HomeMy WebLinkAboutTR-06-00k
REPORT #2
. THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON
REPORT
Meeting: Council
Date: January 24, 2000
Report #: TR-06-00 File #:
Subject: DURHAM MUNICIPAL INSURANCE POOL
Recommendations:
It is respectfully recommended to Council the following:
THAT Report TR-06-00 be approved;
File #:.L
Res.#: ; �3-00
By -Law #:2009-09, 2000-10
2. THAT the attached By -Law (Schedule "A") authorizing the execution of the
Subscribers Agreement and Indemnity Agreement which contain the terms
and conditions of an insurance pooling arrangement, as agreed upon by the
Treasurers of the Municipality of Clarington, the Towns of Whitby and Ajax,
the Townships of Brock, Scugog and Uxbridge and the Region of Durham, be
approved;
3. That the Mayor and Clerk be authorized to sign the final agreements,
substantially in the form attached to the By -Law;
4. THAT the attached By -Law (Schedule "B") appointing the Treasurer as the
Municipality of Clarington's representative on the Board of Directors of the
Insurance Pool and the Deputy Treasurer as the alternate be approved; and
5. THAT the Frank Cowan Company Limited be notified of Council's decision.
Background:
1.0 At the General Purpose and Administration Committee meeting of July 5,1999,
Council approved Report TR-46-99, authorizing the Treasurer to proceed with
participation in the establishment of the Durham Municipalities Insurance Pool.
1.1 The purpose of the pool is to co-operatively self -insure or pool the cost of insurance
claims and to purchase insurance coverage under one common policy from the re,
insurance market.
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TR-06-00 Page — 2 -
1.2 There will be a pool deductible of $350,000. Participating Municipalities will retain
their current deductible limits and the pool will fund the cost of insurance claims,
which fail between the local deductibles and the pool deductible. Insurance coverage
would protect participants from claims exceeding $350,000. Stop loss insurance
would protect the pool participants from aggregate claims exceeding $1,000,000 in
any individual year. Currently, the Municipality of Clarington carries a deductible of
$5,000 for Liability and Fleet, $10,000 for Property and $2,500 for Errors and
Omissions.
1.3 Substantial long-term savings are anticipated due to favorable claims experience, as
well as interest available to be earned by the pool on claims reserve amounts.
Normally these amounts are paid directly to an insurer as part of the premium cost
and therefore interest does not accrue back to the purchaser of the insurance
coverage.
1.4 At this time, the Treasurers of the Region and six Area Municipalities (Clarington,
Whitby, Ajax, Brock, Scugog and Uxbridge) are seeking approval from their
respective Councils to execute the Subscribers Agreement to establish the Durham
Municipalities Insurance Pool. The City of Pickering has the matter under
consideration and may participate at some point.
Subscribers Agreement:
2.0 The Subscribers Agreement sets out the terms and conditions under which the pool
will operate. It must be approved by Council of each subscribing Municipality.
2.1 The Subscribers Agreement covers funding arrangements, the Board of Directors
(currently referred to as Advisory Board in the attached version of the agreement),
accounting and financial reporting, subscribers, operation of the fund and termination
of the fund.
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2.2 Through the terms of the Subscribers Agreement, a fund will be established which will
accept annual levies from the subscribing municipalities. The fund will be used to
purchase required insurance, pay premiums on behalf of subscribers, pay claims
above individual deductibles, finance a claims fluctuation reserve and pay
administrative expenses of the pool.
2.3 The Subscribers Agreement establishes the Board of Directors. The Board of
Directors is composed of one member appointed by Council for each subscribing
Municipality. Each member has one vote. The Council for each subscriber
authorizes the Board of Directors to act on their behalf with respect to matters
covered under the Subscribers Agreement.
2.4 The initial subscription period is three years. Provisions are included in the
agreement to allow for late entry or exit subject to certain conditions. Participating
Municipalities will share pool surpluses based on their proportion of the total
premiums paid into the pool by all subscribing municipalities. At the end of the third
year, surpluses may be paid out, premium contributions reduced for the next period or
be used to enhance the insurance program at the discretion of the Board of Directors.
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2.5 The Board of Directors will determine, with the advice of the actuary, the levy payable
by each subscriber. It is proposed that the initial levy will be based upon the annual
premium amounts paid to the previous insurer for the 1998/1999 premium year. This
will be approximately $280,000.
2.6 The subscribers may terminate the Subscribers Agreement by By -Law passed by a
majority of the subscribers.
Other Matters:
3.0 The draft Subscribers Agreement is attached to the By -Law marked Schedule "A".
The agreement has been reviewed by independent legal counsel with expertise in this
area as well as the legal counsels representing each municipality. There are several
minor issues to be finalized. The final version is anticipated to be substantially in the
form attached. If there are any substantive changes, a further report will be brought
to Council for approval. The pool has a target start-up date of March 1, 2000. As a
result, time is of the essence to formalize the Subscribers Agreement to allow the pool
to proceed.
3.1 Alternative .pool administrative structures for the daily operation and handling of
claims have been reviewed. In order to take advantage of existing staff knowledge, it
was agreed that the Region would be retained to provide daily insurance pool
management services on a contract basis. This does not give the Region any
additional authority at the Board of Directors level, as the Region will still only have
one vote on the Board of Directors. However, the Region will provide:
• Claims handling and administration services;
• Risk management and liability programs;
• Insurance claim and financial reporting; and
• Computer and financial services.
3.2 A copy of the Region of Durham's report to the Finance and Administration
Committee is attached as Schedule "C".
Conclusion:
4.0 It is recommended that the Municipality of Clarington participate in the Durham
Municipalities Insurance Pool, that the Treasurer be appointed as the Municipality's
representative and that the Deputy Treasurer be appointed as the alternate on the
Board of Directors, for the Insurance Pool.
Respe y submitted,
N16rie A. Marano, H. BSc.,AMCT,
Treasurer.
MM/NT/hjl
Reviewed by:
Franklin Wu, M.C.I.P.,R.P.P.,
Chief Administrative Officer.
SCHEDULE "A"
THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON
BY-LAW 2000
Being a By -Law to execute an agreement between the
Corporation of the Municipality of Clarington and Towns of
Whitby and Ajax, Townships of Brock, Scugog and Uxbridge
And the Region of Durham to enter into a Subscriber's
Agreement and Indemnity Agreement for the provision
Of Municipal Insurance Coverage.
THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON HEREBY ENACTS AS
FOLLOWS:
THAT the Mayor and Clerk are hereby authorized to execute, on behalf of the
Corporation of the Municipality of Clarington with the Corporation Seal, a Subscriber's
Agreement and an Indemnity Agreement for the purpose of providing Municipal
Insurance Coverage.
2. THAT the Subscriber's Agreement attached hereto as Schedule "A" form part of this
By -Law
3. THAT the Indemnity Agreement attached hereto as Schedule "B" form part of this By -
Law.
By -Law read a first and second time this 241h day of January, 2000.
By -Law read a third time and finally passed this 241h day of January, 2000.
