Twane Duckworth: Hello and welcome to another episode of WTW's U of Risk. This is our series AOA, the Authority on Authorities. We are talking to some of the most renowned experts in the industry that interact with your daily life through our government authorities. Whether it is transportation, servicing your homes, your entities, your businesses in any way that helps promote and move forward your life. This is now the episode we get to hear from Dallas Area Rapid Transit’s Risk Management Authority, Sophia Gatewood. I'm so happy to introduce her. Sophia, why don't you take it away and tell us a little bit about yourself, your title and your role at DART.
Sophia Gatewood: Good afternoon, Twane. Thank you so much for having me today. Again, my name is Sophia Gatewood. I am the Assistant Vice President of Risk Management here at Dallas Area Rapid Transit. My role at Dallas Area Rapid Transit is to -- I am -- I lead the division tasked with protecting the organization's assets, whether that is our people through our workers comp programs in our short-term and long-term disability programs or our property through our extensive property program. And we also protect these assets by self-insuring and self-funding all of our liability programs. So again, thank you for having me and I look forward to our chat today.
Twane Duckworth: Wonderful. Well, thank you for joining us. We really do appreciate your presence. We know that you are a very busy individual. You have a lot of people and assets to protect. So, let's get right into it so we can let you get back to the heart of your daily work schedule. So, at the end of the day, why don't you do us a favor because not everyone is familiar. I happen to be in Dallas in the WTW office and you're obviously in Dallas as a part of the DART transportation system. But describe for those who may not know.
Sophia Gatewood: Alrighty. Well, DART is considered a regional transit agency, and we serve the Dallas Fort Worth metroplex located in beautiful North Texas. We serve 13, what we like to describe as member cities, who subscribe to the transit agency services, basically contributing a portion of the sales tax revenue for the city at 1%. DART’s been in service for 40 years now. So, we have a long history in the community. And we provide light rail service, bus service, and service for individuals who need specialized transport. Again, we have rail service, and we boast one of the longest rail lines in the country, which covers about 700 square miles in the North Texas area.
Twane Duckworth: Excellent. That's actually something that I did not know. That's very interesting and I live here. That's a lot of square footage. You know, I used to be the Chief of Risk Management for the city of Jacksonville, Florida. And a lot of people are unaware that it is the largest city in the United States by land mass, being over 800 square miles. So that would be roughly the size of Duval County, city of Jacksonville, Florida. I can tell you that is a large area. I used to laugh when people would say, you know, you'd be driving for one hour and you're still in the same city. That's a large city. A lot of rail space.
Yes, but you mentioned something that was also new to me and that it was that the fact that you all are funded, and I'm not sure if this is primarily or solely, but you mentioned through sales tax, right. And a lot of people are unaware sometimes of the interplay between our public transit authorities and the governmental aspect and that quasi-governmental status. Talk to me a little bit more about how you all are funded and how you all operate in a government sense.
Sophia Gatewood: Yes. DART is considered a subsection of local government, which means we enjoy the same rights as any other governmental entity, whether it be a city or a county. And we are governed by the Tort Claims act, which is the Texas statute governing governmental entities.
And the DART was formed back in 1984 by a vote of local constituents who wanted transit in the area. So, the cities put votes on the ballot at that time, and the citizens decided, in the 13 cities, decided, yes, we want transit in our cities, and we want the benefit of having all of the services provided. So, at that time, it was decided that one cent of every dollar would go to fund transportation, and it has been that way 40 years.
We are also funded by state and federal grants and then the state sales tax revenue. And of course, we are a revenue generating agency. So, we, we do have revenue that comes in as a result of our ridership.
Twane Duckworth: Interesting. So, I mean, that's obviously a lot of interplay with governmental aspects. And, and that being if you would, a subdivision of government or state actors. So, in fact, I'm imagining that provides a little bit of distinctive perspective on your ability to -- how you treat risk when it comes to liability purposes because you have things like sovereign immunity as opposed to a private actor. So how does that play into your claims handling ideology and philosophy?
