HomeMy WebLinkAboutFND-014-04
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REPORT
FINANCE DEPARTMENT
Meeting:
GENERAL PURPOSE AND ADMINISTRATION COMMITTEE
MONDAY, JUNE 21, 2004 Resolution #:~P.-~7~
Date:
Report #: FND-014-04
File#:
By-law #:
Subject:
2004/ 2005 INSURANCE PROGRAM
Recommendations:
It is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
1. THAT Report Ff.'JD~14-03. be received; and
2. THAT the Director of Finance/Treasurer be authorized to finalize the general
insurance placement, in conjunction with the other member municipalities of the
Durham Municipal Insurance Pool, with the Frank Cowan Company for an
integrated pooling arrangement that includes integrated insurance coverages,
common self retention deductible levels, and related stop loss aggregate
premium limits for the period July 1, 2004 to June 30, 2005 at an approximate
cost to Clarington of $456,281.
Reviewed by: 0 ~~
Franklin Wu,
Chief Administrative Officer.
NT/hjl
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REPORT NO.: FND-014-04
PAGE 2
BACKGROUND AND INFORMATION:
1.0 As Council is aware, the Municipality of Clarington is a member of the Durham
Municipal Insurance Pool. Insurance has been a difficult issue over the past
several years due to world events and a 'hard' insurance market. Over the past
year, a significant amount of time and effort has been expended in order to
prepare an underwriting submission for consideration by potential insurers for the
upcoming placement. The Pool has sought proposals from a number of sources
including:
· One of the largest Canadian Insurance brokers
· A major Canadian Insurer
· A mid-sized independent insurance broker
· the Frank Cowan Company.
1.1 The Board of Directors of the Durham Municipal Insurance Pool (of which
Clarington sits as Chair), is recommending a proposal from the Frank Cowan
Company for an integrated pooling arrangement. The main features of the
proposal include:
1) Retention of Clarington's local insurance deductibles of $25,000 for most
of the lines of coverage
2) Sharing the cost of claims by the Pool members from the local deductible
level to $500,000 per claim, and
3) A total aggregate annual stop loss limit of $1.5 million for all claims falling
between the local deductible and the $500,000 pool deductible.
1.2 In order to proceed with the 2004/2005 placement, staff of the participating
municipalities are recommending that each municipality's contribution to the Pool
be increased by 14.9% over last year. This provides for the purchase of
insurance as well as the funding of the $1.5 million annual aggregate mentioned
above.
1.3 For Clarington, the 2004/2005 contribution is estimated at $456,281. This may
be subject to minor adjustments prior to the July 1 commencement date. This
represents the 14.9% increase over last years' pool contribution of $397,118.
However, keep in mind that the quote for Clarington last year, without the pool's
involvement was $490,579. If we had not been a part of the insurance pool we
would likely have been looking at a minimum premium of approximately
$565,000 for 2004/2005.
1.4 The 2004 budget for insurance is $450,000 for premiums as well as adjusters
costs and payment of claims below the local deductible. As a result, the budget
for insurance (as mentioned in budget deliberations) will require further
adjustment in the 2005 budget process. For 2004, any shortfall will be funded
through the self-insured losses reserve as required.
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REPORT NO.: FND-014-04
PAGE 3
CONCLUSION:
2.0 For the 2004/2005 year the Durham Municipal Insurance Pool has been
particularly successful in obtaining a good insurance placement with an increase
that is modest in comparison to those that some municipalities have been facing
across the country. It is therefore recommended that Clarington proceed with the
insurance placement in conjunction with the Durham Municipal Insurance Pool
with the Frank Cowan Company.
CORPORATION OF THE MUNICIPALITY OF CLARINGTON
40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L 1C 3A6 T (905)623-3379 F (905)623-4169
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