Mayor
Clerk
SCHEDULE "A"
to By --Law
DRAFT #6 — January _6,.2000
MUNICIPALITIES IN DURHAM REGION
FUNDING ARRANGEMENT FOR
THE PURCHASE OF INSURANCE
SUBSCRIBERS' AGREEMENT
January 2000
e
Municipalities in Durham Region
Funding Arrangement for the Purchase of Insurance
Subscribers' Agreement
Table of Contents
PREAMBLE
ARTICLE 1.00 - DEFE TMONS
ARTICLE 2.00 - THE FUNDING ARRANGEMENT
2.01 Establishment of the Fund
2.02 Purpose of the Fund
2.03 Not a Partnership or Trust
2.04 No Authority to Bind
2.05 Indemnification for Unauthorized Acts
2.06 Several Liability
ARTICLE 3.00 - ADVISORY BOARD
3.01 Establishment
3.02 Constitution of the Advisory Board
3.03 Qualification of Members of Advisory Board
3.04 Rules
3.05 Power and Authority of the Advisory Board
3.06 Payment for Services
3.07 Term
3.08 Resignation
3.09 Vacancies
3.10 Decisions of the Advisory Board
3.11 Chair and Officers
3.12 Signing Officers
3.13 Meetings Generally
3.14 Teleconference Meetings
3.15 Notice
3.16 Location
3.17 Quorum
118 Agreement Without Voting
3.19
Duty of Care
3.20
Conflicts of Interest
3.21
Limitation of Liability
3.22
Indemnity of Members
3.23
Liability Insurance
ARTICLE 4.00 - ACCOUNTING AND FINANCIAL REPORTING
4.01
Fiscal Period
4.02
Books and Records
4.03
Subscriber Accounts
4.04
Annual Report
4.05
Audit
4.06
Bank Accounts
ARTICLE 5.00 - SUBSCRIBERS
5.01 Founding Subscribers
5.02 Additional Subscribers
5.03 Effective Date of Subscription
5.04 Minimum Period of Subscription
5.05 Termination of Subscription
5.06 Subscriber Dissolution, Merger or Break -Up
5.07 Continuing Liability
ARTICLE 6.00 - OPERATION OF THE FUND
6.01 Insurance Policies
6.02 Determination of Levies Payable
6.03 Assessments
6.04 Obligation to Pay
6.05 Closure of Underwriting Period
6.06 Excess and Stop Loss Insurance
6.07 Retention
ARTICLE 7.00 - TERMINATION
7.01 Termination of this Agreement
ARTICLE 8.00 - GENERAL PROVISIONS
8.01 Notice
8.02 Arbitration
8.03 Confidentiality
8.04 Currency
8.05 Calculation of Time Periods
8.06 Subscriber's Right of inspection
8.07 Severability
8.08 Entire Agreement
8.09 Waiver
8.1Q. Successors and Assigns
8.11 Further Acts r
8.12 Applicable Law
8.13 Amendments
8.14 Gender and Number
8.15 Headings
8.16 Time of Essence
SCHEDULES
Schedule A Founding Subscribers
APPENDICES
Appendix A Form of Subscription
Appendix B Form of Termination
Municipalities in Durham Region
Suhscrihers'Agreementfor the Purchase o Insurance
THIS AGREEMENT dated the [I "I day of [March], 2000
AMONG
THOSE MUNICIPALITIES THAT SUBSCRIBE TO THIS AGREEMENT BY
EXECUTING A COPY OF THE FORM OF SUBSCRIPTION ATTACHED AS
APPENDIX "A", SUBJECT TO AND IN ACCORDANCE WITH THE TERMS OF
THIS AGREEMENT
(hereinafter referred to collectively as "Subscribers" and individually as "Subscriber")
WHEREAS the Subscribers to this Agreement wish to secure long-term, stable and
economical insurance coverage;
AND WHEREAS the Subscribers wish to enter into this Agreement, pursuant to which the
Subscribers, among other things, will arrange to purchase policies of insurance, will enter into
contracts of indemnity with the Insurer in respect of the Retention amount, and will agree to
fund the purchase of such insurance policies;
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the
mutual covenants of the parties hereinafter contained and for good and other valuable
consideration, the receipt of which is hereby acknowledged, the Subscribers, one with each and
each with all, covenant and agree as follows:
ARTICLE 1.00 - DEFINITIONS
In this Agreement and any amendment to this Agreement, the following terms will have the
following meanings unless the context otherwise requires:
1.01 "Actuary" means the actuary retained by the Advisory Board from time to time;
1.02 "Advisory Board" means the Advisory Board established pursuant to Section 3.01;
1.03 "Alternate" means the person who is designated pursuant to Section 3.02 to act in the
place and stead of the Member, when unavailable;
1.04 "Annual Incurred Losses" means paid losses in respect of claims occurred, actuarially
determined estimates for reported cases, and actuarially determined estimates for
incurred but not reported claims;
1.05 "Assessment" means a charge against a Subscriber, as determined by the Advisory
Board pursuant to Section 6.03, which is in addition to levies;
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Subscribers'Agreement for the Purchase oflnsurance
1.06 "Attorney -in -Fact" means the person appointed to act for the Subscribers pursuant to the
Power of Attorney in the form attached to this Agreement as Appendix B;
1.07 "Claims Fluctuation Reserve" means actuarially determined reserve funds maintained by
the fund to adequately cover anticipated losses;
1.08 "Closure Date" for a particular Underwriting Period means the date that is three years
after the last day of such Underwriting Period, or such other date as is determined by the
Advisory Board on the advice of the Actuary that no further liability to or of the
Subscribers exists;
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1.09 "Deductible" means the amount which a Subscriber has elected for a particular coverage
for which that Subscriber is responsible in respect of any claim with respect to that
coverage;
1.10 "Eligibility Criteria' means the criteria which maybe determined by the Advisory Board
from time to time which must be met to be eligible to become a Subscriber;
1.11 "Extraordinary Resolution" means;
(a) a resolution passed at a meeting of the Advisory Board by the affirmative vote of at
least 80% of the Members of the Advisory Board; or
(b) any written resolution signed in one or more counterparts by all of the Members;
1.12 "Fiscal Year" means the twelve month period ending [February 28 or 29, as applicable];
1.13 "Founding Subscriber" means each Subscriber who, as of [March 1, 20001, has executed
and delivered the Form of Subscription attached hereto as Appendix A;
1.14 "Fund" means the fund established pursuant to Section 2.01.
1.15 "Indemnity" means each agreement each Subscriber has entered into with the Insurer to
indemnify the Insurer upon the payment of claims within the Retention and Indemnities
means all of such agreements;
1.16 "Insurer" means the insurance company with whom each Subscriber has entered into a
contract of insurance;
1.17 "Insurance Policy" means the policy of insurance purchased for each type of coverage
from the Insurer by each Subscriber. It is understood that each Subscriber will purchase
one or more Insurance Policies and that any references in this Agreement to Insurance
Policy applies to each and all of them, as applicable.
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Subscribers' Agreement for the Purchase of Insurance
1.18 "Member" means a member of the Advisory Board as provided in Section 3.02 and
includes, where the context requires, an Alternate;
1.19 "Municipality" means a municipality as defined in the Municipal Act, R.S.O. 1990,
M.45, as amended and includes a district, metropolitan and regional municipality;
1.20 "Ordinary Resolution" means:
(a) any resolution passed at a duly constituted meeting of the Advisory Board by
affirmative votes of a majority of the Members in attendance at such meeting, or
(b) any written resolution signed in one or more counterparts by 80% of the Members
of the Advisory Board;
1.21 "Prime" means the prime interest rate per annum established by the Toronto Dominion
Bank from time to time as the reference rate of interest for the determination of interest
rates that the Toronto Dominion Bank charges to customers of varying degrees of
creditworthiness in Canada for Canadian dollar loans made by it in Canada and payable
on demand and referred to by it as the "prime rate";
1.22 "Regional Municipality" means the Regional Municipality of Durham;
1.23 "Retention" means the amount per claim, as determined from time to time by the
Advisory Board on the advice of the Actuary, for which the Insurer is responsible on any
claim, subject to any applicable excess of loss, stop loss or similar insurance, Iess the
deductible, and for which each Subscriber is responsible under the Indemnity and the
funds for which shall come from the Fund;
1.24 "Rules" means the rules and regulations established pursuant to Section 3.05(p),
1.25 "Subscriber" means a Municipality which has been accepted for participation and which
has executed and delivered the Form of Subscription attached hereto.
1.26 "Subscriber Participation Percentage" means, with respect to a Subscriber, at any date
during a given Underwriting period, a fraction, the numerator of which is the total of the
levies paid and payable by such Subscriber to that date with respect to that Underwriting
Period, and the denominator of which is the total of the levies paid and payable by all
Subscribers to that date with respect to that Underwriting Period, expressed as a
percentage, except that in the case of the use of this formula for determining
Assessments, levies paid by any Subscribers which are not Iiable to pay Assessments
will not be included.
1.27 "Subscription Date" means, for a particular Subscriber, the date referred to in Section
5.03.
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Municipalities in Durham Region
Subscribers'Agreement for the Purchase oflnsurance
1.28 "Underwriting Period" means the period of three years commencing 12:01 am. on
[March 1, 20001 and ending on 12.01 am. on [March 1, 2003] and each successive three
year period thereafter during which the Fund continues to operate.
ARTICLE 2.00 - THE FUNDING ARRANGEMENT
2.01 Establishment of the Fund
The Subscribers hereby agree to the establishment of the Fund.
