The University’s Master Insurance policies are the foundational components protecting the Harvard community from the financial consequences of loss caused by natural disasters, lawsuits and other contractual liabilities. Given their core financial objectives, the University's CFO provides primary oversight and is considered the cognizant decision maker on the Master Insurance program's overall design and administration. Annually, the Department conducts an internal review of each program's pertinent features, terms and conditions, taking into account the University's current financial and operational needs, appropriately adjusting each program to maintain alignment with management's short and long term business objectives. Any material changes envisioned for one of the programs, as well as prior year's financial results, are communicated in the fall budget letter (typically released each year in November). Generally, only those exposures which are likely to and significantly impact a majority of TUBS or the collectively the entire University community would prompt the creation of a new program or are considered for inclusion under one of the existing master insurance programs. The cost of risk, collectively, under the purview of the master programs is entirely funded by, and therefore allocated back to, all operating units at a TUB level, including Harvard Management Company.
The Department carries a minimalist view regarding the scope of the Master Insurance program's influence over academic and research operations. We accomplish this by carefully selecting insurers, screening for those who share our catastrophe-oriented view of the coverages, incorporating more aggressive policy deductibles/loss retentions where fiscally justified, tailoring policy language to Harvard's particular needs and risk tolerances, and retaining outside technical expertise to help evaluate alternatives. Translation: we avoid using external partners that anticipate a high degree of involvement in business processes and internal risk management practices. Additionally, for its enterprise-level programs, self-insurance is the preferred approach, either centralized and formalized within the Master Insurance program or localized as part of each TUB's retained losses.
There is no action required to enroll or sign up for these policies – being part of the President and Fellows of Harvard College family affords automatic coverage under this insurance program. Though not yet fully risk-based, the current allocation methods are based on algorithms that take into account certain aspects of individual TUB risk profiles. Beginning FY2011, premium and administrative costs for the Master Property Insurance program are allocated entirely on the total insurable value of a TUB's buildings and contents. For the General and Integrated Management Liability programs, premium and administrative costs are allocated entirely on the headcounts of TUB personnel falling within the administrative, professional and faculty categories.