Sophia Gatewood: On the risk management side, we are also regulated by the federal government. So, on the risk management side, there are things that the federal government requires us to do that the state government may not necessarily have us do. One of those things is if you operate rail, you must buy a rail liability insurance at a prescribed rate. At this time, the rate is you must carry $323 million in coverage.
Twane Duckworth: You're talking about the FAST Act.
Sophia Gatewood: Yes. Thank you.
Twane Duckworth: I have a little education in the area. Listen, for those who are unaware, why don't you explain a little bit about the FAST Act? We're getting to it, but I just had to jump in there and throw my two cents.
Sophia Gatewood: Well, look, I think that would be like watching paint dry.
Twane Duckworth: But the FAST Act obviously is something that's relevant to your operations. You operate rail. It does require an extensive amount of limit of liability. And you mentioned it's over $300 million.
Sophia Gatewood: Yes. So, the state government here in Texas requires that – well it does not require that we carry liability insurance, and we have the benefit of having governmental immunity that has caps. And the caps for any governmental entity in Texas are not that high. Well, the federal government, on the other hand, if you are operating rail, they keep the caps, or the amount of insurance required the same across the board. So, while we may be, we may not be a railroad who operates nationally who have a lot more risk than we do. We have to play by the same rules as the big players.
Twane Duckworth: Absolutely.
Sophia Gatewood: And that is specific to our rail operation and does not apply to our bus operation or mobility operation.
Twane Duckworth: And we're going to get to that in a moment. But I thought, I thought it was actually quite interesting because you might think, and I'm sure some of our listeners are probably trying to fathom this if they're in the position of managing risk for any type of operations that's not in rail, that having over $300 million of liability protection, especially in today's marketplace, might be seem a little daunting.
So, I know that WTW was instrumental in helping to coordinate a, if you would, a interconnected scale and scope of getting that liability placement through a collective for multiple railroad operations here locally in North Texas. And I thought that was quite interesting. Do you have any insight on that history or how that worked out?
Sophia Gatewood: Yes, and Willis Towers Watson did play a big part in coordinating that effort. Securing $323 million in this market can be quite expensive. And, you know, it is, of course, not just securing it, but also having the ability to renew at rates that are not, you know, astronomical when you're two, three years into the program and you get these significant increases. So, three years ago, I believe. Well, we have partners. DART has relationships with the Fort Worth Transit Authority, with Trinity Metro, the TRE, and the Grapevine Railroad. They are all much smaller entities, but they connect or interconnect with us daily. And, you know, we share tracks, we share service. There are smaller entities, and we have agreements in place where we basically share the same passengers, the same revenues at points. And our smaller partners were having real issues securing that kind of coverage. So, we made the decision to, and this was with the assistance of the North Texas Council of Governments, basically as the mediator, if you will. We came to an agreement that we would share the coverage and share the cost on a pro rata basis.
So, DART pays the lion's share of any premiums with our smaller partners paying a pro rata share based on size, based on coverage, based on their deductible. And it works out especially for our smaller partners. DART has some economies of scale that we enjoy, but our partners greatly benefit from the program, and it's worked very, very well. None of the partners, DART or any of the partners are, you know, significant reporters of loss. So, we don't have any issues with significant increases with one partner, you know, having a lot of claims and the others not. So, we have not run into those kind of issues. We partner in how we manage risk, how we provide our safety efforts with each other, how we go out and inspect and make ensure that we're running in a safe and efficient manner.
Twane Duckworth: I mean, that's wonderful to hear. I'm glad to hear that you all have, and I'm just going to call it a master rail liability program. You all have been able to operate under those auspices without having a lot of infighting or concerns. I mean, because there are certain parts of this, of our community as well as, you know, just the fabric of America where there is a lot of interconnectivity between multiple rails and lines. And I'm certain they could benefit from something like that. So glad to hear that that's working out well and that has been beneficial for you all. So kudos to you all for being able to make that continue to work. That's a definite ode to the collaborative spirit here in North Texas. So, I'm excited to hear that.