2.02 Purpose of the Fund
It is the intention of the Subscribers to use the Fund in order to purchase insurance, to
pay the premiums for contracts of insurance arranged on behalf of the Subscribers, to
enter into contract(s) of Indemnity with the Insurer in respect of such insurance, to refund
and pay claims as and when required in respect of the Retention, to provide funds for the
Claims Fluctuation Reserve, and to pay the administrative expenses of the Fund. The
Fund shall have the power to do any and every act and thing necessary, 'proper,
convenient or incidental to the accomplishment of these purposes.
2.03 Not a Partnership or Trust
Nothing in this Agreement is to be construed to constitute any of the Subscribers a
partner, agent or representative of the others, or to create any trust, constructive, implied
or otherwise, or any commercial or other partnership among the Subscribers. As among
the Subscribers, it is agreed in matters involving this Agreement not to rely on the
provisions of any partnership or trust legislation in any province or territory.
2.04 No Authority to Bind
Except as expressly provided in this Agreement, a Subscriber does not have the authority
to bind any other Subscriber or the Subscribers.
2.05 Indemnification for Unauthorized Acts
Each Subscriber (in this section called the "Indemnitor") hereby irrevocably and
unconditionally undertakes and agrees to indemnify and save harmless the other
Subscribers (in this section tailed the "Indemnitees") from and against any and all
liability, loss, harm, damage, cost or expense, including reasonable legal fees, which the
lndemnitees may suffer, incur or sustain as a result of any act of the Indemnitor outside
of the scope of or in breach of this Agreement.
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Subscribers' Agreement for the Purchase of Insurance
2.06 Several Liability
The obligations of each Subscriber with respect to the Fund and/or contracts and
obligations entered into by or on behalf of the Subscribers in connection with the Fund
will, in every case, be several and not joint and several.
ARTICLE 3.00 - ADVISORY BOARD
3.01 Establishment
The Subscribers hereby establish an Advisory Board for the purpose of implementing
this Agreement and operating the Fund.
3.02 Constitution of the Advisory Board
The Advisory Board will be composed of one Member appointed by each Subscriber.
Each Member will have one vote. Any Subscriber is entitled to designate in writing from
time to time an Alternate who is entitled to act in the place and stead of such Member
when such Member is unavailable. The Member and the Alternate, if designated, must
meet the qualifications set out in Section 3.03_
3.03 Qualification of Members of Advisory Board
Any individual may be a Member of the Advisory Board provided that, and for so long
as, he or she:
(a) is a person who is eighteen years of age or more;
(b) is not a person who is of unsound mind, having been so found in Canada or
elsewhere;
(c) is not a person who has the status of a bankrupt; and
(d) is an officer or employee of a Subscriber_
No appointment of a person as a Member is effective unless he or she consents to act as
a Member before or after the election or appointment.
3.04 Rules
For the purpose of administering this Agreement, the Advisory Board may establish from
time to time such rules and regulations as it considers appropriate, provided that the
Rules and any amendments thereto will be subject to the approval of the Advisory Board
by Extraordinary Resolution.
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Subscribers'Agreement for the Purchase oflnsurance
3.05 Power and Authority of the Advisory Board
Except as otherwise provided for in this Agreement, the Advisory Board has the power
and authority, and the Subscribers hereby direct the Advisory Board to give any
approvals and to make any decisions and determinations required or permitted to be
given or made by the Subscribers with respect to the Fund and any matter arising out of
or under this Agreement. Without limiting the generality of the foregoing, it is
acknowledged and agreed that the Advisory Board is authorized on behalf of and without
further authority from the Subscribers:
(a) to supervise the funding of the Retentions by the Subscribers in accordance with
such terms and conditions as the Advisory Board may deem proper and to change,
cancel, extend or insure such obligations and to secure insurance and/or
reinsurance in excess of the Retentions as the Advisory Board may deem proper;
(b) to set, by Ordinary Resolution, the levies and Assessments required of Subscribers
pursuant to the provisions of this Agreement, which levies and assessments are to
include each Subscriber's share of the expenses of the fund.
(c) to effect policy changes affecting the operation of the Fund by Extraordinary
Resolution.
(d) to supervise the demanding, collection and receipt of all moneys which may
become due by the Subscribers under this Agreement or under any contract of
indemnity or insurance;
(e) to give and receive all notices necessary or proper under the Indemnity or any
contract of indemnity or insurance in respect of the Fund or the Subscribers, and to
adjust, compromise and settle all claims and losses thereunder;
(fj to retain an auditor, Actuary, legal counsel and such other professional advisors as
the Advisory Board considers appropriate in order to perform its duties under this
Agreement;
(g) to open and operate in the name of the Fund an account or accounts in a Canadian
chartered bank in order to deposit and to distribute funds with respect to the
operation of the Fund;
(h) to invest funds in accordance with any applicable law and to make or approve
policies with respect to the investment of such funds and for the custody and
safekeeping of any securities in which such funds may be invested;
(1) to borrow such funds, in such amounts, on such terms and otherwise as the
Advisory Board may determine are necessary or desirable to fulfill obligations
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Subscribers' Agreement for the Purchase of Insurance `
under this Agreement provided that any borrowing for a term in excess of 30 days
must be approved by Extraordinary Resolution;
{j} to pay all taxes, fees and other expenses relating to the orderly maintenance and
management of the Fund;
(k) to appoint a Manager and other staff, if considered appropriate, to manage the
affairs of the Fund on behalf of the Subscribers on such terms and conditions,
including remuneration, as the Advisory Board may determine from time to time;
(1) to establish such procedural rules with respect to the time, place and number of
Advisory Board meetings;
(m) to require such additional information from any Subscriber as the Advisory Board
deems reasonably necessary in order to perform its duties under this Agreement;
(n) to appoint such committees including any or all of an Executive Committee,
Claims Committee, Policy Committee, Investments Committee and Audit
Committee as may be deemed by the Advisory Board to be necessary or advisable
for the operation of the Fund;
(o) . to take such steps as are necessary to comply with all applicable legislation;
(p) to make and amend, by Extraordinary Resolution, such Rules as the Advisory
Board considers appropriate pursuant to Section 3-04 including, without limitation,
rules for the signing of cheques, negotiable instruments and other documents;
(q) to establish and maintain such segregated balances as the Advisory Board
determines should be established and maintained for the purposes of this
Agreement;
(r) to establish policies with respect to the promotion of loss control and risk
management;
(s) subject to the provisions of the Municipal Act, R. S.O. 1990, M.45, as amended, to
do and perform every other act and all things required to be done under this
Agreement or necessary or proper to be done in order to fully carry out and
perform the terms of this Agreement;
(t) to establish the basis for apportioning the expenses of operating the Fund among
the Subscribers; and
(u) to determine policies and procedures with respect to the administration of claims_
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Subscribers'Agreementfor the Purchase oflnsurance
3.06 payment for Services
Except as determined by the Subscribers from time to time, no payment will be made to
any Member for his/her services in acting as a Member provided that any Member is
entitled to reimbursement of any reasonable expenses incurred in so acting.
3.07 Term
Notwithstanding anything else contained herein, any Subscriber may terminate the
appointment of its Member and appoint a successor Member. Subject to Section 3.03,
3.08 and 3.09, an appointed Member of the Advisory Board will hold office until his/her
successor is duly appointed.
3.08 Resignation
A Member of the Advisory Board may resign from office upon giving a written
resignation to the Advisory Board and such resignation becomes effective when received
by the Board or at the time specified in the resignation, whichever is later.
3.09 Vacancies
(a) Where there is a vacancy or vacancies in the Advisory Board, the remaining
Members may exercise all of the powers of the Advisory Board. When a vacancy
occurs, the Subscriber who appointed the Member no longer in office will fill the
vacancy as soon as practicable.
(b) Among other reasons, a vacancy will be deemed to be created when neither a
Member nor his/her Alternate attend two consecutive duly constituted meetings of
the Advisory Board. Such vacancy will be deemed to exist from the end of the
second such meeting and when written notice of such vacancy has been given by
the Advisory Board to the Subscriber.
(c) The vacancy shall no longer exist when a new Member and/or Alternate has been
appointed by the Subscriber. Nothing herein shall prevent the Subscriber from re-
appointing the Member or Alternate which led to the vacancy.
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Subscribers'Agreement for the Purchase oflnsurance
3.10 Decisions of the Advisory Board
All decisions of the Advisory Board require approval by Ordinary Resolution unless
otherwise provided for in this Agreement. A decision of the Advisory Board with
respect to any matter wi11 be binding on all the Subscribers.
