CAUL Survey

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CAUL Survey
Insurance Valuation Methodologies

Number of respondents: 13

Respondents:
1. Charles Darwin University
2. Charles Sturt University
3. Griffith University
4. La Trobe University
5. Monash University
6. Swinburne University
7. University of Canberra
8. University of Melbourne
9. University of New South Wales
10. University of Newcastle
11. University of Queensland
12. University of Technology (Sydney)
13. University of Wollongong

VALUATION RESPONSIBILITY

Of the 13 Universities that responded the majority perform valuations on an in-
house basis. Only one respondent indicated that external valuation has been the
norm, and this will changing in the very near future to in-house valuation.

GENERAL COLLECTIONS – VALUATION METHODOLOGIES

 CAUL statistics x $X ($100 currently) excludes serials and items
published 20 years+. On-costs are not associated with replacement costs

 All monographs are capitalized at cost. A residual value of 5% of
capitalized cost is retained to account for older material. Disposed items
are written off using the average cost in the year of acquisition for each
item, with depreciation written back accordingly

 (Average price obtained from ILMS Innopac + processing cost) x number
of items in collection

 General collections are valued by adding value of new print purchases to
the value of the existing collection and using a ten year sliding scale for
depreciating the existing collection
 External valuation to obtain Replacement Value and Market Value

 Value estimated by Finance (dept) based on yearly figures provided by
Library including monographs received and disposed. Have requested
review of depreciation and valuation methods as it is not satisfactory.

 Have insured the collection for the replacement of a core collection
including cost of processing

 Books and print serials each year are added to the previous years total in
the Annual Report and then depreciated at a rate of 2.5%. The rate of
depreciation is set by the University’s Financial Operations Group. The
rate is under review.

 Only 90% of the collection would be replaced. Calculate the average price
for books, bound periodicals, microforms and other and multiply by
number of items. Electronic resources are excluded

 At least 85% would be replaced. Number of items x (average price +
processing costs). Average price calculated over 4 years from ILMS
Innopac

 Number of items held (UNILINC Storage Statistics Report) x average cost
(Blackwells Book Time Series reports)

 Cost of the collection less depreciation and discards. Depreciation is 6.7%
per annum.

 General collections are valued by:
o adding value of new print purchases to the value of the existing
collection
o using a ten year sliding sale for depreciating the existing collection.

 Tangible information resources are capitalised at cost annually; Electronic
information resources are expensed annually; Donated items are
capitalised at average cost per item in the year of donation; Rare Books
are valued independently, and are not depreciated; Capitalised cost is
depreciated at 20% per annum; Residual value of 5% of capitalised cost is
retained, reflecting academic and research value of older items
o Valuation for insurance
In 2002 the replacement cost of all collections for all libraries was
estimated to provide a baseline valuation for insurance needs
The cost of new acquisitions added to the collections, attributed to
all library locations (NB: donated items are estimated at default
value)
The value of the write-offs deleted from the collections, attributed to
all library locations

SERIALS

 Serials capitalized at cost with the exception of those in electronic format

 Value estimated by Finance based on yearly figures provided by Library
including journals received and disposed, cost of electronic and print
journals. Have requested review of depreciation and valuation methods as
it is not satisfactory. Depreciation of electronic journals should be set at
100%

 Serials are expensed immediately

 Electronic resources are excluded from the calculations

 Items purchased less than ten years ago: repurchase value = average
price calculated. Items purchased more than ten years ago: it is assumed
photocopying would be permitted. Photocopying cost based on average
per page copying cost and average no. of pages per journal. Processing
cost is incorporated.

 Determined by print serial expenditure as at 31 December plus the
replacement value for the previous ten years. i.e. serial expenditure x 10

 For print serials, coverage for the current year’s subscription costs, over
two years. This is predicated on research which finds that most serial
usage is within the first two to three years from publication date. For back
runs of print serials, we would seek to replace only significant titles in the
Art and Architecture fields – the Dewey 700s. This is because they have
intrinsic value, and the teaching and learning value is enhanced through
the format – i.e. it cannot be replicated through online resources.

RARE / SPECIAL COLLECTIONS

 Rare books are capitalized as per independent valuation

 All individual items worth in excess of $5000 are recorded separately.
Items are reassessed annually against market rates using auction results
and quoted prices of rare materials web sites. Other items are valued
based on the expertise of Rare Book Librarians.
 Professionally valued every 5 years. Purchase value of new acquisitions
added annually.

