GRTC gets new insurance policy [Richmond Times-Dispatch, Va.]

July 21--RICHMOND, Va. -- GRTC Transit System has a new insurance policy to hold down the rising cost of covering the potential liability for accidents involving buses or other company vehicles.

The GRTC board of directors voted unanimously yesterday to buy insurance from Chartis, a subsidiary of the American International Group, instead of a public transit liability pool that the bus company helped establish more than 20 years ago.

GRTC will pay about $1.5 million in annual premiums under the Chartis policy.

The move was triggered by an impending increase in the cost of liability-insurance premiums, as well as the out-of-pocket expenses that the bus company would have to pay before insurance would cover any claims. The policy with Chartis will take effect Aug. 1 for at least one year, possibly two at the same rate, depending on GRTC's safety performance.

"We can't have any large losses during the year," said Sheryl Adams, director of risk management at GRTC.

Two major accidents in the past three years changed the relationship between GRTC and the Virginia Transit Liability Pool, an organization of public transit companies from around the state that has provided liability insurance for the Richmond-based bus company since the pool's founding in 1987.

One accident resulted in an $8 million jury award and undisclosed settlement for a woman hit and severely injured by a GRTC bus at a pedestrian crosswalk in Richmond three years ago. The other led to a $10 million wrongful-death suit filed by family members of a Prince George County woman who was fatally struck by a bus in Richmond last fall.

"There is some disagreement between us and the [pool] over our safety record," GRTC CEO John M. Lewis Jr. said after yesterday's meeting.

The transit pool, based in Goochland County, initially had told GRTC that its annual premium could increase from $1.3 million to $2.1 million after the insurance policy ends July 31. The pool later submitted a proposal that would have increased the premium to $1.6 million a year.

More importantly, the pool proposed to more than double the out-of-pocket cost that GRTC would have to pay before the insurance would cover the cost of an accident -- from $350,000 to $750,000 an incident. The deductible cost will drop to $325,000 an incident under the Chartis proposal.

"We've come to a parting of the ways here," said David Harmer, assistant administrator of the pool. "They found a way to save money. These are difficult times for budgets, and we wish them well."

Lewis said the new insurer also will give the transit company a greater say in decisions over liability claims. GRTC had recommended settlement of the personal-injury suit filed by Meikiu Lo for the 2007 incident that severely injured her, but the company said the liability pool chose to fight the suit, resulting in the $8 million jury award. "We will be much more involved in the decisions in the future," Lewis said.

Contact Michael Martz at (804) 649-6964 or [email protected].

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