3.11 Chair and Officers
(a) The Advisory Board will appoint a Chair and a Vice -Chair from amongst its
Members. The Chair, and in his/her absence the Vice -Chair, will chair all
meetings of the Advisory Board. In the absence of the Chair and the Vice -Chair,
the Members of the Advisory Board in attendance at the meeting will appoint
another Member to act as chair of such meeting.
(b) The Advisory Board may appoint such other officers and designate such
responsibilities for such officers as the Advisory Board determines from time to
time.
(c) The Chair, the Vice -Chair and any officers appointed pursuant to Subsection
3.11(b) will hold office for one year or until a successor is appointed. The Chair
will participate in all activities of the Advisory Board in the same manner as the
other Members and, for greater clarity, will not have a second or casting vote in
respect of any matter voted on by the Advisory Board.
(d) The Advisory Board will appoint a Secretary (who need not be a Member of the
Advisory Board) to keep complete and accurate minutes of all meetings of the
Advisory Board.
3.12 Sigruing Officers
Except as otherwise provided herein or where the Advisory Board has otherwise
authorized the execution of documents on behalf of the Advisory Board, the execution of
all documents required under this Agreement will be:
(a) by both the Chair and the Vice -Chair,
(b) by one of the Chair and the Vice -Chair together with one of two other Members
designated by the Advisory Board, or
(c) in the event that a Manager is appointed, by one of the Chair and Vice -Chair
together with the Manager.
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Subscribers' Agreement for the Purchase of Insurance
3.13 Meetings Generally
(a) The Advisory Board will hold regular meetings at such time as the Advisory Board
will determine from time to time.
(b) The Chair may call additional meetings of the Advisory Board if he/she considers
it advisable to do so, and will do so if requested by another Member.
(c) Each Subscriber may have an additional attendee at each Board meeting (in
addition to the Member, or the Alternate when the Member is unavailable) and,
although such additional attendee may participate in discussions, he or she has
none of the rights of a Member of the Board. 1.
3.14 Teleconference Meetings
When all Members present or participating in a meeting have consented, any Member
may participate in a meeting of the Advisory Board by means of conference telephone or
other communications equipment by means of which all persons participating in the
meeting can hear each other, and a Member participating in such a manner will be
deemed to be present in person at the meeting.
3.15 Notice
The Chair will give each Member written notice of the time and place of each meeting of
the Advisory Board at least 24 hours (excluding any part of a Sunday or holiday as
defined in the Interpretation Act of Ontario for the time being in force) before the time
when the meeting is to be held, save that no notice of a meeting is necessary if all
Members are present or if those absent have waived notice in writing to the holding of
such meeting. Such waiver, whether given before or after the meeting of which notice is
required to be given, will cure any default in giving such notice.
3.16 Location
Meetings of the Advisory Board are to be held at such place as may be agreed upon by
the Advisory Board from time to rime_
3.17 Quorum
A quorum for meetings of the Advisory Board is a majority of the number of Members in
office at the particular time and no action is to be taken at a meeting of the Advisory
Board unless a quorum is present.
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Subscribers'Agreementfor the Purchase of Insurance
3.1 S Agreement Without Voting
Any matter within the competence of the Advisory Board that is agreed or consented to
in writing by every Member is binding on all the Subscribers.
3.19 Duty of Care
Every member, in exercising his/her powers and discharging his/her duties, must:
(a) act honestly and in good faith, with a view to the best interests of the Subscribers
as a group in respect of the Fund; and
(b) exercise the care, diligence and skill that a reasonably prudent person would
exercise in comparable circumstances.
3.20 Conflicts of Interest
Members and/or Alternates shall not:
(a) engage in any business or transaction or have a financial interest or other personal
interest which is incompatible with the discharge of their official duties on the
Advisory Board;
(b) engage in any outside work or business undertaking in which the member has an
advantage or appears to have an advantage derived from involvement with the
Advisory Board;
(c) place themselves in a position where they are under obligation to any person who
might benefit from special consideration or favour on their part or who might seek,
in any way, preferential treatment;
(d) place themselves in positions where they could derive any direct or indirect benefit
or interest from any contracts about which the Member can influence decisions;
(e) benefit from the use of information acquired during the course of their official
duties as a member of the Advisory Board which is not generally available to the
public;
(fj accept a fee, gift or personal benefit that is connected directly or indirectly with the
performance of his or her duties of office as a Member of the Advisory Board;
(g) participate in any decision or make any recommendation to the Advisory Board in
which they or their immediate family has any financial interest.
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Subscribers'Agreement for the Purchase oflnsurance
Whenever a Member considers that he or she could be involved in a conflict of interest as
prohibited by this section, the Member shall immediately disclose the situation to the
Advisory Board. Should a situation arise which appears to be a contravention of this
section, the Advisory Board shall determine what action is appropriate to the
circumstances.
3.21 Limitation of Liability
No Member is liable for the acts, receipts, neglects or defaults of any other Member in
any respect, or for any loss, damage or expense happening to any Subscriber in respect
of the Fund, or for the insufficiency or deficiency of any security in or upon which any of
the moneys of the Subscribers is invested, or for any loss or damage arising from the
bankruptcy, insolvency or tortious acts of any person with whom any of the moneys,
securities or effects of the Subscribers in respect of the Fund be deposited, or for any
loss occasioned by any error of judgment or oversight on his/her part, or for any other
Ioss, damage or misfortune whatever which happens in the execution of the duties of
his/her office or in relation thereto, unless the same are occasioned by his/her own wilful
neglect or default; provided that nothing herein will relieve any Member of the duty to
act in accordance with this Agreement or of liability for any breach thereof.
3.22 Indemnity of Members
Every Member and every former Member of the Advisory Board and every officer and
every former officer appointed by the Advisory Board and their heirs and legal
representatives will be indemnified and saved harmless by the Subscribers from and
against all costs, charges and expenses, including an amount paid to settle an action or
satisfy a judgment reasonably incurred by him/her in respect of any action or proceeding
to which he/she is made a party by reason of being or having been a Member or officer
if:
(a) he/she acted in good faith with a view to the best interests of the Subscribers as a
group in respect of the Agreement; and
(b) in the case of a criminal or administrative action or proceeding that is enforced by a
monetary penalty, he/she had reasonable grounds for believing that his/her conduct
was lawful.
3.23 Liability Insurance
The Advisory Board shall purchase and maintain insurance for the benefit of any person
referred to in Section 3.22 against any liability incurred by him/her in respect of his/her
duties, except where the liability relates to the failure to act honestly and in good faith,
with a view to the best interests of the Subscribers as a group in respect of the
Agreement.
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Municipalities in Durham Region
Subscribers'Agreementfor the Purchase oflnsurance
ARTICLE 4.00 - ACCOUNTING AND FINANCIAL REPORTING
4.01 Fiscal Period
Accounts for the Fund will be prepared and settled as of the last day of each Fiscal Year
or as of any other date the Advisory Board may agree upon.
4.02 Books and Records
Proper and complete books, records, reports and accounts of the Fund will be kept at the
administrative office of the Fund and will be open and available for inspection and
copying by any Subscriber or � authorized representative at any reasonable time during
normal business hours. The said books and records will fully and accurately reflect all
transactions of the Fund and will be maintained in conformity with generally accepted
accounting principles.
4.03 Subscriber Accounts
Individual accounts will be kept for each Underwriting Period showing for each Fiscal
Year each Subscriber's participation in the operations and the operating results of the
Fund in the manner determined by the Rules.
4.04 Annual Report
Within 120 days after the end of each Fiscal Year, the Advisory Board will cause the
accountants of the Fund to furnish to each Subscriber an annual report consisting of
(a) the financial statements of the Fund at the end of the Fiscal Year;
(b) the report of the Actuary;
(c) the Subscriber Participation Percentage of each Subscriber for the Fiscal Year;
(d) any additional information that may be required by the Advisory Board or any
government or governmental authority under applicable legislation.
4.05 Audit
The accounting records and reports of the Fund will be audited annually by such firms as
the Advisory Board may choose from time to time.
