9. INSURANCE

We use a combination of insured and self-insurance programs to cover workers’ compensation, general liability, property damage, and other insurable risks. For the majority of these insurance programs, we retain the initial $1.0 million of exposure on a per-claim basis either through deductibles or self-insured retentions. Beyond the retained exposures, we have varying primary policy limits between $1.0 million and $5.0 million per occurrence. As of October 31, 2013, to cover general liability losses above these primary limits, we maintained commercial insurance umbrella policies that provide limits of $200.0 million. Workers’ compensation liability losses have unlimited coverage due to statutory regulations. Additionally, to cover property damage risks above our retained limits, we maintain policies that provide limits of $75.0 million. We are also self-insured for certain employee medical and dental plans. We retain up to $0.4 million of exposure on a per claim basis under our medical plan.

We had insurance claim reserves totaling $358.0 million and $343.8 million at October 31, 2013 and 2012, respectively. The balance at October 31, 2013 and 2012 includes $7.0 million and $13.0 million in reserves, respectively, related to our medical and dental self-insured plans. We also had insurance recoverables totaling $68.7 million and $64.5 million at October 31, 2013 and 2012, respectively.

Annual actuarial evaluations during the year ended October 31, 2013 were performed for the majority of our casualty insurance programs, including those related to certain previously acquired businesses. Based on the results of these evaluations, we have allocated insurance expense for the year ended October 31, 2013 to our operating segments based upon their underlying exposures. Additionally, as a result of these evaluations, it was determined that there were unfavorable developments in certain general liability, automobile liability, and workers’ compensation claims for various policy years prior to 2013.

Certain general liability claims related to earlier policy years reflected loss development that was measurably higher than previously estimated. The majority of the adverse impact seen in the general liability program was the result of claim development in two jurisdictions, California and New York. This impact was partially offset by the implementation of a series of initiatives to improve the management of general liability claims. A similar trend was also experienced in our automobile liability program, which was largely attributable to considerable changes in a small population of the automobile liability claim pool.

In California, a jurisdiction in which we maintain a significant presence, the workers’ compensation claim development patterns warranted an unfavorable adjustment to our insurance reserves. In response to California’s challenging workers’ compensation environment, we undertook several claim expense reduction initiatives to resolve claims at an accelerated pace where feasible, which may have contributed to some of the unfavorable development. Conversely, the workers’ compensation loss patterns in states other than California warranted a favorable adjustment which partially offset the adverse development experienced in California. Additional favorable prior-year developments were also realized in Illinois in connection with workers’ compensation reform that has contributed to lower claim-related medical cost.

After analyzing the historical loss development patterns, comparing the loss development against benchmarks, and applying actuarial projection methods to determine the estimate of ultimate losses, we increased our reserves for prior year claims, which resulted in an increase in the related insurance expense of $10.6 million during the year ended October 31, 2013 and was recorded as part of Corporate expenses, consistent with prior periods. Insurance reserve adjustments resulting from periodic actuarial evaluations of ultimate losses relating to prior years during the years ended October 31, 2012 and 2011 were $7.3 million and $2.1 million, respectively.

We had the following standby letters of credit, surety bonds, and restricted insurance deposits outstanding at October 31, 2013 and 2012, to collateralize our self-insurance obligations:


	October 31,
(in thousands)	2013		2012
Standby letters of credit	$	97,650	$	104,968
Surety bonds		40,538		34,933
Restricted insurance deposits		28,466		31,720

Total	$	166,654	$	171,621