HomeMy WebLinkAboutTR-52-96 THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON
REPORT
Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE Fsle ��,
Date: July 2, 1996 Fees. ## c4iq—+1 I-9
#
Report##: TR-52-96 File##: By-Law By-Law
Subject: 1996/1997 INSURANCE PROGRAM
Recommendations:
It is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
1. THAT Report TR-52-96 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, 1996 to June 30,
1997, under the Durham Municipal Group Insurance Program at an approximate
cost of$272,308 plus applicable taxes;
3. THAT the Durham Municipal Group, in preparation for the 1997/1998 premium
year, undertake an investigation of the potential associated with bulk co-operative
purchasing and insurance pooling;
4. THAT in conjunction with the review of the Municipal Act currently being
undertaken by the Province of Ontario, that the Province of Ontario be requested
to introduce/amend legislation to provide an appropriate level of statutory
immunity for municipalities from claims made by third parties for personal injury
or property damage arising in connection with the provision of municipal services;
5. THAT a copy of the above resolution be forwarded to the Premier of Ontario, the
Minister of Municipal Affairs and Housing, the Association of Municipalities of
Ontario, the local Member of Provincial Parliament, the Town of Aurora and the
City of Thunder Bay; and
6. THAT the correspondence received from A. Emmink Associates Ltd. be received
for information.
RP.-D RECYCLE
70 1
THI G PRIMED EN RECYCLED PAPER
TR-52-96 Page - 2 -
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 recent 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.
1.3 The Region of Durham has agreed to finance the cost to update the actuarial study done
in 1994 to determine the viability of an insurance pooling arrangement.
1.4 Staff will report back in the fall of 1996 pending the results of the actuarial study update.
1.5 Per Report TR-56-95, Frank Cowan Company Limited was retained as provider for the
Durham Municipal Group Insurance Program for the 1995/1996 premium year with a
commitment in principle for a further one year provided that the level of service and
premium renewal rates are not significantly altered. The 1996/1997 premium year is the
third year in this three year commitment in principle. See Attachment "A" for a Durham
Municipal Group Insurance Cost Comparison.
1.6 Staff will continue to work with area municipalities to examine other future options for
securing the Municipality's general insurance requirements.
1.7 Renewal rates have increased overall from the 1995/1996 premium year by 14.83%.
This is primarily a result of increased liability rates due to recent large judgements
handed down relating to Municipal liability. There is also a 1.9% increase in property
premiums due to increased property values (ie. new fire hall, acquisitions of property), as
well as a review of our insurable assets.
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 1995/1996 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 (ie. Hodgeson) and deductible payments for the
settlement of prior years claims.
702
TR-52-96 Page - 3 -
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. In recent years the number
of incidents of vandalism has been increasing. As of December 31, 1995, the balance in
the reserve was $88,045. The total draw on the reserve in 1995 was $32,259. The
greatest impact stems from Public Works and Community Services due to the scope of
their operations and the number of facilities involved.
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.
MUNICIPAL STATUTORY REFORM
4.0 As indicated in Section 1.7 of this report, renewal rates have increased substantially this
year, as well as for the 1995/1996 policy year. See Attachment "A" for cost comparisons
within the Durham Municipal Group. The increase primarily results from increased
liability rates.
4.1 Council received a communication from the Town of Aurora dated April 12, 1996
(Attachment "B") and another from the City of Thunder Bay dated May 7, 1996
(Attachment "C"). Both were dealing with the issue of municipal statutory reform and
were referred to the Finance Department. Also attached is a copy of the resolution
passed by the Ontario Good Roads Association dealing with the issue (Attachment "D").
4.2 As Council is aware, the Province is currently undertaking a review of the Municipal Act.
Other provinces in Canada that provide statutory immunity to municipalities in areas
relating to municipal liability include Alberta and British Columbia. It is also common in
the United States.