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Municipalities in Durham Region
Subscribers'Agreement for the Purchase oflnsurance
4.06 Bank Accounts
The bank of the Fund will be such Canadian chartered bank or banks as the Advisory
Board may from time to time determine. All moneys received from time to time on
account of the Fund will be paid forthwith into the bank account of the Fund in the same
drafts, cheques, bills and cash in wbich they are received. Until changed by a decision of
the Advisory Board, all cheques, negotiable instruments and withdrawals from bank
accounts up to but not exceeding $10,000 require the signature of the Manager of the
Fund, if any, and one signing officer appointed by the Advisory Board and, if there is no
Manager, of two signing officers appointed by the Advisory Board and all cheques,
negotiable instruments and withdrawals from bank accounts exceeding $10,000 require
the signature of two signing officers appointed by the Advisory Board.
ARTICLE 5.00 - SUBSCRIBERS
5.01 Founding Subscribers
Each Municipality whose name appears in Schedule A attached hereto, and who
executes and delivers the Form of Subscription attached hereto as of [March 1, 2000] or
before, will automatically become a Subscriber with effect from [March 1, 2000]
("Subscription Date").
5.02 Additional Subscribers
The Advisory Board may accept additional qualified Municipalities to become parties to
this Agreement and thereby become Subscribers in accordance with the following
provisions:
(a) any Municipality contained within the Regional Municipality of Durham at the
effective date of this Agreement may apply to become a Subscriber provided that:
(i) such Municipality submits a written application in acceptable form and
remits the application together with such application fee as may be
prescribed by the Advisory Board from time to time;
(ii) such Municipality provides the historical claims information, data and other
relevant information that the Advisory Board, the Actuary and the
insurers/reinsurers deem necessary or appropriate to properly assess
participation qualifications;
(111) such Municipality co-operates with the Advisory Board in providing such
information and documentation as it may require;
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Suhscrihers'Agreement for the Purchase oflnsurance
(b) The Advisory Board will review the application to became a Subscriber and will
make a recommendation to the Councils of the participating Subscribers. A
Municipality's application will be accepted if 80% of the Councils agree, subject
always to the following:
(i) receipt of a duly executed Form of Subscription from such Municipality in
the form attached as Schedule A;
(ii) receipt of a copy of the resolution of Council authorizing Subscription to the
Fund; and
(iii) receipt of any fees required to be paid by such Municipality.
(c) After acceptance by the Councils in the manner indicated above, the Advisory
Council will notify the Municipality of its acceptance by the Councils to become a
Subscriber.
5.03 Effective Date of Subscription
The effective date of Subscription ("Subscription Date") for any particular Subscriber, is:
(a) if the Subscriber is a Founding Subscriber, [March 1, 20001, or
(b) if the Subscriber is not a Founding Subscriber, the date specified by the Advisory
Board in the notification to the Municipality accepting it as a Subscriber.
5.04 Minimum Period of Subscription
If the Subscriber's Subscription Date is coincident with, or on or before the expiry of the
first year in an Underwriting Period, the minimum period of subscription will be such
Underwriting Period or the balance thereof. If the Subscriber's Subscription Date is
after the expiry of the first year of an Underwriting Period, the minimum period of
subscription will be the balance of the then -current Underwriting Period plus the
immediately subsequent Underwriting Period.
5.05 Termination of Subscription
(a) The Advisory Board is empowered to remove, by Extraordinary Resolution, a
Subscriber by providing such Subscriber with a notice in writing to that effect, in
the event that the Subscriber:
(1) fails to comply with any term of this Agreement after having been given 30
days' written notice by the Advisory Board of the details of its failure to
comply and the Subscriber has not yet rectified such non-compliance within
30 days after receipt of such notice;
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Municipalities in Durham Region
Suhscribers'Agreement for the Purchase of Insurance
(ii) fails to pay any premium, Ievy or other fee or assessment within seven days
when due hereunder;
(ui) fails, in the opinion of the Advisory Board, to continue to meet the eligibility
criteria for participation in the Fund and the Subscriber fails to rectify this
condition to the satisfaction of the Advisory Board within 90 days after
receipt of such notice.
(b) The effective date of termination of participation in the Fund in the event of
termination:
(i) pursuant to Paragraph 5.O5(a)(i), will be 30 days after receipt of the written
notice, if the failure has not been rectified-,
(ii) pursuant to Paragraph 5.O5(a)(ii), will be seven days after receipt of written
notice that such prenuum, Ievy or other fee or assessment has not been paid;
(iii) pursuant to paragraph 5.O5(a)(iii), will be at the expiration of 90 days
following the date of receipt of written notice of termination.
(c) Subject to the minimum period of subscription set out in Section 5.04, a
Subscriber may withdraw from participation in the Fund at the end of any
Underwriting Period, provided that it provides the Fund with six months' written
notice of its intention to withdraw, in which event, such withdrawal will take effect
upon the expiry of that Underwriting Period. In the event there is a failure to give
such notice, the Subscriber will be deemed to have elected to participate in the
immediately succeeding Underwriting Period.
5.06 Subscriber Dissolution, Merger or Break -Up
(a) if a Subscriber is dissolved, it will cease to be a Subscriber as of the date of its
dissolution, this date being the date as approved by the Ontario Municipal Board in
accordance with the provisions of the Municipal Act, RS.O 1980, c.2I8, as
amended, if such approval is applicable in law or if by statutory enactment, this
date being the effective date of dissolution as set out in the legislation.
(b) Notwithstanding sub -paragraph (a) hereof, if as a result of municipal
restructuring.
(i) a Subscriber is merged or amalgamated with another Municipality that
is not a Subscriber, the Subscriber will cease to be a Subscriber unless
the merged entity elects to continue as a Subscriber and it meets the
conditions set by the Advisory Board. The newly merged Municipality
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Municipalities in Durham Region
Subscribers'Agreement for.the Purchase oflnsurance
may only continue by applying to the Advisory Board as set out in
Article 5.02;
(ii) a Subscriber is merged with another Municipality that is a Subscriber,
the merged entity will be deemed to be a Subscriber as of the effective
date of the merger;
(iii) a new Municipality is formed from a Subscriber and the Subscriber is
not a regional municipality and does not cease to exist, the Subscriber
will remain a Subscriber and the new entity will be a Subscriber
provided that it continues to meet the Eligibility Criteria set by the
Advisory Board.
5.07 Continuing Liability
If a Subscriber ceases to be a Subscriber, and the Subscriber is not a regional
municipality and does not cease to exist it will continue to be liable for any
Assessment(s) arising during or after such cessation in respect of claims incurred prior to
the effective date of its cessation, unless satisfactory arrangements are made with the
Advisory Board, satisfactory to the Advisory Board in its sole discretion, to buy out such
liability.
ARTICLE 6.00 - OPERATION OF THE FUND
6.01 Insurance Policies
The Advisory Board will arrange for Insurance Policies for the Subscribers with
Deductibles as elected by each Subscriber, for Indemnities and Retentions and limits of
liability as determined by the Advisory Board.
6.02 Determination of Levies Payable
The Advisory Board will, in respect of each Underwriting Period, on the advice of the
Actuary determine the levy payable by each Subscriber. The levy with respect to any
year will be sufficient to fund any insurance/reinsurance, excess or stop -loss insurance
premiums to. make payments under the Indemnities, to provide funds for the Claims
Fluctuation Reserve and to fund the administrative expenses of the Fund. Such levies
will be determined based upon the Annual Incurred Losses for that Subscriber as
determined by the Advisory Board, by Ordinary Resolution, on the advice of the Actuary.
6.03 Assessments
(a) Assessments in respect of an Underwriting Period will be made by the Advisory
Board on the advice of the Actuary if the aggregate of the levies received for such
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Municipalities in Durham Region
Subscribers'Agreement for the Purchase ofinsurance
Underwriting Period, after recognition of investment income earned thereon, is not
sufficient to pay any insurancetreinsurance and excess and stop Ioss premiums
attributable to such Underwriting Period, to pay the actual losses under the
Indemnities, to provide funds for the Claims Fluctucation Reserve and to fund the
administrative expenses of the Fund.
(b) The Subscribers acknowledge that they may be responsible for additional
assessments based on the actual loss experience of the Fund.
(c) Loss claims experience for each Underwriting Period will be assessed annually
and potential deficits and surpluses shall be estimated and amortized over three
years, or such other period as is determined by the Advisory Board.
(d) In the event that an assessment is required, the Advisory Board will so notify each
Subscriber of the arnount of the Assessment which each Subscriber is to pay and
the Assessment will be due 30 days following receipt of such notice or at such
later date as may be prescribed in such notice. The notice will set out in
reasonable detail the reasons for the Assessment and the basis upon which the
Assessment is determined.