Sophia Gatewood: It is, it is. And communication is key. Just communication, getting what the need is, what the expectation is, and just staying in communication and understanding that we're all here to serve the same purpose, that is to provide transportation to North Texas.
Twane Duckworth: And switching to that and segue, that's a perfect idea for me when I think about how important DART is to North Texas, because one of the things I think sometimes people forget about and I used to live in the District of Columbia, so, you know, you have the massive transit system there, right. Because there's such an influx daily into a 12 by 12 if you would square mile place called the D.C. and then people go in and they come out, out. One of the things that we would just, just literally lament about on a regular basis is there's no way in the world I'm driving in to D.C. during traffic time and driving back out. But sometimes people forget that outside of some of these areas that are traditionally considered congested and you know, some, maybe the northeast parts of our countries, for example, that we have that same sort of concerns here.
DART plays a role, am I correct, in how we economically survive here and also our traffic and in the way that we get to and from work as well.
Sophia Gatewood: Right, yes, of course. And you know, we have a theme or an ongoing saying in the transportation industry in North Texas. We Texans like our big trucks. So, the, the drive has been to make sure that people that our consumer, that businesses understand that transportation plays a role in how we live, how we work, how we do business. And you know, there comes a time where there are enough big trucks on the road. So, you know, I hate to say selling, but selling the idea that transportation is a benefit to North Texans is a big push for us at this time, making sure that people understand the value of transit agencies and the services that we provide here in North Texas.
The workforce has changed. What we get in a place like North Texas, where cities are spread out, is we get riders who live in the more urban areas and then we get those riders who are commuters. Well, after the pandemic, the commuter is now at home. And you know, a lot of commuters are at home for the foreseeable future. So, overcoming some of those challenges has, you know, has been tough. But I'm happy to say that on the weekends we have ridership that is at pre pandemic rates, and we are approaching pre pandemic rates with commuter transportation. So, it is important. And as our workforce changes, as the way we do things here in North Texas changes, you know, transportation is definitely an industry that can help.
Twane Duckworth: And you know, I believe that there are some things that DART is doing very well and successfully to get those kinds of enhancements. And I'm going to switch over to the idea of technology. Talk to us about some of the technological enhancements that DART has implemented or has on the horizon that is facilitating that increased ridership and return to pre pandemic levels. Anything you all are doing in that area to help make that happen.
Sophia Gatewood: Well, as I said before, DART was created 40 years ago. Think about the technology that existed then.
Twane Duckworth: Yeah, I won't tell you how old I was.
Sophia Gatewood: Don't ask me to give you the exact year, but when we first started, it was the bus network. You know, as time went on, we added our light rail system and the kind of technology it takes to run a light rail system. Because think about, you know, the machinery that you have, the number of trains that you have on the track at any given time and keeping those trains safely operating without having them run into each other without, you know, the technology it takes to switch a train from one track to another to make it turn. I probably mentioned already that DART has the motto of operating safely and efficiently.
Part of our safety effort is every train in all of our buses, platforms and facilities are monitored by camera. The camera network and the monitors that it takes to do that. After so many years of having this technology in place, there comes a time when it needs to be upgraded, it needs to be replaced. Right now, we are in the process of securing more current technologies for our cameras. We're in the process of procuring new trains and some new buses and the technology that it takes to put into those buses, like buying a Volkswagen versus a Tesla. The things that a Tesla will do is way different than what a Volkswagen will do. So, when you're talking about a train that has to run on a track and safely transport people from point A to point B, and you've got 20 or 30 other trains also running at the same time, and they've transported those passengers for 20 years, it's time to upgrade them.
Twane Duckworth: Yeah.
Sophia Gatewood: With those upgrades also come the upgrades in technology. So, as we procure new equipment, we also at the same time have to upgrade and procure new technology.
Twane Duckworth: Technology for your actual transit transportation has to keep up with also the infrastructure technology enhancements. And I'm imagining things like I remember riding the bus when I was younger, and it was like do you have exact change now? You can then move to you know, having cards and then other, you know, electric payment methods and all of that good thing. So, I imagine those are enhancements that are being made too that helps make the writer experience better.