4.3 The resolutions passed by the Town of Aurora and the City of Thunder Bay have been
adopted by many Municipal Councils across Ontario. The objective is not to absolve
municipalities from all liability but rather place limits on the extent and types of issues
for which municipalities are currently held liable. As indicated in the Ontario Good
Roads Association Resolution #96-09, some restrictions would include municipalities not
being liable on the basis of systems of maintenance or inspections of municipal property
,provided that municipalities follow through on their own systems as determined by
Councils. Another example is that municipalities not be held liable on the basis of
accidents caused by snow or ice unless the municipality is found to be grossly negligent
in its standard of care.
703
TR-52-96 Page - 4 -
4.4 If some form of statutory immunity for municipalities is provided, not only will it result in
reduced insurance premiums, it will reduce the potential for claims in excess of
municipal insurance limits, as well as reduce costs associated with staff time and
insurance adjusters' costs in handling the numerous insurance claims received by the
Municipality each year.
ALTERNATIVE DISPUTE RESOLUTION
5.0 A letter was sent to Council dated June 12, 1996 from A. Emmink Associates Ltd.
(Attachment "E") in which they offer services in corporate conflict management and
dispute resolution. They are proposing providing mediation services in insurance claims.
5.1 Currently the Municipality retains the firm of L.V. Walker and Associates, as insurance
adjusters to deal with insurance claims. L.V. Walker has provided excellent service to
the Municipality and has been effective (in conjunction with municipal staff and Frank
Cowan Company Ltd.), in minimizing claims paid by the Municipality.
5.2 A mediation process implies working towards a settlement. In many cases, this is not
acceptable to the Municipality and its insurers since a precedent may be established
resulting in higher future claims costs. In some instances, it is more cost effective in the
longer term to absorb legal fees to prevent precedents being established.
5.3 Changes to the existing process of handling insurance claims is not recommended at this
time.
CONCLUSION
6.0 The recommendations outlined above are respectfully recommended for approval for the
1996/1997 premium year to be retroactive effective July 1, 1996.
Respe ully submitted, Reviewed by,
y
e . Marano, H.BSc.,A.M.C.T., W.H. Stockwell,
Treasurer. Chief Administrative Officer.
MM/NT/hjl
Attachments
704
ATTACHMENT "A"
D U R H A M M U N I C I P A L G R O U P I N S U R A N C E C O V E R A G E S & C 0 S T S - J U L Y 1, 1 9 94 T O J U N E 30, 1 9 9 5
M U N I C I P A L I T Y I
i I 1