(e) Assessments will be allocated on the basis of the Subscribers Participation
Percentage for each Subscriber in the Underwriting Period. The Advisory Board
will make all assessments on the advice of the Actuary.
6.04 Obligation to Pay
(a) Each Subscriber covenants and agrees to pay forthwith when due any Ievy or
Assessment required pursuant to the terms of this Agreement. If the levy or
Assessment is not paid by a Subscriber when due, an interest charge of Prime plus
2%, compounded monthly, on the outstanding levy or Assessment payable will be
payable by the Subscriber.
(b) Interest will be payable as follows:
(i) at an annual rate of interest expressed on the basis of a 365 or 366 day year,
as the case may be, equal to Prime,
(ii) interest shall be calculated monthly based on the number of days actually
elapsed,
(iii) interest accrued is payable in arrears on the last day of each month except
that, if the last day of the month is not a Business Day, on the immediately
preceding Business Day (where Business Day means any day other than a
Saturday, Sunday, statutory holiday or other day on banks in Ontario are
required by law to close or are customarily closed), and
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Municipalities in Durham Region
Suhscrihers'Agreementfor the Purchase oftnsurance
(iv) changes in Prime cause immediate adjustment of the interest rate applicable
thereto as and from the effective date of any such change without the
necessity for any additional notice to the Subscriber.
6.05 Closure of Underwriting Period
(a) Upon the Closure Date of an Underwriting Period, at the discretion of the
Advisory Board, and subject to Section 7.01, the excess, if any, of the realized
value of the Fund's assets over outstanding obligations of the Fund, will be shared
among all Subscribers in direct proportion to their Subscribers Participation
` Percentage. Any deficit remaining upon the Closure Date will be dealt with in
accordance with section 6.03.
(b) Prior to the Closure Date of an Underwriting Period, as considered prudent by the
Advisory Board, and subject to Section 7.01, excess assets of the Fund, or any part
thereof, may be paid out to the Subscribers, applied to reduce the actuarially
determined levy or retained and applied towards a Claims Fluctuation Reserve for
the next Underwriting Period, in each case in direct proportion to their Subscribers
Participation Percentage.
(c) A Subscriber will not share in that part of the excess attributable, as determined by
the Actuary, to the period prior to the date on which that Subscriber became a
Subscriber. Further, any subscriber not participating in the next following
Underwriting Period will not share in any excess of assets over liabilities for the
preceding Underwriting Period during which the Subscriber participated. The
foregoing restriction on the return of excess assets attributable to the immediately
preceding Underwriting Period does not apply to the return of that portion of any
levy paid by the Subscriber during such Underwriting Period which is determined
by the Actuary, at the time such Ievy is paid, to be a contribution to a surplus
account or contingency reserve, plus investment income attributable thereto, unless
such amounts (or part thereof) have been allocated by the Advisory Board for
other purposes.
6.06 Excess and Stop Loss Insurance
The Advisory Board will endeavour to arrange insurance policies providing excess
insurance coverage over and above the Retention and stop loss insurance coverage. The
insurance policies will name the Subscribers as insureds. In order to minimize the cost
of such coverage, the Fund will perform the administrative services of collecting the
premiums from the Subscribers for remittance to the Insurer and will report claims to the
Insurer based on notices of claim given by the Subscribers to the Fund.
Page19 =-
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Municipalities in Durham Region
Subscribers'Agreementfor the Purchase oflnsurance
6.07 Retention
The Advisory Board will endeavour to arrange the Indemnity between each Subscriber
and the Insurer to cover claims for the Retention. The Retention required under the
Indemnity shall provide for payment by the Subscriber to the Insurer of amounts within
the retention which shall come from the Fund. Claims are to be paid out to the insurer
under the indemnity as they arise in accordance with its terms.
ARTICLE 7.00 - TERMINATION
7.04 Termination of this Agreement
(a) The Subscribers may terminate this Agreement by resolution or by-law passed by
a majority of each of the Subscribers.
(b) Upon termination, as and when determined by the Advisory Board, the assets of
the Fund will be Iiquidated and the excess, if any, of the realized value of such
assets over outstanding obligations (including the setting aside of an adequate
reserve for future claims), will be returned to the Subscribers in direct proportion
to their Subscribers Participation Percentage for each Underwriting Period not yet
closed on the date of termination.
(c) Notwithstanding the termination of this Agreement, the Advisory Board, and the
Fund, are empowered to continue in operation for the limited purpose of winding
up their affairs and, for such purpose, this Agreement will remain in full force and
effect until all obligations of the Subscribers have been fulfilled.
(d) If this Agreement is terminated, all Subscribers will continue to be responsible for
all liabilities and Assessments relating thereto in respect of all Underwriting
Periods or portions thereof in which each Subscriber participated. Unless
satisfactory arrangements are made by the Advisory Board, satisfactory to the
Advisory Board in its sole discretion, to buy out or bond such liability.
ARTICLE 8.00 - GENERAL PROVISIONS
8.01 Notice
All notices, requests, demands or other communications by the terms hereof required or
permitted to be given by one party to another will be given in writing and served
personally, or sent by registered mail, postage prepaid, addressed to:
(a) each Subscriber at the address noted below its signature on the signature page
hereof or on the Form of Subscription attached hereto as Schedule "A'%
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Municipalities in Durham Region
Subscribers'Agreement for the Purchase oflnsurance
(b) the Advisory Board or the Fund, c/o:
Attention:
or at such other address as may be given by any of them to the others in writing
from time to time, and such notices, requests, demands, acceptances and other
communications are deemed to have been received when delivered, or if sent by
registered mail, are deemed to have been received on the third day fallowing the
date of mailing the letter.
8.02 Arbitration
If any dispute occurs among the parties hereto, or the Advisory Board is unable to reach
an agreement, the matter in dispute will be resolved by a single arbitrator pursuant to the
provisions of the Arbitration Act 1991(Ontario) as amended.
8.03 Confidentiality
The Advisory Board shall adopt appropriate procedures to ensure that all information
received by the Board remains confidential. Members of the Advisory Board and
members of any Committee established by the Board shall keep all information
confidential and shall not divulge or use such information other than in the course of
his/her duties as a member of the Advisory Board or other Committee.
8.04 Currency
All payments contemplated herein are to be made in Canadian funds.
8.05 Calculation of Time Periods
Unless otherwise specified in this Agreement, when calculating the period of time within
which or following which any act is to be done or step taken pursuant to this Agreement,
the date which is the reference day in calculating such period is to be excluded. If the
last day of the period is a non -business day, the period in question is to end on the next
business day.
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Municipalities in Durham Region
Subscribers'Agreement for the Purchase oflnsurance
8.06 Subscriber's Right of Inspection
Any subscriber by a duly authorized agent, upon reasonable notice, shall have the right,
during regular business hours and subject to the reasonable demands of the business of
the Fund, to inspect and, at its own expense, to copy the record books, the books of
account, and any other book or document of the Fund other than such documents as the
Advisory Board shall for time to time designate as confidential.
8.07 Severability
If any provision of this Agreement is held to be invalid, illegal or unenforceable, the
r. validity, legality or enforceability of the remaining provisions_ of this Agreement are not in
any way to be affected or impaired thereby.
8.08 Entire Agreement
This Agreement constitutes the entire agreement among the parties relating to the
establishment and operation of the Fund and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, among the parties
with respect thereto.
8.09 Waiver
No waiver by any party to this Agreement of any breach of any of the provisions of this
Agreement by any other party will take effect or be binding unless in writing and signed
by the party intended to be bound. Unless otherwise provided therein, such waiver is not
to limit or affect the rights of such party with respect to any other breach.
8.10 Successors and Assigns
This Agreement will enure to the benefit of and be binding upon the parties hereto and
their respective heirs, executors, administrators, successors and assigns provided that
this Agreement may be assigned by a Subscriber only with the consent of the Advisory
Board.
8.11 Further Acts
The parties hereto agree to execute and deliver such further and other documents and
perform and cause to be performed such further and other acts and things as may be
necessary in order to give full effect to this Agreement and every part thereof
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Municipalities in Durham Region
Subscribers'Agreement for the Purchase oflnsurance
8.12 Applicable Law
This Agreement will be construed and enforced in accordance with the rights of the
parties hereto and is to be governed by the laws of the Province of Ontario and the laws
of Canada applicable therein.
