National Academies Press: OpenBook
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Suggested Citation:"Front Matter." National Research Council. 2023. Shared-Risk Insurance Pools for Transit Agencies: A Guide. Washington, DC: The National Academies Press. doi: 10.17226/27419.
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Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

2023 N A T I O N A L C O O P E R A T I V E H I G H W A Y R E S E A R C H P R O G R A M NCHRP RESEARCH REPORT 1079 Shared-Risk Insurance Pools for Transit Agencies A GUIDE Scott Baker Mark Frank Carlos Espindola Osorno AECOM Arlington, VA William (Bill) Evans CRT Consulting, LLC Omaha, NE Subscriber Categories Public Transportation • Administration and Management Research sponsored by the American Association of State Highway and Transportation Ofcials in cooperation with the Federal Highway Administration

NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM Systematic, well-designed, and implementable research is the most effective way to solve many problems facing state departments of transportation (DOTs) administrators and engineers. Often, highway problems are of local or regional interest and can best be studied by state DOTs individually or in cooperation with their state universities and others. However, the accelerating growth of highway transporta- tion results in increasingly complex problems of wide interest to high- way authorities. These problems are best studied through a coordinated program of cooperative research. Recognizing this need, the leadership of the American Association of State Highway and Transportation Officials (AASHTO) in 1962 ini- tiated an objective national highway research program using modern scientific techniques—the National Cooperative Highway Research Program (NCHRP). NCHRP is supported on a continuing basis by funds from participating member states of AASHTO and receives the full cooperation and support of the Federal Highway Administration (FHWA), United States Department of Transportation, under Agree- ment No. 693JJ31950003. The Transportation Research Board (TRB) of the National Academies of Sciences, Engineering, and Medicine was requested by AASHTO to administer the research program because of TRB’s recognized objectivity and understanding of modern research practices. TRB is uniquely suited for this purpose for many reasons: TRB maintains an extensive com- mittee structure from which authorities on any highway transportation subject may be drawn; TRB possesses avenues of communications and cooperation with federal, state, and local governmental agencies, univer- sities, and industry; TRB’s relationship to the National Academies is an insurance of objectivity; and TRB maintains a full-time staff of special- ists in highway transportation matters to bring the findings of research directly to those in a position to use them. The program is developed on the basis of research needs iden- tified by chief administrators and other staff of the highway and transportation departments, by committees of AASHTO, and by the FHWA. Topics of the highest merit are selected by the AASHTO Special Committee on Research and Innovation (R&I), and each year R&I’s recommendations are proposed to the AASHTO Board of Direc- tors and the National Academies. Research projects to address these topics are defined by NCHRP, and qualified research agencies are selected from submitted proposals. Administration and surveillance of research contracts are the responsibilities of the National Academies and TRB. The needs for highway research are many, and NCHRP can make significant contributions to solving highway transportation problems of mutual concern to many responsible groups. The program, however, is intended to complement, rather than to substitute for or duplicate, other highway research programs. Published research reports of the NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM are available from Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet by going to https://www.mytrb.org/MyTRB/Store/default.aspx Printed in the United States of America NCHRP RESEARCH REPORT 1079 Project 23-04 ISSN 2572-3766 (Print) ISSN 2572-3774 (Online) ISBN 978-0-309-70922-4 Library of Congress Control Number 2023948384 © 2023 by the National Academy of Sciences. National Academies of Sciences, Engineering, and Medicine and the graphical logo are trade- marks of the National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, APTA, FAA, FHWA, FTA, GHSA, or NHTSA endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The research report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the National Academies of Sciences, Engineering, and Medicine. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; the FHWA; or the program sponsors. The Transportation Research Board does not develop, issue, or publish standards or spec- ifications. The Transportation Research Board manages applied research projects which provide the scientific foundation that may be used by Transportation Research Board sponsors, industry associations, or other organizations as the basis for revised practices, procedures, or specifications. The Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; and the sponsors of the National Cooperative Highway Research Program do not endorse products or manufacturers. Trade or manufacturers’ names or logos appear herein solely because they are considered essential to the object of the report.

e National Academy of Sciences was established in 1863 by an Act of Congress, signed by President Lincoln, as a private, non- governmental institution to advise the nation on issues related to science and technology. Members are elected by their peers for outstanding contributions to research. Dr. Marcia McNutt is president. e National Academy of Engineering was established in 1964 under the charter of the National Academy of Sciences to bring the practices of engineering to advising the nation. Members are elected by their peers for extraordinary contributions to engineering. Dr. John L. Anderson is president. e National Academy of Medicine (formerly the Institute of Medicine) was established in 1970 under the charter of the National Academy of Sciences to advise the nation on medical and health issues. Members are elected by their peers for distinguished contributions to medicine and health. Dr. Victor J. Dzau is president. e three Academies work together as the National Academies of Sciences, Engineering, and Medicine to provide independent, objective analysis and advice to the nation and conduct other activities to solve complex problems and inform public policy decisions. e National Academies also encourage education and research, recognize outstanding contributions to knowledge, and increase public understanding in matters of science, engineering, and medicine. Learn more about the National Academies of Sciences, Engineering, and Medicine at www.nationalacademies.org. e Transportation Research Board is one of seven major programs of the National Academies of Sciences, Engineering, and Medicine. e mission of the Transportation Research Board is to provide leadership in transportation improvements and innovation through trusted, timely, impartial, and evidence-based information exchange, research, and advice regarding all modes of transportation. e Board’s varied activities annually engage about 8,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. e program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individuals interested in the development of transportation. Learn more about the Transportation Research Board at www.TRB.org.

