National Academies Press: OpenBook

Shared-Risk Insurance Pools for Transit Agencies: A Guide (2023)

Chapter: Appendix B - Coverage Matrix

« Previous: Appendix A - Useful Links
Page 47
Suggested Citation:"Appendix B - Coverage Matrix." National Research Council. 2023. Shared-Risk Insurance Pools for Transit Agencies: A Guide. Washington, DC: The National Academies Press. doi: 10.17226/27419.
×
Page 47
Page 48
Suggested Citation:"Appendix B - Coverage Matrix." National Research Council. 2023. Shared-Risk Insurance Pools for Transit Agencies: A Guide. Washington, DC: The National Academies Press. doi: 10.17226/27419.
×
Page 48

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.

B-1   Table B.1 contains the coverage matrix. A P P E N D I X B Coverage Matrix

Coverage Types Predictability Implications and Definitions Frequency(1) Severity(2) Payout Pattern(3) Vehicle Liability High Moderate High It lends itself to pooling due to its inherent predictability and long-tail (long settlement period) payment pattern. Vehicle Physical Damage High High High It lends itself to pooling due to its inherent predictability and long-tail payment pattern. General Liability High Moderate High It lends itself to pooling due to its inherent predictability and long-tail payment pattern. Workers’ Compensation High High In particular, workers’ compensation lends itself to pooling due to its inherent predictability. A statutory cap on loss wage benefits paid brings an element of certainty to the severity of losses to be expected. The payment of large claims is spread over time, providing cash flow advantages to the pool employer. Typically, workers’ compensation loss patterns are high volume and low severity, which translates to fairly predictable loss forecasting analysis. State law may prevent offering coverage. Employer’s Liability Moderate High High It lends itself to pooling due to its inherent predictability and long-tail payment pattern. Employment Practices Liability Moderate High High It lends itself to pooling due to its inherent predictability and long-tail payment pattern. Public Officials Liability High Moderate High It lends itself to pooling due to its inherent predictability and long-tail payment pattern. Cyber Liability Low Low Low High It lends itself to pooling due to its inherent predictability and long-tail payment pattern. Property Low Low Low It does not lend itself to pooling because there is no predictable payout pattern to judge capital and loss reserve requirements and no long-tail liability for which loss reserves must exist. Each year, the coverage starts with a fresh set of exposures. (1) Frequency: Frequency is the number of claims expected in a specified period. (2) Severity: The amount of damage that is (or that may be) inflicted by a loss. (3) Payout Pattern: Payment is spread over time. Note: Policies covering long-tail risks have a larger gap between the time premiums are collected versus when claims are paid. As a result, long-tail insurance providers have more time to invest their premiums, allowing them more time to earn a higher rate of return. Table B.1. Coverage matrix.

Next: Appendix C - Fundamental Factors That Contribute to Shared-Risk Pool Success »
Shared-Risk Insurance Pools for Transit Agencies: A Guide Get This Book
×
 Shared-Risk Insurance Pools for Transit Agencies: A Guide
MyNAP members save 10% online.
Login or Register to save!
Download Free PDF

Transit agencies are finding it increasingly difficult to find, purchase, and maintain adequate 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.

NCHRP Research Report 1079: Shared-Risk Insurance Pools for Transit Agencies: A Guide, from TRB's National Cooperative Highway Research Program, explains how insurance pools function, how to evaluate the feasibility of a shared-risk insurance pool, and how to establish and manage this type of pool.

Supplemental to report is a presentation and NCHRP Web-Only Document 374: Developing a Guide to Shared-Risk Insurance Pools for Transit Agencies: Conduct of Research Report.

READ FREE ONLINE

  1. ×

    Welcome to OpenBook!

    You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

    Do you want to take a quick tour of the OpenBook's features?

    No Thanks Take a Tour »
  2. ×

    Show this book's table of contents, where you can jump to any chapter by name.

    « Back Next »
  3. ×

    ...or use these buttons to go back to the previous chapter or skip to the next one.

    « Back Next »
  4. ×

    Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

    « Back Next »
  5. ×

    To search the entire text of this book, type in your search term here and press Enter.

    « Back Next »
  6. ×

    Share a link to this book page on your preferred social network or via email.

    « Back Next »
  7. ×

    View our suggested citation for this chapter.

    « Back Next »
  8. ×

    Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

    « Back Next »
Stay Connected!