immunity is not provided
pursuant to section 12- 820.01. 6. The failure to discover violations of any provision
of law when inspections are done of property other than property owned by the
public entity in question. 7. An injury to the driver of a motor vehicle that is attrib-utable
to the violation by the driver of section 28- 693, 28- 1381 or 28- 1382. 8. The
failure to prevent the sale or transfer of a handgun to a person whose receipt or
possession of the handgun is unlawful under any federal law or any law of this
state.
87
Appendix 9
2008 STATE TORT CAP AND GOVERNMENTAL IMMUNITY SURVEY - AGRiP
AR
CA
Scope of Immunities: Public Entities liable only as provided by statute ( Govt. Code
§ 815( a)), e. g.: • for injury approximately caused by ct/ omission of employee of
public entity within scope of employment ( § 815.2.( a)) • for tortious act/ omission of
independent contractor of public entity as if public entity was private person ( §
815.4) No liability if immunity provided by statute, e. g. for: • adopting/ failure to
adopt enactment or failure to enforce any law; • issuance, denial, revocation etc.
of permit license etc. if discretion ( § 818.4); • failure to make certain ( adequate)
inspections ( § 818.6); • certain publications of reports, records etc ( § 818.7); •
misrepresentation by employee of public entity ( § 818.8); • plan/ design of con-struction
of public property under certain conditions ( § 830.6); • failure to provide
traffic signals etc. with certain exceptions ( § 830.8). Liable for Punitive Damages:
No.
CA
( No liability for exemplary and punitive damages - Govt. Code § 818) Statutory
Caps for Damages: General statutory caps, if any, apply. Statute of Limitations:
Claims notice Death/ Personal Injury/ Personal Property to be filed within 6 months
after accrual of claim ( Govt. Code § 911.2) Action to be filed within 6 month after
response to claim or, if no response to claim, within 2 years after accrual of cause
of action ( Govt. code § 945.6)
CO
Exceptions to immunity - The operation of a motor vehicle owned or leased by a
public entity or employee while in the course of employment. However, this waiver
does not apply to emergency vehicles. The operation of any public hospital, cor-rectional
facility, or jail. A dangerous condition of any public building. A dangerous
condition of a public highway, road, or street which physically interferes with the
movement of traffic on the paved portion. Physically interferes with the movement
of traffic” does not include traffic signs, signals, or markings or the lack there of. A
dangerous condition caused by the failure to realign a stop sign or yield sign
which was turned without authorization in a manner which reassigned the right of
way or the failure to repair a traffic control signal on which conflicting directions
are displayed. 7
CO
A dangerous condition caused by an accumulation of snow and ice which physi-cally
interferes with public access on walks leading to a public building open for
public business if the public entity failed to use existing means available to it to
remove or mitigate such accumulation if the public entity had actual notice of the
condition and a reasonable time to act. A dangerous condition of any public hospi-tal,
jail, public facility located in any park or recreation area maintained by a public
entity or a public water, gas, sanitation, electrical, power, or swimming facility. The
operation and maintenance of any public water facility, gas facility, sanitation facil-ity,
electrical facility, power facility, or swimming facility. The waiver of sovereign
immunity created by these exceptions does not apply to those incarcerated in a
correctional facility or jail unless the claimants have not yet been convicted. -
Every few years Plaintiff lawyers lobby to change.
CT
DE
88
Appendix 9
2008 STATE TORT CAP AND GOVERNMENTAL IMMUNITY SURVEY - AGRiP
FL
Attorney fees limited to 25% of award. No punitive damages or interest for the
period before judgment. If employee acted outside the scope of employment or in
bad faith with malicious purpose or in a manner exhibiting wanton and willful dis-regard
of human rights, safety or property, then they would be liable. By an act of
the State Legislature, a wronged or injured party can have a claims bill introduced
in the Fl. Legislature awarding damages above the $ 100,000 per person,
$ 200,000 per occurrence limit. No immunity if suit is filed in federal court. Neither
the state nor any agency or subdivision of the state waives any defense of sover-eign
immunity, or increases the limits of its liability upon entering into a contractual
relationship with another agency or subdivision of the state. Such a contract must
not contain any provision that requires one party to indemnify or insure the other
party for the other party's negligence or to assume any liability for the other party's
negligence.
