About Risk Management and Tort Defense

About the Risk Management and Tort Division

The mission of the Risk Management & Tort Defense Division is to provide comprehensive and cost effective risk management services, insurance coverage, claims adjudication, and legal defense to state agencies and universities that serve the citizens of Montana.

During the early 1970's, Montana State Government lost its sovereign immunity. Therefore, the state began to purchase commercial liability insurance to protect itself from third party litigation. The risky nature of state services coupled with the high cost of commercial insurance forced state government and most other public entities to self-insure their liability risks in the mid-1970s.

Subsequent legislation (§2-9-101, MCA through §2-9-305, MCA) authorized the Department of Administration to assess state agencies and the university system for the costs associated with defending tort claims and administering commercial insurance and self-insured programs. The Risk Management & Tort Defense Division may, therefore, elect to insure auto, aviation, boilers & machinery, fidelity bond, fine art, tort liability, and other risks through any combination of commercial or self-insurance programs that are deemed necessary and cost-effective.

The Risk Management & Tort Defense Division offers a variety of loss control services that are designed to prevent and/or mitigate insured losses including training, boiler inspections, consultations, property inspections, building plan reviews, thermographic imaging surveys, property loss management guidelines, loss mitigation grants, and insurance premium discount programs. These programs save lives, time, and tax payer dollars and have been effective at reducing the frequency and severity of insured losses.

Call us (406) 444-2421 with your questions about property/casualty insurance, claims/lawsuits, and loss prevention! We'd love the opportunity to assist you!

Welcome to The Risk Management & Tort Defense Division's web page. We provide a broad array of services designed to protect state agencies and universities from the adverse effects of claims and losses.

We Consult with state agencies and universities and provide safety and loss control training and guidelines to mitigate risk and reduce exposure to claims and losses.

We Administer a cost effective and comprehensive property/casualty insurance program for state agencies and universities. Most coverages, except employee benefits, are centrally purchased by RMTD.

We Evaluate and resolve property/casualty claims filed against the state in a timely and cost-effective manner.

We Provide cost-effective, quality legal defense.

Division Mission: To provide comprehensive and cost-effective loss mitigation, insurance administration, claims adjudication, and legal defense services to state agencies and universities that serve Montana citizens and students.

Goal: Assist state agencies/universities to mitigate/control losses through consultation, training mitigation funding, and financial incentives.

Objectives:

  • Achieve premium discounts savings of $1 million each year through participation in risk management programs.
  • Provide onsite and online training to 1,000 state and university employees to address core risks and to assist clients with higher losses or specialized exposures.
  • Conduct inspections of 300 key state/university properties whose insured values typically exceed $1 million or that present unique risks.
  • Respond to consultation requests within 5 business days.

Goal: Maintain and administer cost-effective and comprehensive commercial insurance and self-insured programs.

Objective:

  • Obtain favorable property/casualty insurance terms and conditions relative to losses, risks, and market conditions.

Goal: Investigate, evaluate, and resolve claims in a timely and cost-effective manner.

Objective:

  • Claims will be evaluated within statutory timeframes (120 days) and reported to insurance carriers in accordance with the terms and conditions of the state’s commercial insurance policies.

Risk management is a process of identifying, managing, organizing, and controlling resources and activities to minimize the adverse effects of loss.

There are five basic types of risk that state managers, supervisors, and employees should be aware of. These risks are not mutually exclusive and may be interrelated. Many incidents, accidents, and claims involve losses in several risk areas.

  1. Damage to Property. Accidental loss or damage to state property such as buildings, boilers, vehicles, and heavy machinery.
  2. Liability to Others. The risk of legal liability to others resulting from a negligent act or omission and resulting in injuries to persons and/or damage to their property or person.
  3. Loss of Income or Increased Costs. This is a risk that is often overlooked. Many state participants operate revenue-producing facilities. Athletic venues, bookstores, cafeterias, prison industry operations, and state parks are examples. If these facilities are destroyed or damaged there may be a significant loss of income. Increased costs might include the cost of cleaning up or repair, training replacements, overtime, supervision, etc.
  4. Employee Injuries. Injuries to state and university employees that arise from work-related activities.
  5. Enterprise Risks. Enterprise Risk Management (ERM) is a new and emerging discipline in risk management that is gradually being assimilated and adopted in the culture of some public and private entities. An enterprise risk is an activity or event that prevents an organization from achieving its objectives. An organization may fail to reach its objectives through failure to manage its finances through economic boom or recession, failure to take advantage of strategic opportunities, damage to its reputation, and unexpected political events either at home or abroad, to name a few.

