HomeMy WebLinkAboutTR-67-92 THE CORPORATION OF THE TOWN OF NEWCASTLE
REPORT
Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE File #
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Date: July 6, 1992 Res. ,Z
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TR-67-92— File #:
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Subject: 1992/93 INSURANCE AND RISK MANAGEMENT REPORT
Recommendations:
It is respectfully recommended that the General Purpose and Administration
Committee recommend to Council the following:
1. That report TR-59-92 be received;
2 . That Frank Cowan Company Limited continue to be retained as the Town
of Newcastle's insurance carriers for the period from July 1st, 1992
to June 30, 1993, with a total premium renewal rate of $207,354 .00
(a decrease of 5 .78% over 1991/92 premium of $220,071. 00) ;
3 . That the updated Fleet and Property schedules be forwarded to the
Frank Cowan Company as they are received from Department Heads;
4 . That the Legal Expense Insurance (Defence Costs) be approved as
follows:
a) Legal defence policy:
to provide for the reimbursement of defence costs when the
outcome of the statutory charge is guilty at an additional
premium of $2,357 as recommended by Frank Cowan Company Limited
and outlined on page 6 of the 1992 Comprehensive Insurance
Program (Distributed to Department Heads and Council members
under separate cover) and to be funded from the Self-Insured
Losses Reserve until the funds are reimbursed by the Town's
insurer;
b) Legal defence policy-deductible amount:
to provide for the non-reimbursable deductible portion of the
legal defence policy from the Self-Insured Losses Reserve; and
c) Penalties and fines:
any fines and/or penalties assessed as a result of a legal
defence claim be fully borne by the Town and funded from the
Self-Insured Losses Reserve provided that the individual(s) was
not wilfully or negligently at fault while performing his/her
duties;
TR-67-92 Page 2
5 . That the Councillors' Accident Policy reflecting an increase in the
Principal Sum for Loss of Life and Capital Sum for Dismemberment
from $50,000 to $100,000 at an additional premium of $470 be
approved, as recommended by Frank Cowan Company Limited and outlined
on page 6 of the 1992 Comprehensive Insurance Program;
6 . That the 1992 Budget overprovision for insurance amounting to
$29,253 be transferred to the Self-Insured Losses Reserve;
7 . That a transfer to the Self-Insured Losses Reserve in the amount of
$50, 000 be approved (funds to be provided from Contingency Account
#7007-X-298) .
1.0 BACKGROUND & COMMENTS
1. 1 The overall decrease in the insurance premium for the 1992/93 premium
year is due mainly to the improved claims record under the Property,
Liability (owned automobile fleet) and Fire-Fighters policies. For
example, under the Automobile Fleet Insurance policy the good
experience record resulted in Frank Cowan Company paying out 13. 8 cents
( 1991/92; 23 .7 cents) for every dollar of insurance premium paid by the
Town. Also, the decrease in the insurance premium is due to a
stabilization trend in the insurance market.
1.2 The Frank Cowan Company continues to service the insurance needs of the
greater percentage (approximatley 75%) of the municipalities in the
province, and they are considered a consistent and financially stable
insurer.
All area municipalities in Durham Region including the Region of Durham j
retain the Frank Cowan Company as their insurer.
1.3 Department Heads are currently reviewing and updating the Fleet and
Property schedules that were included in the 1992 Comprehensive
Insurance Program, and as they become available they will be reviewed
and any changes will be passed along to the Frank Cowan Company so they
may update their records accordingly.
1.4 The existing Legal Expense Insurance (Defence Costs) policy provides
I
for the reimbursement of legal fees when employees or elected officials
are charged and the result of the verdict in an outcome is "other than
guilty" . The proposed coverage that is now available through Frank c
Cowan under the Legal Expense Insurance policy would provide for
reimbursement of defence costs when the outcome of the statutory charge
is guilty. The policy coverage is triggered by the outcome or verdict i
of the incident. Staff advise that this coverage is necessary due to
the very real possibility that an employee or a member of Council could
be found guilty without being wilfully or knowingly negligent.
TR-67-92 Page 3
1.5 Staff recommend that the Town indemnify elected officials and employees
for legal defence costs that are incurred as a result of being charged
when performing his/her duties for the Town and are in the process of
defending a charge(s) so that the elected officials and employees are
not "front ending" legal costs .
Staff survey of the area municipalities reveal that the City of Oshawa
and the Town of Pickering have approved Legal Expense Insurance
(Defence Costs) for guilty and other than guilty categories .
1.6 Experience that has been seen by the Town's Insurer is that charges
laid by the Province have not only included the individual employee
who caused the accident but also his/her department manager and
department head, the elected officials and the corporation itself.
For example, in the Port Colborne water rescue incident the Fire
Chief, Deputy Fire Chief and the municipal corporation were jointly
charged under the occupational health and safety act. Fines and
penalties are not covered under this or any other policy therefore,
it is recommended that the Town cover this deficiency until such
time as a policy is available in the marketplace.
1.7 Policy coverage upgrades have been provided by Frank Cowan to the
Town at no additional premium cost for the 1992-1993 premium years.
The policies improved included are;
Conflict of Interest and Legal Expense limits to $100,000
Fire-Fighters Accidental Death Benefit increased to $100,000
Increased Limits for Valuable Papers, Accounts Receivable and Extra
Expense to $250,000 under the Property Insurance Program
Boiler and Machinery Insurance Limits increased to $5,000,000.
1.8 Frank Cowan Company did recommend increasing the limit of Excess
Liability and higher limits with respect to Environmental Liability
Insurance at additional annual premiums of $8,771 and $6,375
respectively. However, staff recommend that these additions are not
required at this time as existing coverage seems adequate. There
were no significant changes in either the polices or premiums in
the other classes of insurance and thus further indepth analysis is
not deemed to be warranted.
1.9 The Region of Durham will be conducting a feasibility study on
establishing a risk sharing (insurance) pooling for the Region and
the Area Municipalities . The purpose of the study will be to
appraise the potential savings that could result from pooling and
to determine whether fair value for the purchased insurance dollar
has been received in comparison to the claims experience.
It is for this reason and the limited number of qualified companies in
the insurance marketplace who could provide adequate municipal
insurance that the service has not in the past or currently been
tendered.
TR-67-92 Page 4
2 .0 The combination of the 1992 Budget provision for insurance being an
estimate of $243, 123, and the premium year straddling two fiscal years,
results in an overprovision of $29,253 . As in prior years, this amount
is available for transfer to the Self-Insured Losses Reserve, to be
used to meet claims that fall within the current deductible levels
maintained. The balance in the Self-Insured Losses Reserve at May 31,
1992 is approximately $7,776 .
It is advisable to buildup the balance in this reserve in order to
continue to fund claims that fall within the liability deductible level
of $5,000 or property damages of $10,000 . Staff recommend that the
contingency account fund this reserve with a transfer of $50,000.
There are adequate funds available in this account.
3.0 CONCLUSION
3. 1 Since the Region of Durham's proposal to research methods of combining
the insurance programs of the various municipalities and the Region
(pooling or reciprocal agreement) is pending staff respectfully
recommend the recommendations as outlined above.
Respectfully submitted, Recommended for presentation
to t Committee
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Ma i arano, H.BSc . ,A.M.C.T. Lawrence E. Kot e f
Treasurer Chief Administr: iye Officer
MAM/JR