 Current valuation determined by estimation only. An independent valuer
will be engaged in the near future.

 The Prints, Grainger, Archives rare books etc are valued by Registered
Valuers (from the ATO registered valuers list under the Cultural Gifts
Program). The cost of the valuation and insurance is met by the University
out of the general university costs fund.

 Special collections are valued by an external expert every 5 years

 For items which have asset value, such as Cultural Collections, we would
insure for full replacement value. Significant items from these collections
have been valued by an accredited CGP valuer in November 2005
Institution Methodology Respondent
University of Assets valuation Marion Wilson
Newcastle  Based on a process used at University of Technology, Sydney
 Tangible information resources are capitalised at cost annually
 Electronic information resources are expensed annually
 Donated items are capitalised at average cost per item in the year of donation
 Rare Books are valued independently, and are not depreciated
 Capitalised cost is depreciated at 20% per annum
 Residual value of 5% of capitalised cost is retained, reflecting academic and research value of
older items

Valuation for insurance
In 2002 the replacement cost of all collections for all libraries was estimated to provide a baseline
valuation for insurance needs

This was updated annually by
 The cost of new acquisitions added to the collections, attributed to all library locations (NB:
donated items are estimated at default value)
 The value of the write-offs deleted from the collections, attributed to all library locations

New methodology – 2006 +

At the end of 2005, as the result of an audit requirement, an independent valuer was brought in to
provide a market value estimate of all the collections, including Rare Books and Archives which will be
insured for full replacement value. We will use this valuation in the future, to be updated every two to
three years. It will also provide the base for insurance replacement value. The principles for insurance
replacement value are shown below.

The basic principle for replacing items is to return to core business activity as soon as possible. Our core
business is to provide access to information resources required by our clients. On this basis,
replacement of entire collections is not a priority (nor possible), but provision of in-demand information
Institution Methodology Respondent
resources is.
 In the event of loss, the areas for which we would seek replacement are those which would
enable us to return to providing our core activity as quickly as possible. Insurance for a
replacement schedule would include :
 For monographs, we would seek replacement for the 85% of the open collections only. This
estimate provides allowance for items on loan or missing, and for multiple copies of items which
would no longer be required for teaching and learning.
 For Closed stack items, generally older, duplicated titles and editions, not in high demand, we will
insure for 10% of the valuation. Many are out of print and could not be replaced. Non-
replacement of these items would not impact upon core business activity. The need for older
items to support research activity could be met via document delivery mechanisms.
 For Open Stack items, we would insure for 25% of the value. These are often long runs of print
serials, which may not be replaceable in this format, but we would need to provide access to
some of them via electronic format.
 For print serials, coverage for the current year’s subscription costs, over two years. This is
predicated on research which finds that most serial usage is within the first two to three years
from publication date.
 For back runs of print serials, we would seek to replace only significant titles in the Art and
Architecture fields – the Dewey 700s. This is because they have intrinsic value, and the teaching
and learning value is enhanced through the format – i.e. it cannot be replicated through online
resources.
 For items which have asset value, such as Cultural Collections, we would insure for full
replacement value. Significant items from these collections have been valued by an accredited
CGP valuer in November 2005
 We will not insure for:-
o Formats which are redundant, and which have not transferred in significant numbers to a
newer technology, such as laserdisks.
o Electronic resources, as these are non-tangible. Expenditure on electronic resources
buys access to the information, not a physical product, so there is no loss in the event of
incident to library buildings.

University of The methodology here for the General Collection (set down by our in-house insurance manager and Anita Crotty
Institution Methodology Respondent
Canberra based on past practice) is to use the CAUL statistics, multiply by $X per item, excluding serials. The
agreed X is $100 at the moment.

Last year I agreed to a change this process so that items published more than 20 years ago were not
included. This was partly driven by the insurance premium going up sharply and a de-selection plan for
many items added in the seventies when the academic program was quite different.

Each year I get fresh figures on the collection in terms of volumes:publishing date - this then informs any
adjustment in the average $X replacement amount. My request not to have the 20-year cut-off was not
supported because of the added premium expense. Of course the "scarce/rare/archival" material is
valued through an entirely separate calculation.