Sophia Gatewood: Yes. And DART actually is award winning for it and I will shameless plug the GoPass app. And it's an app that was created by DART Innovation about five years ago and the team won an award for the new technology, and we have other transit agencies that have since bought in to the app that we created and we basically brand it with the other transit agency’s trademarks and logos and so on and sell them that platform. So we've got some exciting things going on in technology here at DART.
Twane Duckworth: Very impressive. You realize you just introduced a of risk that other organizations are completely unaware of or don't have as an exposure, patenting and trademarking, all of this stuff. That's a whole another world.
Sophia Gatewood: And you know, and there's a such thing as a indemnification agreement, you know.
Twane Duckworth: So, you know, and that's the thing about it. I think that a lot of times people forget that just because you have a primary source or exposure when it comes to risk, that people that sit in your role where you have so many various levels of interaction with the community and other corporate entities, that risk can be come in so many different facets. I have to imagine that like you're talking about enhancements, upgrades, infrastructure that probably comes with additional construction risks, I'm guessing. Are you all involved in various construction projects? How do you handle those risks?
Sophia Gatewood: Yes, we certainly are. There are great things going on at DART. We are currently building a new rail line that runs from Plano down to DFW Airport. It is affectionately known as the Silver Line. And that project started five and a half years ago, and we decided to make use of an OCIP policy or plan. So that program. Are you familiar with the OCIP program?
Twane Duckworth: I have a little familiarity. But just to ensure that some of those who are again learning from what you say, tell them what's up.
Sophia Gatewood: Yes sir. It's an owner-controlled insurance program and that program basically is a insurance package policy that covers -- ours covers general liability, auto liability, workers comp and of course builders risk and a wrap up plan or policy. And we chose to use an OCIP because this is a very large, very extensive project and we have multiple, multiple, multiple contractors on site. The, you know the risk associated with building a rail is they're a great risk.
When you're constructing a building, your risks there are going to be mainly workers comp. But when you are trying to build a track that is 20 miles long, 30 miles long, you know it is, you've got lots of driving, you've got lots of folks who are spread out over many miles working on this project. So, we decided because the risks were such that anything could happen in any place in North Texas that we needed some control over who's insured, how much insured they have, not to mention subcontractors, you know, so we've got our general contractor and many, many subcontractors participating in the build.
So, we needed control to make sure that our vendor and their subs remained insured throughout the course of the project. There's a very robust safety component built into the administration of the program. So, we don't have to go out and hire safety folks to oversee and make sure that people are operating the way they're supposed to operate, that all the measures that are needed are being taken.
Our administrator, Willis Towers Watson, I'll plug for you there, also takes care of badging, making sure that folks who are supposed to be on the program are appropriately vetted and badged and that when they're done with their part of the project that their badges are deactivated, and they're not allowed back on the property.
Twane Duckworth: When you say OCIP, just for our listeners to understand, as it's an owner-controlled insurance program, it is very much owner controlled. You are, and I'm imagining that helps present some efficiencies for you economically as well too.
Sophia Gatewood: It certainly does. The folks who are basically in charge of running the plan are not actual employees of DART, but the relationship has been intact for five years. Actually more because we had an OCIP before this build and Willis Towers Watson has been instrumental in making sure that the OCIPs ran into each other.
Twane Duckworth: I want to transition, if you don't mind, into your transition into your role at DART because you were with public entity, business and expertise before that, correct?
Sophia Gatewood: Yes, yes, I was. I have been in public service for 12, maybe 13 years. Prior to my service in the public sector, my background was in private insurance. I was a claims adjuster handling all kinds of claims in the industry for over 20 years and I have worked for several very large carriers. I've been in liability claims, workers comp claims, short-term, long-term disability claims. I have a myriad of claims handling experience and coming from a claims background, you completely understand what could happen. Because you see it happen every single day.
