Safety & Loss Prevention
Risk Management Policy and Procedure Manual
PART 9 Risk Management Accounting
Subject: The Uninsured Loss Fund
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Purpose:
This section was developed as a source of clarification of the UW System Uninsured Loss Fund (ULF). Some of the information in this section was provided from FPPP 35.
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Background:
UW System Risk Management maintains an Uninsured Loss Fund for the benefit of all UW campuses. This fund was established at the system level to provide reimbursement for those loss expenses that a campus incurs which are not reimbursable from any other source. The Uninsured Loss Fund is administered jointly by the System Risk Manager and the System Accounting Office. Each loss is reviewed and decided upon on an individual basis by the System Risk Manager with final approval from accounting. Funding for the Uninsured Loss Fund is acquired through a number of sources within System Administration and from the campuses.
Recently, the Uninsured Loss Fund, which has accumulated to a significant level over the years, has been targeted as a potential source for the loss control efforts of the UW campuses. As part of a proposal for comprehensive loss control, the ULF would provide the seed money for funding a System Loss Control position as well as a Risk Management Information System.
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Fund Sources:
- Overhead
The Uninsured Loss Fund is financed with an overhead surcharge to any campus labor charge on property loss repairs and cleanup made by the campus. This surcharge is 28% for all campuses and should be applied as follows. When the campus has used its own labor costs for repairs in excess of $100, the labor amount should be separated from material costs by the campus and a factor of 1.28 should be applied to develop the total labor reimbursement amount.
Example: Total Cost$350 Material $150 $150 Labor $200 * 1.28 = $256 Claim Total $406 Always provide this level of detail when submitting a claim.
- Premium Surcharges
Potentially, as UW System begins formalization of the loss control function at the System level, the ULF will be used to capture additional funding through the use of premium surcharges. This type of surcharge is most acceptable in those situations, such as camps and clinics, where the premium cost is transferred directly to the program user.
- Fund 999 Reconciliation
As stated in Section 9, A of this manual, the campuses maintain a loss clearing fund which is reconciled annually by the campus risk manager. All excess loss reimbursements are returned to UW System Accounting where they are deposited in the Uninsured Loss Fund for future loss reimbursement.
- Overhead
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Fund Uses:
When a campus is unable to pay for repair or replacement for a loss from other sources, they may request payment from the ULF. The following sources of funds should be exhausted before doing so:
- Collect from the insurer.
- Collect from the person responsible.
- Have the department that has suffered the loss pay.
- Collect from the campus Chancellor's Fund.
Payment from the Uninsured Loss Fund is dependent upon the merits of the specific claim. Consideration is also given to the extent of loss control used by the campus and the efforts made to avoid the loss. The amount paid will reflect the amount that would have been received by the campus had insurance been in force. In some cases a percentage of the loss will be reimbursed dependant upon the situation.
Requests for reimbursement from the uninsured loss fund should be made by the campus in the same format as a property claim. All pertinent information regarding the loss and values involved should be included (See Section 2,A).
Note:Loss of books in shipment are no longer covered by the uninsured loss fund because of the small values involved which can most often be absorbed by the department and also because of the need for campuses to pursue these losses through the shipper or the post office.
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Revised 10/20/03