By the way, I am also not permitted to factor in on-costs associated with replacing items as part of an
insurance claim - only the replacement cost of the item. (I have of course indicated to the insurance
manager that the on-costs would then have to come from the University coffers. He laughed!! )

CAUL Stats x $100
(excludes serials and items published more than 20 years ago)
INHOUSE METHODOLOGY

University of The Collection Valuation Methodology is as follows – Fides Datu Lawton
Technology
(Sydney) All Monographs are capitalised at cost with the exception of those in electronic form which are expensed.

All Serials are capitalised at cost, with the exception of those in electronic form (CD or online service),
and Inter-Library Loans which are expensed

Theses are capitalised at cost of reproduction, estimated at $100 per item (reviewed annually)

Rare Books are capitalised as per independent valuation
Institution Methodology Respondent
Donations are capitalised using the average cost in the year of publication for each item

Capitalised cost is depreciated at a rate of 12.5%, commencing in the year of purchase

A residual value of 5% of capitalised cost is retained, to account for older material that holds value for
academic and research purposes

Disposed items are written off using the average cost in the year of acquisition for each item, with
depreciation written back accordingly

La Trobe The library uses the following simple formula to estimate the value of Helen King
University its general collections (across all campus libraries) for insurance
purposes

For each material type (e.g. serial, monograph, AV etc)

(Average current price obtained from ILMS Innopac where possible +
processing cost) x number of items in the collection

Charles We're currently looking at our processes for library valuation at the request of the university insurers who Ruth Quinn
Darwin I gather insure a number of Universities and are looking at a consistent approach.
University
Over the years we've just employed a professional valuer to do a valuation for us - they come on site
about every 5 years, look at samples of the collection within dewey ranges, ascertain both Replacement
Value and Market Value, and then do a desktop valuation every 2nd year or so based on what we've
purchased/withdrawn.

The University's insurers however are looking at things like the percentage that we would replace in the
instance of a significant loss, and the percentage of the collection that would be on loan at any one time.
The latter is reasonable, but I find the first one very difficult to ascertain. It will be interesting to see what
they recommend eventually.
Institution Methodology Respondent
University of Valuation Lyn Wailes / Felicity
Wollongong The value of the collection was estimated by Finance towards the end of 2003, using figures from McGregor
annual reports. We had some input but were not
fully satisfied with the figure. The collection was insured based on that valuation

Depreciation
Depreciation Rates were revised during 2003 -see attached template. We are still using these rates but
have consistently asked Finance to review depreciation of electronic journals as it is 100% and will
present problems as electronic journals form increasingly larger proportions of the collection.

Annual process
At the beginning of each year I provide Finance with previous year's figures for:

number of monographs received
number of journal titles received
number of monographs disposed
number of journal volumes disposed
cost of electronic journals
cost of print journals

Finance use these figures to come to a collection valuation figure for year end. Again, we have indicated
that the methodology used is not satisfactory.

University of We write off our monographs collection straight line over 5 years. Susan Lafferty
New South
Wales Our serials are expensed immediately.

We have insured the collection for the replacement of a core collection
and we've included the cost of processing in the amount insured.

Monash For insurance purposes, the library attempts to derive the current replacement cost for 90% of the David Knox
University General Collection, and 100% of the Rare Books Collection. All valuation work is performed internally (ie.
Institution Methodology Respondent
there are no external valuations performed).

Rare Books:
All items with an individual value in excess of $5,000 are recorded separately. The valuations of these
items are reassessed annually against market rates, as measured by auction results and quoted prices
on rare materials web sites. Smaller items are grouped into collections, and are given a value based on
the expertise of our Rare Books librarian. These have been compared with the University of Sydney, who
have a similar collection, to ensure that they are reasonable.

General Collection:
In our insurance valuation model we assume that only 90% of the collection would be replaced in the
event of a claim. This takes into account the fact that a significant portion of the collection could not be
replaced or has limited value and therefore would not be replaced.

In terms of putting a value on the collection, we assume that the average cost of acquiring materials in
the most recent full year is our best measure of the current replacement cost of our collection. We
calculate the average price for each of the following - books, bound periodicals, microforms, and other.
The average price is calculated by dividing total expenditure in the most recent year divided by the
number of volumes acquired in that year.