Transitioning from insurance into risk management and into the public sector has been a such a smooth transition because knowing what definitely could happen, it's like reverse engineering. So, I have been able to take my experience from the insurance industry and parlay it into risk by knowing that if I'm running a transit agency or if I am assessing risk for a transit agency and I am driving vehicles every day, millions and millions and millions of miles per year, there's bound to be a car accident. So, we know that it's going to happen. We know it at what severity. A bus is about the same size, maybe slightly smaller than an 18-wheeler. A private entity may drive an 18-wheeler, but I've got a bus that can do the same amount of damage or greater. Taking that experience from the other entities that I've worked for, the other places that I've worked, has been a very smooth transition into this side of the house, meaning risk management, into public entities where I have the benefit of caps, governmental immunity.
It has been a great transition. And I will add that coming out of the private sector into the public sector has been an amazing experience for me because the work feels really good. To be able to take all those years of working in a private entity and coming on this side of the house and saying I have something to give that has taken me not quite 40 years. It's taken me a little less than 40 years to gain the experience. But being able to use it in this manner has been really satisfying for me.
Twane Duckworth: I can appreciate that. That was one of my certainly attractive aspects of doing what I did in the government for 17 years was the mission. I was mission driven. Knowing that I'm doing something that serves our community, and we find that to be important in what we do.
So, I'll close with this just because I know there are listeners out there who are going to say, I like what I hear. I want to figure out how I can do that. Do you have any organizations or associations that have helped you in your journey to dealing with transit risk? Anything that you want to let people know that you've participated in or you believe in that can help others who might be interested in making that transition?
Sophia Gatewood: Yes, I actually started with, as far as organizations, with PRIMA, the Public Risk and Insurance Management Association, and learned a great deal about managing public risk. The colleagues that you find there, a lot of the folks who are in public risk, that's all they've ever done. So, when transitioning to this side of the house, making the -- having those relationships has been invaluable to me. The risk managers that I find in both that organization and the local chapter of PRIMA, Texas PRIMA, has been just really helpful. The kinds of folks that you find there are helpful and we're in Texas, things are done way different in Texas. So, it is having colleagues who are willing to stop and give you the knowledge that they've gained in this business. You know, it is down home Texan help, fun. Just being parts of those organizations has really helped.
So, -- and then the other one is from a transportation standpoint has been APTA. And APTA is the transportation organization with many, many, many arms. And one of them is that APTA has a safety and risk component and there's a conference. After coming into the transportation side of public entities. I attended the conference for APTA, and I was blown away on how much a transportation safety department has to do and how much reporting there is and the standards that we’re held to. So, just getting the knowledge and understanding what the expectation for one is as a risk professional in transportation.
I subscribe to any organization that can help me understand my business, meaning the industry as well as the risk management aspects. Because as you said earlier, each organization is different, and we all have specialized risk that we may be participating in that others don't. So just reaching out to peers has been great.
Twane Duckworth: Yeah, I agree. I know the American Public Transportation Association does help with that. So APTA is definitely good at that. So, I just want to say so much to you, Sophia. Thank you. My this was a shock full of information I got. I got to tell you I'm very happy to have had this conversation with you. Your time is valuable. We appreciate your attendance. I just want to say thank you to you personally and directly. So, thank you so much for being with us.
Sophia Gatewood: You are most welcome. Thank you for inviting me. This has been wonderful. I'm always glad to share my knowledge and expertise with the public.
Twane Duckworth: Wonderful. Well, having said that, I just want to say to our listeners, thank you for joining us. We appreciate your time and thank you for being a student here at WTW's U of Risk campus. You have been listening to our AOA series, the Authority on Authorities.
We are here to help you orient you and make sure you understand how the people that serve you possibly in your life on a daily basis. Maybe as you travel to and from work, maybe as you go home and find your electricity on and make sure that all of your utilities are working and things of that nature, that the authorities that are intersecting in your life are being run by consummate professionals with an insurance perspective that moves you. This is Twane Duckworth signing off on WTW U of Risk podcast series for AOA. Thank you for joining us.
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