1POLICY 1AJAX BROCK 1CLARINGTON 10SHAWA 1PICKERING 1SCUGOG 1UXBRIDGE 1WHITBY 1DURHAM
'COUNCILLORS ACCIDENT '
1 I 100 r 000' 100,000! 100 r 000' 100 r 000' 100,00 1 0' 100,0001 100,000, 100,000I 1 Board
100,
000'i-Income total disability
5001 5001 5001 5001 5001 5001 5001 5001 Members 5001
1-income partial disability 1 2501 2501 2501 2501 2501 2501 2501 2501 2501
1 i I i I
!MUNICIPAL CONFLICT OF INTEREST'
1(10% DEDUCTIBLE) 1 100,0001 100,0001 100 0001 100 0001 100,0001
100,0001 100 0001 100 0001 Members 100,0001
i I I 1 ' 1 ' 1 1
'CRIME-BOND ! 1 000 000' 1,000,000 1 1,000,0651 1 000 0001
1,000,0001 1 000 000' 1 000 0001 1 000 0001 5 000 000'
1 rr1 1 r1 1
!PROPERTY 1 56,216,1001 21,230,2001 52,914;1851 126,541,4001 85,536,8701 17,966,7001 21,341,3001 61,298,1001 261,619,2001
1 DEDUCTIBLE 1 10,0001 1,000/10,0001 500/10,0001 50,0001 500/10,0001 500/2,5001 500/2,5001 500/10,0001 100,0001
1 ' 1 314 070'
1 I I 1 I 1
lEDP I I 1 111,0001 1,000,0001 4,310,0001 1,549,220I
1 314,7921 205,0001 1,194,5001 7,900,0001
1 DEDUCTIBLE 1 1,0001 1,0001 1,0001 5,0001 1,0001 1,0001 1,0001 1,0001 10,0001
I
1 I I
180[LER/MACHINERY 1 10 000 0001 10 000 0001 10 000 0001 10 000 0001 10 000 0001 10 000 0001 10 000 0001 10,000,000 1 15 000 000'
1 ! ' 5,0001 r r I r . I r r I r . 1 . r I . . 1 1 . . 1
DEDUCTIBLE 1 1 1 I
1 1,0001 5,0001 50,0001 5,0001 1,0001 1,0001 10,0001 100,0001
1ENVIRONMENTAL LIABILITY 1 2,000,0001 2,000,0001 2,000,0001 N/A1 1,000,0001 2,000,0001 2,000,0001 2,000,0001 N/A'
1 SELF-INSURED RETENTION 1 5,0001 2,5001 5,0001 1 5,0001 2,5001 2,5001 5,0001
1MUNICIPAL LIABILITY 1 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 25,000,0001
1 DEDUCTIBLE ' S 000' 01 S 0001 5 0001 5 000 01 01 5,0001 100,0001
1 1 r1 1 - 1
1 I I
1ERRORS & OMISSIONS 1 15,000,0001 15,000,0001 1 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001
1 DEDUCTIBLE 1 2,5001 01 2,5001 5,0001 2,5001 01 01 2,5001 10,0001
I
� 1 I
1oWNED AUTO 1 15 000 0001 15 000 0001 15 000 0001 15 000 0001 15,000,000!1 15 000 0001 15 000 0001 15 000 0001 25 000 0001
I I r r I . r 1 r r I r r I r r I r r I . r 1 . . 1
1 DEDUCTIBLE 1 A.P. 5,0001 A.P. 1,0001 A.P. 5,0001 A.P. 5,0001 A.P. 5,0001 A.P. 1,0001 A.P. 1,0001 A.P. 5,0001 A.P. 15,0001
1 T.P.L. 5,0001 T.P.L. 01 T.P.L. 1,0001 T.P.L. 1,0001 T.P.L. 1,0001 T.P.L. 01 T.P.L. 01 T.P.L. 5,0001 T.P.L. 50,0001
1NON-oWNED AUTO-LIABILITY 1 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 25,000,0001
1NON-OWNED AUTO-PHYSICAL DAMAGE1 500,0001 250,0001 500,0001 500,0001 500,0001 250,0001 250,0001 500,0001 500,0001
( � 1 DEDUCTIBLE 1 5001 5001 5001 5001 5001 5001
1 1 ! 1 i 1 1 5001 5001 5001
1NON-OWNED AIRCRAFT LIABILITY 1 N/A1 N/A! 10,000,0001 N/A1 N/A, N/A, N/A1 10,000,0001
1 I I