8.13 Amendments
This Agreement may be amended by written agreement of all the Subscribers as
confirmed by resolution or bylaw.
8.14 Gender and Number
Words importing the singular number only shall include the plural and vice versa, and
words importing the masculine gender shall include the feminine gender and words
importing persons shall include a natural person, firm, trust, partnership, association,
corporation, government or governmental board agency or instrumentality.
8.15 Headings
The division of this Agreement into Articles and Sections and the Article and Section
headings are for convenience of reference only and shall not affect the interpretation or
construction of this Agreement.
8.16 Time of Essence
Time shall be of the essence of this Agreement.
IN WITNESS WHEREOF the parties hereto have subscribed to this Agreement by execution
of two copies of the From of Subscription appended to this Agreement as fully as they would
have by executing a copy of this Agreement.
Page 23
Draft #6 — January 6, 2000
SCHEDULE A
FOUNDING SUBSCRIBERS
The following Municipalities may become Founding Subscribers pursuant to Section 5.01:
Town of Ajax
Township of Brock
Municipality of Clarington _
Regional Municipality of Durham
Township of Scugog
Township of Uxbridge
Town of Whitby
APPENDIX A
FORM OF SUBSCRIPTION
Pursuant to the form of Agreement dated as of the [i't day of March, 2000] entitled
"Municipalities in Durham Region Subscribers' Agreement for the Funding Arrangement for
the Purchase of Insurance", as amended from time to time, (hereinafter referred to as the
"AgreemenfI
Municipality
Address of the Municipality
(hereinafter referred to as the "Municipality"), hereby subscribes to the Agreement.
The execution of this Form of Subscription by the Municipality constitutes execution of the
Subscribers' Agreement dated [March 1, 2000] (including any future amendments made in
accordance with the terms of the Agreement). The Agreement and the Forms of Subscription
executed by all other Municipalities shall together constitute the Agreement of the Subscribers,
as if all the Subscribers have executed the Agreement.
IN WITNESS WHEREOF the Municipality has caused to be affixed its corporate seal duly
attested to by the hands of its proper officers duly authorized in that behalf.
Dated this
(Seal)
day of
(Name of Municipality)
(Authorized Signing Officer)
(Authorized Signing Officer)
FORM OF TERMINATION
OF
MUNICIPALITIES IN DURHAM REGION
SUBSCRIBERS' AGREEMENT
FOR THE PURCHASE OF INSURANCE
Subscriber
[ ] agrees
[ ] disagrees
APPENDIX B
to terminate the Agreement dated the [1°t day of March, 2000] and all amendments thereto,
pursuant to Section 7.01 thereof.
Date:
(Seal)
Subscriber
Authorized Signing Officer.
Authorized Signing Officer
SCHEDULE "B"
TO BY-LAW
Draft
Fasken Campbell Godfrey
Robert W. McDowell
Claudia D. Feldkamp
November 19,1999
INDEMNITY made at Toronto, Ontario as of the day of 2000.
To: (Name of Insurance Company) ("Insurance Company")
DEFINITION
"Retention" means the amount per claim, for which the Insurer is responsible on any
such claim under the Insurance Policy, subject to any applicable excess of loss, stop loss
or similar insurance, less the Deductible under the Insurance Policy, and for which each
Municipality is responsible under this Indemnity.
6111:19W.M41
(A) The undersigned, "Municipality", has obtained from the "Insurance Company"
(the insurance policy # with respect to coverages (the "Insurance
Policy");
(B) The Insurance Company has agreed to assume the payment of claims within the
Retention on condition that the Municipality enter into this Indemnity;
NOW THEREFORE THIS INDEMNITY WITNESSES THAT in consideration of good
and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged by the Municipality), the Municipality hereby undertakes, covenants
and agrees as follows:
1. The Municipality shall indemnify and keep indemnified the Insurance Company
in respect of claims under the insurance Policy as they arise in the following
manner.
(a) if and whenever the Municipality makes a claim within or in excess of the
Retention upon the Company for payment of any amount in respect of the
Insurance Policy, the Municipality shall, either investigate, negotiate,
adjust, and settle such claim, or assign to an Independent Adjuster to
investigate, negotiate, adjust and settle such claim and either:
-2-
(i) provide the Company with the Municipality's draft, payable to the
Company, in the amount claimed and direct the Company to pay
the same amount to the claimant; or
(ii) instruct the Company to deny, or defer payment pending final
adjustment of such claim, in which case the Municipality shall, as
and when appropriate, instruct counsel to defend on behalf of the
Insurance Company any action instituted by the claimant or any
other person in respect of or arising out of such claim;
Provided that it is understood that the amount payable by the Municipality
under this Indemnity in respect of any claim shall not exceed the Retention.
(b) if the Company commences proceedings to enforce the terms of this
Indemnity, the Company shall be entitled to recover, over and above
party and party costs, its own solicitor's fees and expenses in connection
with such proceedings, it being the intent hereof that the Company be
fully indemnified in respect of all legal costs and expenses incurred by it
in such proceedings.
2. It is understood that the Company shall not take any action in respect of any
claim, including that it shall not investigate, negotiate, adjust or settle any claim
under the Insurance Policy.
3. If the Insurance Policy is cancelled or otherwise terminated, this Indemnity shall
continue with respect to claims arising thereunder and until final adjudication or
resolution of any such claims.
4. All notices provided for herein shall be in writing and shall be deemed to have
been given when delivered personally, or when faxed or five business days after
being mailed by registered mail, return receipt requested, addressed as follows:
If to the Municipality:
If to the Insurance Company:
or to the other party at such other address as the party may designate by notice
duly given in accordance with this clause, provided that notice shall not be given
by mail in the event of an local or national postal disruption or other condition
-3-
which might reasonably be anticipated to prevent delivery within 5 days of
mailing.
5. This Indemnity shall be governed by and interpreted in accordance with the laws
of the Province of Ontario and any laws of Canada applicable therein.
IN WITNESS WHEREOF, the Municipality has caused this Indemnity to be duly
executed as an instrument by its duly authorized officers as of the date first
above written.
(Name of Municipality)
SCHEDULE "B"
THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON
BY-LAW 2000
Being a By -Law to Appoint representatives for the Municipality of
Clarington on the Board of Directors for Durham Municipal Insurance Pool
WHEREAS, Council has passed a By -Law to authorize the Municipality of Clarington to
participate in the Durham Municipal Insurance Pool.
AND WHEREAS, pursuant to the Subscriber's Agreement, Council must appoint a
representative and an alternate to represent the municipality on the Board of Directors for the
Durham Municipal Insurance Pool.
NOW THEREFORE THE COUNCIL OF THE CORPORATION OF THE MUNICIPALITY OF
CLARINGTON ENACTS AS FOLLOWS:
1. THAT Marie Marano, Treasurer, be appointed as the Municipality of Clarington's
representative on the Board of Directors for the Durham Municipal Insurance Pool.
2. THAT Nancy Taylor, Deputy Treasurer, be appointed as the alternate representative
for the Durham Municipal Insurance Pool.
By -Law read a first and second time this 24`h day of January, 2000.
By -Law read a third and finally passed this 241h day of January, 2000.
Mayor
Clerk
M
SCHEDULE "C"
January 19, 2000
TO: The Finance and Administration Committee
FROM: R.J. Clapp, Commissioner of Finance
RE: REPORT #2000-F-03
THE DURHAM MUNICIPAL INSURANCE POOL
RECOMMENDATIONS:
That the Finance and Administration Committee recommend to Council that:
1 } The attached draft Subscribers Agreement and Indemnity Agreement which contain the
terms and conditions of an insurance pooling arrangement as -agreed upon by the
Treasurers of the Municipality of Clarington, the Towns of Whitby and Ajax, the
Townships of Brock, Scugog and Uxbridge and the Region of Durham be approved and
that the Regional Chair and Regional Clerk be authorized to sign the final agreements.
2) As part of the terms of the Subscribers Agreement, the Region appoint the Commissioner
of Finance as its representative to the Insurance Pool Board of Directors with the
Manager of Budgets, Economic Studies and Risk Management as the alternate.
3) The Commissioner of Finance be authorized to acquire the additional staffing and
administrative support services necessary to provide the Durham Insurance Group with
the required Pool Management Services with funding provided from the Insurance Pool
as agreed by the Insurance Pool members.
