Insurance

9 Months Ended

Jul. 31, 2020

INSURANCE

We use a combination of insured and self-insurance programs to cover workers’ compensation, general liability, automobile liability, property damage, and other insurable risks. For the majority of these insurance programs, we retain the initial $1.0 million to $1.5 million of exposure on a per-occurrence basis, either through deductibles or self-insured retentions. Beyond the retained exposures, we have varying primary policy limits ranging between $1.0 million and $5.0 million per occurrence. To cover general liability and automobile liability losses above these primary limits, we maintain commercial umbrella insurance policies that provide aggregate limits of $200.0 million. Our insurance policies generally cover workers’ compensation losses to the full extent of statutory requirements. Additionally, to cover property damage risks above our retained limits, we maintain policies that provide per occurrence limits of $75.0 million. We are also self-insured for certain employee medical and dental plans. We maintain stop-loss insurance for our self-insured medical plan under which we retain up to $0.5 million of exposure on a per-participant, per-year basis with respect to claims.

We maintain our reserves for workers’ compensation, general liability, automobile liability, and property damage insurance claims based upon known trends and events and the actuarial estimates of required reserves considering the most recently completed actuarial reports. We use all available information to develop our best estimate of insurance claims reserves as information is obtained. The results of actuarial reviews are used to estimate our insurance rates and insurance reserves for future periods and to adjust reserves, if appropriate, for prior years.

Actuarial Review Performed During Q3 2020

We review our self-insurance liabilities on a regular basis and adjust our accruals accordingly. Actual claims activity or development may vary from our assumptions and estimates, which may result in material losses or gains. As we obtain additional information that affects the assumptions and estimates used in our reserve liability calculations, we adjust our self-insurance rates and reserves for future periods and, if appropriate, adjust our reserves for claims incurred in prior accounting periods.

During the third quarter of 2020, we performed a comprehensive actuarial review of the majority of our casualty insurance programs that evaluated changes made to claims reserves and claims payment activity for the period of November 1, 2019 through April 30, 2020 (the “Actuarial Review”). The Actuarial Review was comprehensive in nature and was based on loss development patterns, trend assumptions, and underlying expected loss costs during the period analyzed.

Based on the results of the Actuarial Review, at July 31, 2020, we decreased our total reserves for prior periods by $8.5 million. Together with the $6.6 million decrease we recorded during the first half of 2020, the total decrease to our reserves for claims related to prior periods was $15.1 million for the nine months ended July 31, 2020. This compares to a $2.0 million increase in prior period reserves for the nine months ended July 31, 2019. We will continue to assess ongoing developments, which may result in further adjustments to reserves.

During the fourth quarter of 2020, we expect to perform an update to our Actuarial Review for our significant insurance programs that will use updated claims data and consider changes in claims development and claims payment activity for the periods analyzed. This review will be abbreviated in nature based on actual versus expected development during the periods analyzed, will rely on the key assumptions used in the Actuarial Review (most notably loss development patterns, trend assumptions, and underlying expected loss costs), and will include claims related to certain previously acquired businesses. This review may lead to further adjustments to our insurance reserves.

Insurance Related Balances and Activity


(in millions)	July 31, 2020		October 31, 2019
Insurance claim reserves, excluding medical and dental	$	521.0	$	507.8
Medical and dental claim reserves	14.9		7.2
Insurance recoverables	69.2		64.5

At July 31, 2020 and October 31, 2019, insurance recoverables are included in both “Other current assets” and “Other noncurrent assets” on the accompanying unaudited Consolidated Balance Sheets.

Instruments Used to Collateralize Our Insurance Obligations


(in millions)	July 31, 2020		October 31, 2019
Standby letters of credit	$	143.6	$	141.0
Surety bonds	85.2		90.8
Restricted insurance deposits	0.7		0.8
Total	$	229.5	$	232.6