Going to the head of the class

Scholastic aptitude

We prospect for public entity business primarily through trade association memberships and other relationships. My agency is an associate member of the Texas Association of School Business Officials and the Texas Association of Community Schools, an organization whose members are school districts with only one high school-our bread and butter. At these organizations' meetings and conferences, we network with 1,500 to 2,000 school administrators from throughout the state. In March, we hosted a TACS golf outing, an event that provided us with excellent networking and prospecting opportunities.

Also, the relationships I developed during my high-school principal days have proved invaluable. Many of my former colleagues have become school superintendents, and most have remained here in northeast Texas, creating a nice network of contacts for me. Arranging insurance for schools is quite a political undertaking, but I often manage to sidestep local politics and gain entre? to such accounts because of these contacts. It's not unusual for a school administrator to move from one district to another several times during his or her career, and when that happens, it provides me with entre? to a new district. Even those school administrators who move beyond our normal marketing territory usually allow me to continue writing their coverage because of the relationships we established years ago.

Another source of leads is my agency's sister company, Claims Administrative Services. It provides benefits for more than 400 school districts statewide, and its products complement the property-casualty coverages I write. Each half of our operation enjoys crossover business from the other.

In Texas, schools and other political subdivisions are required by law to solicit bids for their insurance but have some flexibility in doing so. For instance, many forego the traditional bid process, which obligates a public entity to award its business to the lowest bidder, in favor of issuing a "request for proposals" that allows an entity to evaluate the merits of each proposal and render a decision based on a number of factors besides price.

Insureds can request multiyear contracts, and I encourage them to do so. In fact, most of the school districts we write are on three-, four- or five-year programs, which satisfy the bid law and yield other benefits as well. First, an insured can save a lot of time by going through the insurance procurement process every three years rather than annually. Second, multiyear contracts allow time for an agency to develop a relationship with a client and to demonstrate its value (via loss-control and claims-handling proficiency, etc.). Finally, and perhaps most important, most public entities' professional liability coverage is written on claims-made forms with exclusions for "prior and/or pending" claims. Multiyear contracts reduce the risk of coverage gaps (and E&O claims for the agent) and provide continuity, consistency and ultimately better protection for the entity.

Most local school districts are pretty sophisticated when it comes to issuing bid specifications. The Texas Association of School Boards is good at educating districts about applicable laws, and our agency conducts seminars each year to which we invite school district personnel to discuss bid laws and how best to prepare bid specs. As a result, the specs we see tend to be quite detailed and professional. They normally call for appropriate liability limits, contain up-to-date property values and request higher deductibles designed to lower premiums. They also contain all the data I need to prepare complete, accurate submissions.

Filling in the blanks

We place schools with two programs and have an exclusive in our territory with each. One is offered by the Texas Association of Public Schools (served by Trident Insurance Services), and the other is available from the Texas Association of Public Educators. Both use comprehensive applications asking for fleet schedules, a list of drivers with correct motor vehicle records, ID numbers and vehicle identification numbers. The apps also request equipment schedules, accurate and thorough property schedules, information about school board officials, and background data about other professionals employed by the district.

Lately, applications have asked about an insured's relationships with its vendors. No doubt this change came about because vendors have filed suit against school districts who are their customers-and even against those who are not. I've seen a claim arise out of an exclusive arrangement between a school district and a soft drink vendor for providing beverages from a vending machine in a common area of a high school. Apparently, a competing soft-drink vendor asked to install its own soda machines in the school's buildings but was refused. The second vendor sued the school for giving all its business to the first vendor, alleging their deal was not above-board and open to bid. In another case, a sporting goods store provided 90% of the uniforms and sports equipment to the schools in its area. When a new sporting-goods store opened in the same area and couldn't get the schools to buy its merchandise, the vendor filed suit, claiming the first store had a monopoly on such business. One of our clients was named in that lawsuit, and although the school prevailed in the litigation, its carrier spent about $30,000 defending it.

Besides the completed application, a submission includes a narrative I prepare describing the insured's operations. Clearly listing everything a school district or municipality does can prevent nasty surprises in the event of a claim. For example, smaller school districts typically offer only a few sports programs-such as basketball, baseball and track-while a larger district usually also offers football and perhaps tennis and wrestling. When a school district sponsors extracurricular activities or anything out of the ordinary-such as a rodeo or Future Farmers of America event-we describe that, too. If someone is injured while competing in a barrel race or herding livestock into a pen, I don't want an angry underwriter demanding to know why I didn't mention that risk.

When responding to an RFP, we usually have at least 60 days to prepare our presentation. We get a quote at least 10 days prior to the due date so we have time to review it before meeting with our contact-normally the business manager or superintendent-a few days before the school board meeting. When my proposal is one of those being considered at a school board meeting, I always attend. The proposals presented might not align exactly with the bid specifications, making it difficult for the board to compare apples to apples. For example, the specs might ask for a $2,500 property deductible, so some proposals likely will include that amount, but others might offer a $5,000 deductible because that's all their programs allow. Most school board members are not insurance experts, so they may have questions about the proposals or need guidance in interpreting the data, particularly if it isn't consistent with bid specs or differs significantly from that presented by other agents. I know from experience that being present to answer questions and explain elements of my proposal can mean the difference between winning or losing a school's business.