We perform this calculation for each of our sites, so as to take account of the different unit costs for each
site. This also gives us a total value for each site, given that an insured event is likely to be site specific.

We specifically exclude the cost of electronic resources from the calculations, as these resources are
stored externally to the library, and therefore do not fall within the scope of the University’s insurance
policy.
University of At the University of Queensland it has been deemed that In the event of Mary Lyons / Jocelyn
Queensland a disaster to the collection , the Library would wish to replace at Priddey
least 85% of the destroyed content.

* Format may be different
- DVD replacing film
Institution Methodology Respondent
- Electronic replacing print and/or microform
- CD's replacing LP's

Based on that premise the valuation methodology is as follows.

A) Rare & manuscript material professionally valued every 5 years.
* Purchase value of new acquisitions added annually

B) Remaining standard collection based on:
* Collection count for each format
Multiplied by
* Average price for each format
Plus
* Processing cost for each format

Calculated from a base 1992 actual count + new items - discarded items.

Average price

* Determined from Innopac, the Library's integrated library
management system.

* To reduce the distortion effect on yearly averaged prices
caused by currency fluctuations, expensive purchases and the variations
in the mix of purchases from year to year, the average purchase price
has been averaged over 4 years.

Average price - Variation for Journals

* Items purchased less than 10 years ago
- Repurchase value = Average price as calculated
Institution Methodology Respondent
* Items purchased more than 10 years ago
- It is assumed photocopying would be permitted.
- Photocopying cost based on average per page copying cost & an
average no of pages per journal

A processing cost is incorporated into each calculation

Charles Sturt Non Serial Replacement Value Shirley Oakley
University
* Result calculated by multiplying the number of items held (source
UNILINC Storage Statistics Report as of 31 December) multiplied by an
average cost provided by Blackwells Book Time Series reports per
discipline area.

Print Serial Replacement Value

* Result determined by the serial expenditure as of 31 December plus the
replacement value for the previous 10 years. Ie. the serial expenditure
multiplied x 10.

Rare and Special Collections

C Current valuation determined by estimation only. Plan to engage
independent valuer in the near future.

The University is currently talking to with the State Valuation Office
re: insurance valuation in general and the library collection as a
subset. Our methodology may change.

Swinburne My understanding is that Swinburne insures the written down value of the library collection - ie the cost of Gary Hardy
University the collection less depreciation and discards from the collection. The collection is depreciated on a
Institution Methodology Respondent
straight line 6.7% per annum, regardless of format.

Given its teaching and research profile, Swinburne does not have significant rare or archival collections.
Griffith Special collections are valued by an external expert every 5 years. Janice Rickards
University We use the principles for developing collection valuation figures provided
by the Queensland Auditors to value general collections.
General collections are valued by:
- adding value of new print purchases to the value of the existing collection
- using a ten year sliding sale for depreciating the existing collection.

Note: Law collection items are assumed to increase in value overtime
rather than depreciate in value.
University of Nicki McLaurin Smith
Melbourne The University of Melbourne insures both the general and special (rare books, prints etc)
collections with Unimutual Ltd.

The University's insurance has 4 core Covers: Public Liability / Property / Professional Indemnity /
Directors in Office. The Library Materials are covered under the Property insurance. This covers
Physical Loss or Damage to Property owned or held in custody. Insurance is based on replacement
cost of each item. Cost of valuation and insurance is met by the University out of general university
costs fund.

General Collection
The base value of the general collection is as stated in the University's Annual Report (Approx $324
Million). The books and print serials (note this does not cover e journals or books) purchased each
year are added to the previous year's total in the Annual Report and then depreciated at a rate of
2.5%. The rate of depreciation is set within the University by our Financial Operations Group - it is
currently being reviewed as the University feel the current depreciation rate is too low.
FYI re Works of Art or Special Collections
These include Prints, Grainger, Archives, rare books etc. Each collection is valued individually.
These are valued by Registered Valuers (from the ATO registered valuers list under the Cultural Gifts
Program).
Institution Methodology Respondent
The Accounting Standards require Collections be valued (it was every 3 years but I believe this has
now changed and the university is making adjustments to the time period). Again the cost of
valuation and insurance is met by the University out of general university costs fund.