Board Agenda - March 20, 2007

i. School professional legal liability

Presenter: Danny Modisette

Purpose: A - Request decision - closure required

Time: No time limit

Description:

As a result of an 85% renewal with the incumbent provider of school professional legal liability (SPLL), a competitive sealed proposal was used to find another market for this important coverage. This insurance product protects the district, school board members, employees of PISD, student teachers or volunteers. SPLL coverage pays for damages the district becomes legally obligated to pay for acts, errors, and omissions rendered in the course and scope of employment and includes defense costs.

Consultants with Wachovia Insurance Services and district staff interviewed the two companies who submitted proposals - Independent Insurance Group using Ace American Insurance Company and Merit Insurance Services using United National Insurance Group. By completing a cost/benefit analysis of the district's past exposures, moving the current deductible from $100,00 to $250,000 would likely capture 89.4% of claims. Having a higher retention (deductible) may provide a better opportunity for the premiums to stabilize over time.

Therefore, the collaborative decision between Wachovia and district staff is to recommend Independent Insurance Group. Their proposal protects the district retroactively from 1/1/07 through 3/31/07 (full prior acts coverage), the policy is more inclusive, and the Best rating is A+ XV. The annual premium of $203,212 reflects a 3% increase - rather than an 85% increase - with double coverage ($2,000,000 coverage - current coverage is $1,000,000) and is $70,505 less than the competitor. It is additionally our recommendation to extend coverage through 7/1/08, so that this coverage is offered on the district's fiscal year, rather than the calendar year mandated by the past provider. The 15-month premium is $271,085.

Recommendation:

To approve Independent Insurance Group through Ace American Insurance Company to provide school professional legal liability effective 4/1/07.

Business Impact:

School Professional Legal Liability reduces exposure to the district's assets.

Summary:

Appendix:

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