'MUNICIPAL LEGAL EXPENSE ' 100 0001 100 0001 100,0061 100 0001 100 0001 100 0001 100 000' 100,0001 100,0001
I 1 r I , I
1(10% DEDUCTIBLE) 1 1 ' i ' i
1 i 1 1 I
i
1FIRE-FIGNTERS ACCIDENT 1 100,0001 N 7A1 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 N/A1
1 I I
TOT PREMIUMS (2) 1 249,2891 79,2991 217,0941 498,2231 (1) 257,3631 79,2631 83,9041 (1) 226,2311 619,8171
1 I 1 I
I 1
(1) Includes Transit
(2) Retail Sales Tax not included
ATTACHMENT "A"
D U R H A M M U N I C I P A L G R 0 U P I N S U R A N C E C 0 V E R A G E S & C 0 S T S - J U L Y 1, 1 9 9 5 T O J U N E 30, 1 9 9 6
1 i M U N I C I P A L I T Y
!POLICY (AJAX BROCK ICLARINGTON IOSHAWA IPICKERING iSCUGOG !UXBRIDGE (WHITBY IDURRAN 1
!COUNCILLORS ACCIDENT 1 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 Board 100,0001
Income total disability 1 5001 5001 5001 5001 5001 5001 5001 5001 Members 5001
1-Income partial disability 1 2501 2501 2501 2501 2501 2501 2501 2501 2501
(MUNICIPAL CONFLICT OF INTEREST( 1 1 i i i I 1
1(10% DEDUCTIBLE) 1 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 Members 100,0001
!CRIME BOND 1 1,000,0051 1,000,0051 1,000,0001 1,000,0001 1,000,0601 1,000,0001 5,000,0001
!PROPERTY 1 65,345,9001 22,910,5501 58,168,5991 141,157,4001 90,453,9701 19,165,1001 25,925,5001 63,572,2001 434,948,0001
1 DEDUCTIBLE 1 10,000i 500/10,0001 50,0001 500/10,0001 500/2,5001 500/2,5001 500/10,0001 100,0001
1
!EDP 1 1,314,0701 111,0001 1,000,0001 4,310,0001 1,549,2201 314,7921 205,0001 1,194,5001 7,900,0001
1 DEDUCTIBLE 1 1,0001 1,0001 1,0001 S 000' 1 000' 1 000' 1 000' 1 000' 10,0001
1 I I I 1 1
1601LER/MACHINERY 1 10,000,0001 10,000,0001 10,000,0001 10,000,0001 10,000,0001 10,000,0001 10,000,0001 10,000,0001 15,000,0001
1 DEDUCTIBLE 1 5,0001 1,0001 5,0001 50,0001 5,0001 1,0001 1,0001 10,0001 100,0001
(ENVIRONMENTAL LIABILITY 1 2,000,0001 2,000,0001 2,000,0001 N/A1 1,000,0001 2,000,0001 2,000,0001 2,000,0001 N/A1
1 SELF-INSURED RETENTION 1 5,0001 2,5001 5,0001 1 5,0001 2,5001 2,5001 5,0001 1
!MUNICIPAL LIABILITY 1 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 25,000,0001
1 DEDUCTIBLE 1 5,0001 01 5,0001 5,0001 5,0001 01 01 5,0001 100,0001
!ERRORS & OMISSIONS 1 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001
1 DEDUCTIBLE 1 2,5001 01 2,5001 5,0001 2,5001 01 01 2,5001 10,0001
(OWNED AUTO 1 1 i i i 1 1
i , 15,000,000, 15,000,000, 15,000,000, 15,000,000, 15,000,000, 15,000,000, 15,000,0001 15,000,0001 25,000,0001
1 DEDUCTIBLE 1 A.P. 5,0001 A.P. 1,0001 A.P. 5,0001 A.P. 5,0001 A.P. 5,0001 A.P. 1,0001 A.P. 1,0001 A.P. 5,0001 A.P. 15,0001
T.P.L. 5,0001 T.P.L. 01 T.P.L. 1,0001 T.P.L. 1,0001 T.P.L. 1,0001 T.P.L. 01 T.P.L. 01 T.P.L. 5,0001 T.P.L. 50,0001
INON-OWNED AUTO-LIABILITY 1 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 25,000,0001