Risks typically stem from a variety of causes. (A cause of loss is a situation or condition, which may create a loss.) Examples: Natural Causes of Loss - Lightning, flood, windstorm, or weather can create property losses. Human Causes of Loss - Theft, arson, negligent acts of omission or commission may result in property losses or legal liability.

Failure to establish appropriate Enterprise Risk Controls may result in damage to an organizations reputation, loss of business, missed opportunities to achieve strategic objectives, or unauthorized disclosure of private information from a cyber breach.

Losses may be caused by unsafe acts, unsafe conditions, or poor risk controls. Examples: Unsafe Acts - 1) The improper operation of a snowplow which damages a private vehicle. 2) State workers on a building scaffold have no warning signs and drop an object on an innocent pedestrian.

Unsafe Conditions - 1) Slippery road conditions which result in a car collision. 2) Poor lighting of a stairwell and no handrails causes an injury to a member of the public attending a university play. Losses do not just happen. They are caused. Since, in the most cases the causes are known, many losses can be prevented..

The risk management process involves five basic steps:

  1. Risk Identification and Analysis: Identifying the services and assets that could cause a loss.
  2. Risk Treatment: Examining alternatives to handle the risks by eliminating loss exposures and minimizing effects on your participant before or after a loss occurs, as well as exploring ways to cover a loss financially.
    1. Loss Prevention
      1. Avoidance. Risk may be avoided by refusing to assume it. Obviously, it is not always possible to completely avoid risks, but the possibility should not be overlooked.
      2. Loss Control and Reduction. When risk cannot be avoided, it often can be reduced and the severity of loss minimized. For example, fire-resistant construction reduces the chances of a fire. Loss Prevention and loss reduction are primary responsibilities of management. These responsibilities cannot be delegated. If loss prevention is to have any priority, state managers must create it. Managers and employees should be accountable for losses, which could have been prevented or controlled, but were not.
    2. Insurance
      1. Risk Transfer. If a risk cannot be avoided, it can often be transferred to others. One common way to transfer risk is to buy insurance. In purchasing insurance, the risk of unpredictable loss is relieved by making scheduled premium payments. Another way to transfer risk to third parties is through contractual arrangements.
      2. Retention. It may be decided to pay for losses out of current operations by self-insuring or retaining them even though other methods of handling the risk are available. For example, the State of Montana currently retains losses on its state-owned vehicles for collisions rather than purchase commercial insurance. This is done because in some cases retention is more efficient and economical.
    3. Claims Management
      1. Claims Administration. Once a claim occurs it must be reported immediately to assure that it is thoroughly evaluated within statutory deadlines and to minimize the possibility that it may result in costly and protracted litigation.
      2. Litigation Management. Lawsuits must be investigated, evaluated, and resolved as soon as possible consistent with legal and ethical obligations. Lawsuits that have merit are settled expeditiously and the remaining cases are prepared for summary judgment or resolution at trial.
  3. Selection: Determining which risk treatment technique or combination of techniques is most appropriate.
  4. Implementation: Putting the selected risk management programs in place.
  5. Program Evaluation: Monitoring results of risk management programs to make sure they are effective.

Why Manage Risks?

The benefits of risk management are many! First and foremost, an effective program of risk management will assure that damages resultant from tort liability, property, business income, and enterprise risks are minimized and that your vital assets, resources, and continuity are protected.

In addition, participants may reduce their liability premiums by lowering their losses. Each participant's premiums are dependent on the number and amount of losses, which are paid out of the self-insurance fund.

Each participant may reduce its risks and lower its insurance premiums through participation in the Risk Management & Tort Defense Division’s insurance premium discount programs.

