Waste Management 2015 Annual Report Download - page 171

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
We have retained a significant portion of the risks related to our automobile, general liability and workers’
compensation claims programs. “General liability” refers to the self-insured portion of specific third party claims
made against us that may be covered under our commercial General Liability Insurance Policy. For our self-
insured retentions, the exposure for unpaid claims and associated expenses, including incurred but not reported
losses, is based on an actuarial valuation and internal estimates. The accruals for these liabilities could be revised
if future occurrences or loss development significantly differ from our assumptions used. As of December 31,
2015, our commercial General Liability Insurance Policy carried self-insurance exposures of up to $2.5 million
per incident and our workers’ compensation insurance program carried self-insurance exposures of up to $5
million per incident. As of December 31, 2015, our auto liability insurance program included a per-incident base
deductible of $5 million, subject to additional deductibles of $4.8 million in the $5 million to $10 million layer.
The changes to our net insurance liabilities for the three years ended December 31, 2015 are summarized below
(in millions):
Gross Claims
Liability
Receivables
Associated with
Insured Claims(a) Net Claims Liability
Balance, December 31, 2012 ................... $569 $(202) $ 367
Self-insurance expense (benefit) ............. 177 (5) 172
Cash (paid) received ...................... (156) 10 (146)
Balance, December 31, 2013 ................... 590 (197) 393
Self-insurance expense (benefit) ............. 168 (9) 159
Cash (paid) received ...................... (161) 23 (138)
Balance, December 31, 2014 ................... 597 (183) 414
Self-insurance expense (benefit) ............. 202 (39) 163
Cash (paid) received ...................... (156) 4 (152)
Balance, December 31, 2015(b) ................. $643 $(218) $ 425
Current portion at December 31, 2015 ......... $141 $ (20) $ 121
Long-term portion at December 31, 2015 ...... $502 $(198) $ 304
(a) Amounts reported as receivables associated with insured claims are related to both paid and unpaid claims
liabilities.
(b) We currently expect substantially all of our net claims liability to be settled in cash over the next five years.
The Directors’ and Officers’ Liability Insurance policy we choose to maintain covers only individual
executive liability, often referred to as “Broad Form Side A,” and does not provide corporate reimbursement
coverage, often referred to as “Side B.” The Side A policy covers directors and officers directly for loss,
including defense costs, when corporate indemnification is unavailable. Side A-only coverage cannot be
exhausted by payments to the Company, as the Company is not insured for any money it advances for defense
costs or pays as indemnity to the insured directors and officers.
We do not expect the impact of any known casualty, property, environmental or other contingency to have a
material impact on our financial condition, results of operations or cash flows.
Operating Leases — Rental expense for leased properties was $140 million during 2015, $159 million
during 2014 and $170 million during 2013. Minimum contractual payments due for our operating lease
obligations are $89 million in 2016, $77 million in 2017, $61 million in 2018, $51 million in 2019, $42 million in
2020 and $281 million thereafter. Our minimum contractual payments for lease agreements during future periods
is less than current year rent expense due to short-term leases.
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