HomeMy WebLinkAboutTR-60-97 THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON
REPORT
GENERAL PURPOSE AND ADMINISTRATION COMMITTEE
Meeting: File# Lo�-�
Date: June 16 1997 Res. # ° 97
By-Law#
Report#:__'11 69 g7 File #:
Subject: 1997/1998 INSURANCE PROGRAM
Recommendations:
It is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
1. THAT Report TR-60-97 be received;
2. THAT Frank Cowan Company Limited continue to be retained as the Municipality
of Clarington's insurance carriers for the period from July 1, 1997 to June 30,
1998, under the Durham Municipal Group Insurance Program at an approximate
cost of $283,523 plus applicable taxes; and
3. THAT the Durham Municipal Group, in preparation for the 1998/1999 premium
year, continue to pursue an investigation of the potential associated with bulk co-
operative purchasing and insurance pooling, as well as any other insurance
alternatives in the marketplace.
BACKGROUND
1.0 In preparation for the 1994/1995 premium year, the area municipalities in conjunction
with the Region of Durham undertook an investigation of the potential associated with
bulk co-operative purchasing, pooling of funds and reciprocal insurance.
1.1 As a result of this investigation, it was concluded that the Regional/Municipal Group were
not at a sufficient stage of development to be able to efficiently or effectively administer
the extreme move to a fully self-funded pooling arrangement as it would require central
co-ordination of all policies, additional expert staffing and significant administrative cost.
1.2 At a spring 1996 meeting of the Durham Municipal Group, presentations and discussions
took place regarding insurance pooling with purchased reinsurance to reduce the risk to
the participating Municipalities.
RPAPERC ECY�CLE g 4 1
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DI3 N PO-D OR RECYCLED PAPER
TR-60-97 Page - 2 -
1.3 The Region of Durham financed the cost to update the actuarial study done in 1994 to
determine the viability of an insurance pooling arrangement.
1.4 At this time, pooling to some degree remains as a viable option in the long term, however,
there is a greater degree of risk involved and many issues that remain unresolved. The
Durham Municipal Group will continue their investigation in this area but are not yet at a
stage where recommendations can be made.
1.5 Per Report TR-52-96, Frank Cowan Company Limited was retained as provider for the
Durham Municipal Group Insurance Program for the 1996/1997 premium year. This
completes a three year commitment in principle provided that the level of service and
premium renewal rates were not significantly altered. See Attachment "A" for a Durham
Municipal Group Insurance Cost Comparison for the 1997/1998 premium year.
1.6 Staff will continue to work with area municipalities to examine other future options for
securing the Municipality's general insurance requirements including obtaining a quote
from OMEX (Ontario Municipal Insurance Exchange) for comparison purposes.
1.7 Renewal rates have increased overall from the 1996/1997 premium year by 3.5%. This
is primarily a result of increased errors and omissions rates due to recent claims history
(1996 - 14.83%). A copy of the most recent claims audit was circulated recently to
Council.
SELF-INSURED LOSSES RESERVE
2.0 Annually, any surplus resulting from the comparison of premium year budget to actual
cost is transferred into the self-insured losses reserve. For the 1996/1997 premium year,
there was no unexpended budget remaining to be transferred into the reserve. This is
primarily a result of budget constraints as well as payments to our insurance adjusters
handling an increased number of claims and deductible payments for the settlement of
prior years claims.
2.1 The Self-Insured Losses reserve is intended to cover costs associated with insurance
claims below the Municipality's deductible amount, as well as fund the payment of the
deductible. In order to keep premiums at lower levels, the property deductible is
$10,000 and the boiler and machinery deductible is $5,000. As of December 31, 1996,
the balance in the reserve was $114,197 (1995- $88,045). The total draw on the reserve
in 1996 was $1,152 as where possible, deductible payments were charged directly to the
insurance operating account. There was also a budgeted contribution of $25,000 to the
self-insured losses reserve in 1996.
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RISK MANAGEMENT
3.0 Frank Cowan Company Limited offers extensive services in the area of Risk Management
including seminars and the development and improvement of risk management programs.
An effective risk management program helps to reduce the number of claims as well as
protect the Municipality's interests in the event of claims.
3.1 In the coming year, Treasury staff plan to review the current risk management policies
practiced in various Municipal departments, as well as co-ordinate risk management
seminars in areas of particular interest to the Municipality.
CONCLUSION
4.0 The recommendations outlined above are respectfully recommended for approval for the
1997/1998 premium year to be effective July 1, 1997.
Respectfully submitted, Reviewed by,
f,.
Marie A. Marano, H.BSc., A.M.C.T., W.H. Stockwell,
Treasurer. Chief Administrative Officer.
MM/NT/hjl
Attachments
843
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ATTACHMENT "Ali
DURHAM MUNICIPAL GROUP
COST COMPARISON
Cost Analysis
Municipality 1996-1997 1997-1998
Expiring Term Renewal Term % change
AjAx $ 348,391 367,969 +5.6%
BROCK 114,175 107,954 -5.8%
CLARINGTON 273,992 283,523 +3.5%
DURHAM 831,902 807,438 -2.5%
OSHAWA 526,472 480,498 -11 .0%
PICKERING 3573986 3775586 +5.5%
SCUGOG 100,545 1103845 +10.5%
UXBRIDGE 122,414 116,162 -5.4%
WHITBY 308,530 314,940 +2.1 %
TOTAL $ 21984,407 $ 219669915 -0.6%
Plus Tax Plus Tax