C O O P E R A T I V E R E S E A R C H P R O G R A M S CRP STAFF FOR NCHRP RESEARCH REPORT 1079 Waseem Dekelbab, Deputy Director, Cooperative Research Programs, and Manager, National Cooperative Highway Research Program Ann M. Hartell, Senior Program Officer Dajaih Bias-Johnson, Senior Program Assistant Natalie Barnes, Director of Publications Heather DiAngelis, Associate Director of Publications Kami Cabral, Editor NCHRP PROJECT 23-04 PANEL Field of Administration—Area of Agency Administration Michael J. Spadafore, Jayhawk Area Agency on Aging, Topeka, KS (Chair) Peter K. Anderson, Greater Cleveland Regional Transit Authority (RTA), Cleveland, OH Wiley Brooks, Alabama Department of Transportation, Montgomery, AL Barbara K. Cline, Prairie Hills Transit, Spearfish, SD Mary J. Hoffmeyer, Michigan Department of Transportation, Lansing, MI Jonathon C. Moore, TranSystems, Kansas City, MO James B. Webb, Utah Department of Transportation, Salt Lake City, UT Jack D. Jernigan, FHWA Liaison Shayne H. Gill, AASHTO Liaison

NCHRP Research Report 1079: Shared-Risk Insurance Pools for Transit Agencies: A Guide explains how insurance pools function, how to evaluate the feasibility of a shared-risk insur- ance pool, and how to establish and manage this type of pool. The Guide will be of interest to those at state and local transportation agencies who are responsible for strategic decisions related to risk management and insurance for transit. Transit agencies are finding it increasingly difficult to find, purchase, and maintain ade- quate and affordable insurance coverage for public transit vehicles. The number of smaller insurance providers is decreasing due to the volatile nature and demands of the insurance industry and insurance coverage requirements in general. Not only is the cost of adequately insuring all the vehicles in every transit agency increasing, but the ability to cover costs for each agency’s policy premiums is a challenge as well. Premium increases can result in addi- tional administration costs, requiring transit agencies to reallocate funds away from service provision. Small rural transit agencies often face the largest cost increases due to their small fleet sizes and high annual mileage per vehicle. While loss prevention programs and train- ing efforts have helped some agencies maintain premiums and coverage at a manageable cost, securing sustainable, affordable coverage is often problematic. State departments of transportation (DOTs) are responsible for safeguarding federally funded program assets and for supporting mobility with multimodal programs and services. Therefore, state DOTs have an interest in decisions related to transit insurance and risk management and are important stakeholders in insurance-related decisions, such as types of coverage, acceptable premiums, levels of coverage, and funding arrangements, such as cost sharing. One approach to insurance for transit agencies is a transit shared-risk pool. An insur- ance pool is created by a group of transit providers that contribute funds to a common fund to cover agreed-upon losses. Under NCHRP Project 23-04, “Statewide Insurance Pooling for Public Transit,” AECOM was tasked with developing a guide to shared-risk insurance pools. The research team surveyed transit providers, state DOTs, and insurance industry stakeholders. Additional information and perspectives were collected through case studies of eight pools. The Guide describes how to conduct a feasibility study to determine whether a shared-risk pool is appropriate as well as the essential steps to set up and manage a pool. Accompanying the Guide is NCHRP Web-Only Document 374: Developing a Guide to Shared-Risk Insurance Pools for Transit Agencies: Conduct of Research Report, which documents the research, and a set of presentation slides summarizing the project. These materials are available on the National Academies Press website (nap.nationalacademies.org) by searching for NCHRP Research Report 1079: Shared-Risk Insurance Pools for Transit Agencies: A Guide. F O R E W O R D By Ann M. Hartell Staff Officer Transportation Research Board

1 Chapter 1 Introduction 1 1.1 Audience 1 1.2 Purpose 3 Chapter 2 Transit Insurance Basics 3 2.1 Why Transit Insurance? 3 2.2 What Is a Transit Shared-Risk Pool? 3 2.3 What Are the Alternatives to Transit Shared-Risk Pools? 4 2.4 How Do Pools Operate? 5 2.5 Why Is the Insurance Cost Cycle Important? 6 Chapter 3 Phases to Create and Operate a Transit Pool 6 3.1 Phase 1: Perform Exploratory Study 12 3.2 Phase 2: Conduct Feasibility Study 14 3.3 Phase 3: Make Decision 15 3.4 Phase 4: Create Pool Mission Statement 15 3.5 Phase 5: Establish Shared-Risk Pool 18 3.6 Phase 6: Create Operations Plan 23 3.7 Phase 7: Establish Pool Operations 25 3.8 Phase 8: Establish and Operate Board 27 3.9 Phase 9: Define Pool Management Activities 29 3.10 Phase 10: Operate Pool 32 Chapter 4 Continual Improvement 32 4.1 Performance and Trend Analysis 32 4.2 Member Satisfaction 32 4.3 Conclusion 34 Acronyms 35 Glossary 44 References and Resources A-1 Appendix A Useful Links B-1 Appendix B Coverage Matrix C-1 Appendix C Fundamental Factors That Contribute to Shared-Risk Pool Success D-1 Appendix D Pool Best Practices C O N T E N T S

E-1 Appendix E Common Objections to Municipal Shared-Risk Pools F-1 Appendix F Challenges Facing Municipal Shared-Risk Pools G-1 Appendix G Vehicle Fleet Loss Mitigations and Loss Reduction Practices and Procedures Note: Photographs, figures, and tables in this report may have been converted from color to grayscale for printing. The electronic version of the report (posted on the web at nap.nationalacademies.org) retains the color versions.

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