MIT Reports to the President 1994-95

Insurance and Legal Affairs

The risk management activities for the Office of Insurance and Legal Affairs are best summarized by reviewing the loss history and premium information for the various insurance programs in place. For insured values in excess of $1.9 billion, MIT's property premiums (including fine arts and ocean marine) was $550,633. Unreimbursed losses, which fell below the $5,000 deductible, were $130,620, while claims paid by MIT's insurer totaled $329,853. The largest loss, $170,000, resulted from a fire at 440 Massachusetts Avenue, one of MIT's investment properties. The Institute continues to be plagued by computer thefts, with reimbursements for stolen equipment in excess of $43,000.

Total liability premiums for all liability policies (including excess, umbrella, and professional liability) were $1.3 million, while losses paid out by insurers, including the Barton Insurance Co. (wholly-owned by MIT), were $154,239. This loss figure included the settlement of four significant claims, totaling $123,500 which covered lawsuits for hazardous waste, bodily injury, and employment-related matters. This year, almost $900,000 in reimbursements for legal expenses related to prior litigation was recovered.

The Institute paid $326,559 for Automobile and Aircraft insurance this year. Automobile losses paid by the Institute's insurer were $15,546, while MIT paid $33,798 in losses from accidents involving rental cars, which MIT self-insures for collision damage. Regular training for pilots and stringent maintenance and safety programs have helped MIT to maintain a clean record for its aircraft activities. The possibility of self-insuring for all auto losses is being examined.

The Institute's self-insured workers' compensation program paid over $719,000 for losses and expenses on open claims. Of that amount, only $350,000 represented last year's losses; state mandated fees and excess coverage cost $386,630.

In summary, the "cost of risk" for MIT was $3,707,439. This amount represents payments for all insurance premiums plus payments that fell within self-insurance or deductible levels. However, this does not include the costs of safety, security, legal, and other measures taken proactively to avoid losses.

The office continued to provide a broad range of legal guidance to over 100 students again this year.

Thomas R. Henneberry

MIT Reports to the President 1994-95