Learning the material

Agents writing public entity insurance must understand the nuances associated with each type of insured. For example, the Texas Tort Claims Act defines the legal liability tort limits for public entities. For a public school or county, the limit is $100,000 per person for an auto claim and/or, $300,000 per occurrence for bodily injury and $100,000 per occurrence for property damage. The cap for municipalities is $500,000 per occurrence for bodily injury and/or property damage. Texas school districts enjoy sovereign immunity, so they cannot be held liable for most types of bodily-injury or personal-injury claims. If a child falls out of a swing on a playground during recess, or if a high-school student is struck by lightning during football practice, the school's general liability package may provide reimbursement for medical payments up to $5,000, but the student's parents cannot successfully sue for negligence. On the other hand, if a county or municipality generates revenue from a water or sewage-treatment facility, or by collecting fees for use of a landfill, then tort limits do not apply to such activity, and the entity is not immune from lawsuits.

Property losses are a great concern for the school districts I write. Their property values range from $20 million to $130 million, so the loss potential is significant. A single hail storm can easily cause $1 million to $2 million in building damages. Fortunately, however, most claims are rather small, and the majority involve school buses. At the end of the school day, buses line up outside the buildings, waiting for children to exit. Parents are told to pick up their children in a different area, but inevitably someone gets in line directly behind a bus, where the bus driver can't see the smaller vehicle, and ends up with a dented fender. Serious bus accidents are rare and, again, tort liability limits prevent huge awards.

Counties and municipalities experience fewer property losses than school districts do and far more professional liability claims. Wrongful termination and other employment-practices issues can spawn litigation in any entity. The largest claims I've seen recently, however, were related to police professional liability. Since any county or municipality with a police force is susceptible to claims alleging false arrest, false imprisonment and excessive use of force, I always recommend limits of at least $1 million.

Most counties we insure have an elected sheriff and a large sheriff's department, with each deputy operating a patrol car while on duty. Our smallest county has a population of only 20,000, but maintains about 20 sheriff's vehicles-quite a lot of officers and vehicles on the road for an entity of that size. Increasingly, claims arise from auto accidents involving high-speed pursuits of drug runners or speeding motorists. Another source of frequent claims is the county jail that's also often used by small area municipalities. We've seen an increase in the number of claims filed by female prisoners alleging that male jailers fraternized with them or otherwise abused them. Even an accusation of guards exchanging cigarettes for sexual favors-and such accusations are fairly common-can prove costly for an insured.

Our public entity clients typically choose general liability limits of at least $1 million, and often purchase $2 million or more for professional liability. They rarely buy umbrella policies, and then only because a vendor requires one. Some carriers offer sublimits for non-monetary and punitive damages, while others have eliminated the coverages altogether.

Two exclusions that commonly appear on public entity policies are "insured versus insured" and dam exclusions. The former would deny coverage if, for instance, a commissioner tries to curtail the power of a county sheriff and the sheriff sues the commissioner. It's an important exclusion, so I often negotiate with an underwriter to have it removed. Since most rural Texas counties have a lake formed by a dammed river, I often must address dam exclusions. That usually is accomplished by having the insured complete a separate questionnaire about its dam-providing the year it was built, its height and width, downstream exposures, etc.-and submitting it to the underwriter.

The staff at my agency meets twice a year to review and discuss our program forms so we all know exactly which coverages are offered under each one. If we go to a specialty market outside our programs for such professional liability coverage as school board legal, police professional or public officials, we carefully read those less-familiar forms and make sure we understand them before presenting them to insureds.

Community service

We have found that the keys to effective customer service are a good claims-handling program with a central contact person, knowledgeable staff, consistent follow-up and responsiveness to clients' needs. We provide a toll-free, round-the-clock phone number for claim reporting. Clients who call to file claims or ask questions can talk with a member of our staff with expertise in public entity law. After business hours, such calls are routed to our claims manager, who responds within minutes. We also conduct periodic claims-history reviews with all our insureds either annually or quarterly, whichever they prefer.

Helping clients manage their risks is an important part of our customer-service curriculum. Our programs send loss-control personnel to visit all our new accounts within 60 days after binding coverage to identify potential problem areas, make safety recommendations, offer in-house training, provide videotapes, etc. We also conduct seminars that teach clients how to identify and reduce their exposures, prevent claims and determine the amount of coverage they need. We sometimes also offer safety training and seminars on OSHA guidelines.

Our staff includes a certified claims manager well-versed in professional liability matters, including school-board legal liability, who provides us with data for the seminars. If an insured has a substantial professional liability exposure, we may work with the sheriff, county commissioner or other elected and appointed officials to reduce it. For instance, a county we insure had some problems with its constables, so one of our markets sent an expert on police professional liability to write a set of policies and procedures for the sheriff's office and help implement them. We then coached the officers for several months while they cleaned up their department. Now their claims history is sterling.

Our clients can access their claims histories online, a service they really appreciate. If they have questions about a claim, they can retrieve the related data and read our notes. With the continued firming of the insurance market, offering the lowest price doesn't guarantee that an agent will win a prospect's business. It's more important than ever to demonstrate professionalism, commitment and in-depth knowledge of an insured's operation, whether it's a school district, municipality or other public entity. If you apply some of the basic principles you learned in school-doing your homework, paying attention and respecting others-and take them to the next level, you'll get passing grades from your clients and find yourself promoted to the head of the public entity class.