The mission of the Insurance and Legal Affairs Office is to manage the Institute's exposures to risk of loss and to address any claims that arise either on the Institute's behalf or against the Institute. Counsel is provided to all departments and offices, particularly on the issue of liability. Coordination is maintained with outside counsel which provides legal assistance to MIT.
The most significant activity during the year involved the builder's risk and operational coverage for the Cogeneration facility. Seven claims are pending resolution with combined costs in excess of $1.5 million.
The majority of the cogeneration claims relate to design issues and contractor errors. MIT is actively pursuing reimbursement for these claims through both insurance and legal channels. These losses made it difficult for MIT to obtain quotes for operational coverage until coverage was combined and marketed with MIT's blanket property coverage. MIT received very favorable quotes and secured coverage with Arkwright Mutual Insurance Company (Factory Mutual System). Overall savings for the year should exceed $300,000.
The largest property loss this year, was a transit loss of components of a signature acquisition system. This loss was insured for $89,000, which was fully reimbursed by MIT's insurer, less a deductible of $5,000. The frequency of losses under the deductible increased by 34 percent from last year to $174,576, while losses paid by MIT's insurer dropped by 11 percent to $292,370. Of the total property losses, $154,713 was attributed to computer thefts.
Although workers' compensation administrative expenses and excess coverage dropped by 6 percent to $406,298, paid losses increased by 22 percent from last year to $871,909. Premiums and losses for all other lines of coverage remained level, resulting in MIT's total insurance costs being consistent with last year at $3.7 million.
Three significant liability claims were settled this year at a total cost of $102,950. These claims involved charges of hazardous waste dumping, discrimination, and wrongful termination. In addition, a lawsuit brought by a former MIT student for negligence in a pole-vaulting accident resulted in a judgment in the plaintiff's favor in the amount of $637,647. This suit is currently under appeal. This Office is involved in a continuing effort to recover from one of MIT's insurers the legal costs which were incurred in the defense of the anti-trust matter several years ago.
Legal guidance continued to be provided for MIT students and student groups over a broad range of topics, including landlord/tenant disputes, personal injury, prospective employer contracts, and questions involving city, state, and federal agencies.
Thomas R. Henneberry
MIT Reports to the President 1995-96