GA
Joint and Several recently eliminated. - Governmental immunity may not extend to
employees of local government
ID
IL
No immunity for willful and wanton conduct; Immunity will not apply if the entity
had actual or constructive notice of a dangerous condition in sufficient time to take
reasonable steps to remedy condition. Legislation proposed in 2007 to modify
joint and several liability to provide that the apportionment of fault under joint liabil-ity
would only apply to parties remaining in the litigation at the time of the final
judgment of the trier of fact; would not apply to defendants or 3rd party defendants
that have been dismissed for any reason, including settlement. Are not aware at
this time if legislation will be reintroduced in 2008.
IN
Exceptions to governmental immunity: false arrest, false imprisonment; intentional
misrepresentation; loss resulting from design of highways and tollways ( within 20
years of design); certain acts not performed in good faith. See Ind. Code 34- 13- 3-
3.
Additional comments: Recent case against Indiana public school corporation
which involved the definition of " any one" occurrence. A student alleged that an
employee of the school corporation molested her. At the time, Indiana law pro-vided
for a maximum of $ 300,000 for injury to or death of any one person in any
one occurrence. The student alleged that she was assaulted by the employee
one hundred different times thus suffering one hundred different injuries from a
hundred different occurrences. The student asserted her cap for injuries was $ 30
million [$ 300,000 times 100 different occurrences]. No previous case has ever
established multi- occurrences in such a fact- situation. This case settled without a
court opinion on this issue.
IA
KS
Discretionary functions, long list of others, but most have been eroded significantly
over the years. - Comparative negligence, joint & several liability - A bill has been
proposed to require cities to submit to binding arbitration when individuals make a
claim against the city.
89
Appendix 9
2008 STATE TORT CAP AND GOVERNMENTAL IMMUNITY SURVEY - AGRiP
KY
( state agencies & school districts enjoy sovereign immunity) - Immunity does not
apply to " proprietary functions" or to individual govt. employees who usually enjoy
qualified good faith immunity. - There is no tort cap for private defendants. State
agencies are covered via the Board of Claims ( KRS 44.070)
LA
59: 2- 2. Liability of public entity - a. A public entity is liable for injury proximately
caused by an act or omission of a public employee within the scope of his em-ployment
in the same manner and to the same extent as a private individual under
like circumstances. A public entity is not liable for the exercise of discretion when,
in the face of competing demands, it determines whether and how to utilize or
apply existing resources, including those allocated for equipment, facilities and
personnel unless a court concludes that the determination of the public entity was
palpably unreasonable. Nothing in this section shall exonerate a public entity for
negligence arising out of acts or omissions of its employees in carrying out their
ministerial functions. 59: 2- 6. Failure to inspect, or negligent inspection of, prop-erty.
LA
A public entity is not liable for injury caused by its failure to make an inspection, or
by reason of making an inadequate or negligent inspection of any property; pro-vided,
however, that nothing in this section shall exonerate a public entity from
liability for negligence during the course of, but outside the scope of, any inspec-tion
conducted by it, nor shall this section exonerate a public entity from liability
for failure to protect against a dangerous condition as provided in chapter 4. A pub-lic
entity is not liable for failure to provide supervision of public recreational facili-ties;
provided, however, that nothing in this section shall exonerate a public entity
from liability for failure to protect against a dangerous condition as provided in
chapter 4.59: 3- 1. Liability generally
LA
59: 3- 1. Generally. a. Except as otherwise provided by this act, a public em-ployee
is liable for injury caused by his act or omission to the same extent as a
private person. A public employee is not liable for the exercise of discretion when,
in the face of competing demands, he determines whether and how to utilize or
apply existing resources, including those allocated for equipment, facilities and
personnel unless a court concludes that the determination of the public employee
was palpably unreasonable. Nothing in this section shall exonerate a public em-ployee
for negligence arising out of his acts or omissions in carrying out his minis-terial
functions. L. 1972, c. 45, s. 59: 3- 2. 59: 3- 3. Execution or enforcement of
laws - A public employee is not liable if he acts in good faith in the execution or
enforcement of any law. Nothing in this section exonerates a public employee
from liability for false arrest or false imprisonment.
ME
MD
I believe we are one of the few states left that still uses