REPORT:
1.0 INTRODUCTION
On June 30, 1999, Regional Council adopted the recommendations of Report
#1999-F-38 of the Commissioner of Finance which gave approval for the Region
of Durham to participate in the establishment of an Insurance Pool with
participating Area Municipalities to co-operatively self insure or pool the cost of
insurance claims and to purchase insurance coverages under one common policy
from the re -insurance market.
Regional Council also adopted the following recommendation regarding a
Subscribers Agreement to be entered into by the participating Municipalities:
"Authority be given for staff to work with the participating Area
Municipal Treasurers, in order to establish an acceptable subscribers
agreement, reinsurance contracts and an administrative structure and to
report back to the respective Committees and Councils of the Region and
the participating Area Municipalities for final approval of the Subscribers
Agreement no later than December 1999."
65
REPORT #2000-F-03 2
THE Di:RHANI MUNICIPAL INSURANCE POOL _
1.0 INTRODUCTION/cont'd
• The purpose of this report is to provide the Finance and Administration
Committee and Regional Council with an update on the status of the
Insurance Pool and to seek approval for the Subscribers Agreement and the
Indemnification Agreement to enable Regional participation in the Insurance
Pool.
2.0 POTENTIAL SAVINGS IN INSURANCE COSTS OVER 3 YEARS
• Under the proposed Insurance Pooling Arrangement, participating municipalities
will combine their existing insurance premiums into a single pool to purchase a
common insurance policy from the re -insurance market -with a pool deductible of
approximately S350,000.
• Participating municipalities will retain their current local liability insurance
deductibles (which range from $5,000 to S 100,000) and the Pool will fund the
cost of insurance claims which fall between the local deductibles of the
participating municipalities and pool deductible of $350,000. Claims in excess of
S350,000 will be paid by the reinsurance company.
• Stop loss insurance will be purchased by the Pool to limit the aggregate of all
losses incurred by the Pool (i.e. all claims less than $350,000) to $1.0 million in
any given year as indicated in the chart below:
Pooled
Risk
Transferred Excess of $35 ,000 per daifn
Risk SLO1W$3.W aggregate
Lora! Deductibles - as per eAsting progwns
per claim
AM aggregate
REPORT #2000-F-03 3
THE DURHAM MUNICIPAL INSURANCE POOL _
2.0 POTENTIAL SAVINGS IN INSURANCE COSTS OVER 3 YEARS/cont'd
Potential savings to the Pool could range from $0.5 million to $2.5 million if
claim losses are favourable over the 3 year period.
3.0 PARTICIPATING MUNICIPALITIES
To date the Treasurers of the Region and six Area Municipalities (Clarington,
Whitby, Ajax, Brock, Scugog and Uxbridge) have indicated their intention to
participate in the Pooling arrangement. The City of Oshawa declined an
invitation to participate from the outset of the pooling review and staff of the City
of Pickering although participating in the process and meetings to date, have not
indicated a willingness to participate in the pooling arrangement.
If the City of Pickering respond favourably to participation in the Insurance Pool,
the potential savings would range between S 1.4 million to S3 A million over the
three year period.
4.0 OVERVIEW OF SUBSCRIBERS' AGREEMENT
Since June 1999, the Treasurers of the participating Area Municipalities, the
Region and the City of Pickering have met on numerous occasions to review the
Subscribers Agreement (copy attached).
The Subscribers' Agreement is a comprehensive legal document which sets forth
provisions relating to the formal establishment of the Insurance Pool Board of
Directors, funding arrangements, accounting and financial reporting, subscribers
rights and obligations, operation of the fund and termination conditions. The
main provisions of the Subscribers Agreement are as follows:
Participating municipalities are to commit to an initial 3 year period with
an option to terminate their participation, subject to certain conditions and
penalties.
Participating municipalities are to share surpluses in the Pool based on
their proportion of the total premiums paid into the Pool by all
participating municipalities. At the end of the third year, surpluses may be
returned to the participating municipalities, premium contributions may be
reduced accordingly throughout the three years or the insurance program
could be reworked and enhanced.
An Insurance Pool Board of Directors is to be established and composed
of one member from each participating municipality with each member
having one vote. It is anticipated that the Area Treasurers who are
involved in insurance matters for their respective municipalities would be
the appointees. The Board of Directors would meet regularly and has the
responsibility for the general operation of the Insurance Pool.
%I
REPORT ##2000-F-03 a
THE DURHAM MUNICIPAL INSURANCE POOL -
4.0 OVERVIEW OF SUBSCRIBERS' AGREEMENT/cont'd
The Subscribers' Agreement contains a number of detailed provisions regarding
the participation of subscribers and the termination or withdrawal from the
Pooling arrangement including:
• The initial levy will be based upon annual premiums paid to previous
insurer by each subscriber for 1998/1999 premium year.
+ The Board of Directors will determine, with the advice of the actuary, the
levy payable by each Subscriber.
• Additional subscribers may be accepted into the Insurance Pool at a later
date if they are within the Regional Municipality of Durham and 80% of
the Councils of the participating subscribers agree.
• The Insurance Pool is subject to annual audit and reporting provisions.
• Prior to the end of the 3 year underwriting period, the Board of Directors
may also pay out excess assets of the fund, reduce required levies, or
supplement the claims fluctuation reserve.
• Upon termination, excess assets (after an appropriate reserve for future
claims has been set aside), will be returned to subscribers based on their
participation percentage.
• Subscribers may withdraw at the end of any three year underwriting period
with six months written notice. The subscriber will continue to be liable
in respect of claims incurred prior to withdrawal.
At the end of each three year underwriting period, the Board of Directors
will determine if any excess, or part thereof, of the realized value of the
Insurance Pool assets over obligations will be shared among all
subscribers based on their subscribers participation.
• The subscribers may terminate the subscribers agreement by By-law
passed by a majority of the subscribers.
The draft Subscribers Agreement, as attached to this report, incorporates changes
and suggestions proposed by the Treasurers and legal counsels representing each
participating municipality. There are several minor issues which need to be
finalized by the legal counsels. If in finalizing the Agreements there are any
major variations from the attached draft agreement, staff will report back to the
Finance and Administration Committee and Council.
REPORT #R2000-F-03
THE DURHAM MUNICIPAL INSURANCE POOL
5.0 POOL MANAGEMENT SERVICES
In accordance with Council direction, the staff of the participating municipalities
and the Region have reviewed alternative administrative structures relating to the
operation of the Pool and the handling of all claims on behalf of the Board of
Directors.
• It was agreed that one of the most cost effective administrative structure was to
retain the Region to provide the Insurance Pool Management services on a
contract basis as the Region currently has the most experienced staff in terms of
managing insurance claims with higher deductibles and, all aspects of the broader
insurance portfolio. By augmenting the already existing resources of the Region,
the following Pool Management Services can be provided:
• Claims handling and administration
• Risk management and liability programs
• Insurance claims and financial reporting
• Computer and financial services
• The Insurance Board of Directors will have the responsibility to oversee the Pool
Management Services provided by.the Region and will have input into the
decisions regarding staffing and resources required to provide the Pool
Management Services. These arrangements will be finalized prior to the launch
of the Pool.
6.0 NEXT STEPS
• The recommendations contained in this report seek Regional Council's approval
of the Subscribers Agreement and Indemnification Agreement and will permit
staff to finalize the administrative and reporting structures for a target launch date
of March 1, 2000 (earliest) or April 1, 2000.
• Concurrently, the local Councils of the participating Area Municipalities are also
being requested to approve similar recommendations by their respective staffs.
At the time of preparing this report, the City of Pickering had not indicated its
participation in the Pool. Staff of the remaining participating municipalities have
tentatively agreed that should Pickering indicate its willingness to participate in
the pool, all efforts will be made to accommodate Pickering within the Pool.
REPORT #2000-F-03 6
THE DURHAM MUNICIPAL INSURANCE POOL
6.0 NEXT STEPS/cont'd
• Accommodations would also be made with the Pooling Agreement if the City of
Oshawa wishes to join the Pool prior to the target launch date of March 1 or April
1/2000. The subscriber agreement sets out the requirements for entry into the
pool subsequent to the start up.
Encl.
Recommended for Presentation to Committee:
G.H. Cubitt, Chief Administrative Officer
W,
12" -
R.J. Clapp, CA,
Commissioner of Finance
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