Risk Management Services (RMS)
POLICY 5
Effective Date: 07/01/2003
Last Modified Date: 07/26/2004
This Policy is issued under the authority of Steve Kenny, Director of Risk Management Services, who reviewed and approved its contents as of April 26, 2005.
Introduction
The University's "cost of risk" is allocated back to each campus department. In this way, departments are more accountable and have a greater financial incentive to avoid losses. Additionally, financial planning and budgeting is easier and more accurate when the true cost of risk is known.
Besides insurance costs, departments bear other costs of operational risk, such as uninsured losses and deductibles.
The Role of Risk Management Services
Risk Management Services (RMS) serves as a clearinghouse for the University's insurance premiums. On behalf of the entire University, RMS deals directly with the insurance broker and carriers to negotiate the best coverages and prices. Once coverage is purchased, RMS pays the insurance carrier directly from its accounts.
This process serves the interest of the University in several ways. Purchasing as a single entity allows economies of scale that create much greater bargaining power. RMS's expertise ensures that the proper insurance coverage is being purchased and that the premiums are paid in a timely fashion with no lapse in coverage. Finally, campus departments are freed from this administrative duty so they can focus on their educational missions.
Although RMS initially pays the premiums, these insurance costs are ultimately allocated back to the campus department(s) that requested the coverage. This internal charge-back program (including any credits that may arise from cancelled coverage) is done electronically through FRS.
Chargeback Specifics
Property Insurance
Buildings and contents are insured against fire; in accordance with State regulations, buildings or contents under the authority of generally funded departments are not charged a premium, but receipt-supported departments do pay for the coverage. All departments also have the option to purchase additional insurance, such as extended coverage or all-risk. The Fund charges a premium for these coverages regardless of the department's funding status.
The Fund's property insurance renews each July 1st and RMS pays the University's entire premium from its clearing account. In August, RMS charges each department its portion of the entire bill, if applicable, according to the funding status guidelines described above. Coverage is in force even when departments have not yet been billed.
Note: See RMS Policy 8, Property Insurance, for more information about buildings & contents insurance, extended coverage, and all-risk insurance.
Automobile Insurance
The University's automobile insurance is part of a master policy issued to "The State of North Carolina." Having one policy for the entire State allows UNC to benefit from economies of scale, thus reducing the premiums charged by our insurance carrier.
By law, liability insurance is required for every University-owned automobile. This coverage is automatically placed once the automobile is purchased and titled and the cost is charged back to the custodial department, if applicable, based on the funding status guidelines described above.
Departments also have the option to purchase collision, comprehensive, and medical payments insurance. Departments that want any of these coverages should request them in writing to RMS and are responsible for these premium charges regardless of funding status.
Our automobile insurance renews each July 1st and RMS pays the University's entire premium from its clearing account based on the number of units in our fleet and the optional coverages requested by departments. In October, RMS charges each department its portion of the entire bill, if applicable, according to the funding status guidelines described above. Coverage is in force even when departments have not yet been billed.
Professional Liability and Medical Malpractice Insurance
Due to policy exclusions in the University's excess employee liability policy, certain campus departments must purchase professional liability or medical malpractice insurance on behalf of their faculty and students. For example, most medical-related practices, as well as non-employees, are excluded under this coverage. Examples of those departments that choose to purchase this additional coverage include the School of Pharmacy, the Dental School, the School of Social Work, and Student Health Services.
Departments choosing to purchase these professional liability coverages are responsible for this insurance premium. Whether this insurance charge is passed on to those covered is at the department's discretion as long as University billing guidelines are followed.
Other Coverages Purchased by RMS
Certain insurance coverages are purchased on behalf of the entire University without any charge being charged back to departments. Instead, these charges are paid from an RMS account. Examples of these coverages include the following:
- Boiler & Machinery Insurance—exception: Cogeneration Facility
- Fine Arts Insurance—exception: Ackland Art Museum
- Employee Dishonesty Insurance
- Crime Insurance—exceptions: Student Stores; University Cashier
- Employee Excess Liability Insurance
The first four types of insurance in this list are briefly defined in the Property Insurance section of RMS's Web site.
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