Enterprise Risk Management (ERM) is a new and emerging discipline in risk management that is gradually being assimilated and adopted into the culture of some public and private entities. An enterprise risk is an act, activity, asset, or event that prevents an organization from achieving its objectives. For example, an organization may fail to reach its objectives by failing to manage its finances through economic recession, missed strategic opportunities, reputational damage from a cyber attack or product recall, or unexpected political events either at home or abroad.

ERM is becoming an increasingly important business process tool to assist organizations to identify, prevent, and mitigate not only the kinds of losses that arise from their operations (i.e. insured property and liability losses), but also risks that arise from other acts, activities, assets, and events that prevent an organization from achieving its strategic objectives. The Risk Management and Tort Defense Division may offer a 2.5% general liability insurance premium discount to those state agencies/universities that implement comprehensive and effective enterprise risk management (ERM) programs.

If you are interested in how you may qualify for an insurance premium discount, please contact Mike Anderson at mike.anderson@mt.gov or call him at (406) 444-2617. The Risk Management & Tort Defense has developed an Enterprise Risk Map and a mapping tool to assist state agencies/universities to identify key risks associated with their enterprise and hereby offers additional resource links about ERM to help you learn more.

Montana University System's Enterprise Risk Management Initiative:

North Carolina State University's Enterprise Risk Management Initiative:

ERMT Manual/Handbook Examples:

Federal Government (General Accounting Office) ERM Guidelines:

University Enterprise Risk Management ERM Websites:

The Risk Management & Tort Defense Division employs a competent, professional staff trained and capable of assisting you with your claims, legal, insurance, or risk management issues.

Main Number (406) 444-2421

RMTD Directory Information can be found on the State Directory site.

There are many great sites that will help our state agencies and universities manage risk and work safer and smarter. If you know a site that would be good to add, just let Web Administrator, Brett Dahl know:

  • American Society for Healthcare Risk Management
  • American Society of Safety Professionals
  • Business Insurance Magazine
    Business Insurance Magazine provides timely information to its subscribers on issues involving insurance, legal, claims, governmental affairs. All monthly issues since 1994 may be accessed through a search browser for $80 a year (member subscribers), $120 a year (non-member subscribers).
  • Claims Magazine
    Claims magazine is the leading trade publicationcovering property and casualty insurance losses, subscribed to by insurance claims personnel; independent adjusters, appraisers and investigators; corporate risk managers; attorneys; and vendors to the insurance loss business.
  • Consumer Product Safety Commission
  • Federal Motor Carrier Safety Administration
  • International Risk Management Institute (IRMI)
    One of the most useful features of the International Risk Management Institute (IRMI) site is its Expert Commentary section, which posts articles written by industry specialists in insurance, law, legal trends and other aspects of risk management. IRMI also has a resource directory and financial rating, provided by Standard and Poor's, on more than 3000 insurance companies.
  • National Institute for Occupational Safety and Health
  • National Safety Council
  • Occupational Safety & Health Administration (OSHA)
  • Public Risk Management Association (PRIMA)
  • Risk and Insurance Management Society, Inc. (RIMS)
    Risk and Insurance Management Society, Inc. (RIMS) serves its member entities by proactively providing the highest quality products, services and information to manage all forms of business risk. Through its monthly publication 'Risk Management Magazine' RIMS provides timely information to its members on issues involving insurance, legal, claims, governmental, etc.
  • The Nonprofit Risk Management Center
    The Nonprofit Risk Management Center offers information on upcoming conferences and on new books on related topics. Its online newsletter Community Risk Management and Insurance is free to nonprofit organizations and government agencies. Detailed articles cover topics such as professional liability, disability, fundraising risks and on-site crime. Visitors can also find Riskfacts-answers to frequently asked questions on liability, insurance and risk management.
  • The Risk Theory Society
    The Risk Theory Society's home page is on the American Risk and Insurance Association Web site. The purpose of this small group (fewer than 100 members) is "to foster research into topics in risk theory and risk management." The society meets annually to discuss its members' reactions to papers it received on risk management. These papers are available online, along with instructions for submitting your own.
  • Car Safety Ratings