TERRAFIRMA RISK RETENTION GROUP LLC CONSERVATION DEFENSE LIABILITY INSURANCE 1
Purposes • Safety net • No substitute for sufficient reserves • Helps meet liability of legal challenges • Terrafirma funds defense costs • Provide early effective expert assistance • Minimize disputes • Provide wide array of problem solving • Must have sound practices • Most land trusts will face litigation • Few land trusts can fund long litigation 2
Goals • Uphold conservation obligations forever • Defend conserved land • Help prevent violations • Avoid unnecessary litigation • Create favorable case law • Avoid bad precedents • Maintain public confidence in – conservation easements as a legal tool – land trusts as effective conservation organizations • Prevent land trust bankruptcy from legal battles 3
Terrafirma Organization Facts • 423 land trusts are Terrafirma owner-members for 2013 • Land trusts in 46 states and DC • Alliance Risk Management Services LLC – provides daily operational management – ARMS is Alliance subsidiary • Multiple independent contractors – technical compliance services • Registered in 49 states and DC • Policy inception March 1, 2013 • No commercial coverage available • No commercial carrier interested 4
Terrafirma Regulators • Vermont Insurance Regulator approval – Leading state for captives – Over 900 hundred – Terrafirma is #965 – License July 12, 2012 – Risk retention group • IRS tax exemption May 16, 2012 as 501(n) charitable risk pool • Vermont non-member managed limited liability company organized April 2011 5
Terrafirma Statistics • 20,411 parcels of conserved land currently enrolled; 6.3 million acres • 18,557 conservation easements currently enrolled; 1854 fee land parcels enrolled • Not counting large national organizations (which can self-insure) 79% of Alliance members’ 24,415 conservation easements enrolled • Capitalization of $4 million from foundations and major donors • Available only to private tax-exempt 501(c)(3) conservation organizations 6
Basic Numbers • Covers both conservation easement and fee-owned land • Defends and enforces conservation rights • Base premium of $60 per year per property • Maximum limit of $500,000 per claim • Some higher aggregate limits for large portfolios • $5,000 deductible per claim • Discounts available • No coinsurance (co-payment) except in unusual situations 7
Structure and Governance St Structure a e and Managem gement 8
Terrafirma Insurance Policy • One annual enrollment window in January of each year • Details, frequently asked questions, eligibility requirements and more at www.terrafirma.org • Only for legal related expenses and not damages • Does not cover pre-existing problems • Must report claims on time • Must also be fully eligible to have the coverage • Thirteen eligibility criteria • Has 32 exclusions from coverage 9
Terrafirma Structure & Governance LAND TRUST OWNER MEMBERS THE INSURANCE COMPANY (LCIA)* Terrafirma The Manager (ARMS) Risk Retention Group COMMERCIAL PROVIDER OF THE LAND ALLIANCE RISK Limited Liability CAPTIVE MANAGEMENT TRUST SERVICES MANAGEMENT Company ALLIANCE, SERVICES LLC CAPTIVE INC. MANAGEMENT 501(n) tax status (Vermont LLC; Alliance sole COMPANY (MA not-for- (Vermont manager-managed not-for-profit LLC) member) And other profit corporation) consultants 10 10
Structure & Governance Members Committee of Terrafirma • General oversight • Appointment of service providers and committees • Nominate candidate slate for Members Committee • Overall policy direction • All volunteer; Single terms; Elected regionally • Only member land trust senior leadership eligible • Must be independent • One rep for each geographic region (total of eight), • One for regulator required Vermont resident 11 11
Claims Committee • Evaluate, monitor, administer claims • Seven experienced individuals • Manages claims and legal strategy • Determines claims • Approves all settlements • Appoints attorneys or other experts • Collaborative process with land trust 12 12
Claims • Service to Land Trusts guiding principle • Uphold conservation permanence • Avoid unnecessary litigation • Implement timely responses • Support strong risk management practices • Give early advice for dispute resolution • Encourage timely and effective claim reports • Maintain adequate claim loss and expense reserves • Provide an equitable member claims dispute resolution • Obtain best result possible given all the circumstances • Comply with fair claims practices and regulations 13 13
Question ons? Conta tact I t Inform rmatio tion he help@ p@terrafirma. a.org Lorri B rri Barre rett a at 202-800 800-2219 2219 Leslie R e Ratley ey-Beach at at 802 802- 262 262-6051 6051 Website ite a at www.te terra rafir irma.org rg May 1 10, 2 2013 14 14
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