INON-OWNED AUTO-PHYSICAL DAMAGEI 500,0001 250,0001 500,0001 500,0001 500,0001 250,0001 250,0001 500,0001 500,0001
1 DEDUCTIBLE 1 5001 5001 5001 5001 5001 5001 5001 5001 5001
INON-OWNED AIRCRAFT LIABILITY 1 N/A1 N/A1 N/A1 10,000,0001 N/A1 N/A1 N/A1 N/A1 10,000,0001
IMUNICIPAL LEGAL EXPENSE I 100,0001 100,0001 100,0001 100,0001 100,0001 100,0661 100,000i
1(10% DEDUCTIBLE) I
,FIRE FIGHTERS ACCIDENT ; 100,0001 _N/AI 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 NIA,
!TOTAL PREMIUMS (2) 1 286,4691 91,5431 239,4941 558,2111 (1) 294,1661 90,7161 96,5941 (1) 263,6041 676,8131
i
Increase -
1995 cost over 1994 cost 14.92% 15.44% 10.32% 12.04% 14.30% 14.45% 15.13% 16.52% 9.20%
(1) Includes Transit
(2) Retail Sales Tax not included
ATTACHMENT "A"
i
D U R H A M M U N I C I P A L G R 0 U P I N S U R A N C E C O V E R A G E S ✓E C 0 S T S - J U L Y 1, 1 9 9 6 TO J U N E 3 0, 1 9 9 7
MUNICIPALITY 1
I
(POLICY (AJAX IBROCK ICLARINGTON IOSHANA 1PICKERING 1SCUGOG (UXBRIDGE IIJNITBY (DURHAM
(COUNCILLORS ACCIDENT 1 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 Board 100,000'
I-Income total disability 1 5001 5001 5001 500' 500' 500' 500' 1
I-Income partial disability I 250' 250' 250' 1 i I 1 500, Members 500,
1 I 250 ,
1 i 1 I 251 2501 2501 2501 2501
(MUNICIPAL CONFLICT OF INTERESTI ' 1 i i I I 1 i 1
1(10% DEDUCTIBLE) I 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 Board 0001 100 0001
' 1 I 1
1CRIME BOND 1 1,000,0001 1,000,0001 1,000,0001 1,000,0001 1,000,0001 1,000,0001 1,000,0001 1,000,0001 5,000,0001
I ' ; ; 1
1PROPERTY 1 66,528,0001 22,910,5501 59,548,4351 174,807,200; 92,261,7701 19,527,450-1 65,048,6001 445,000,0001
DEDUCTIBLE I 10,0001 1,000/10,000i 50,0001 500/10,0001 500/2,5001 500/2,5001 500/10,000'
100,0001
(EDP I 1,314,0701 111,0001 1,000,0001 4,310,0001 1,549,2201 314,7921 205,0001 1,194,5001 7,900,0001
I DEDUCTIBLE 1 1,0001 1,0001 1,0001 5,0001 1,0001 1,0001 1,000' 1 0 '
I , , 1 � i 00, 10,0001
1BOILER/MACHINERY I 10,000,0001 10,000,0001 10,000,0001 10,000,0001 10,000,0001 10,000,0001 10,000,0001 10,000,0001 15,000,0001
DEDUCTIBLE I 5,0001 1,0001 5,0001 50,0001 5,0001 1,0001 1,0001 10,0001 100,0001
I I
1ENVIRONMENTAL LIABILITY I 2,000,0001 2,000,0001 2,000,0001 N/AI 1,000,0001 2,000,0001 2,000,0001 2,000,000' 1
SELF-1NSURED RETENTION 1 5,0001 2,5001 5,0001 I 5,0001 2,5001 2,5001 5,0001 N/A1
1MUNICIPAL LIABILITY 1 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 25,000,0001
DEDUCTIBLE 1 5,0001 01 5,0001 5,0001 5,0001 p� 1 ,
1 01 5,0001 100,0001
1ERRORS & OMISSIONS 1 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,000' 15,000,0001
DEDUCTIBLE I 2,500' 0' 2 500' 5,0001 2 500' 0' 10 000
i 1 i i i 1 ' I 1 0, 2,5001 ,
10WNE0 AUTO 1 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 25,000,0001
1 DEDUCTIBLE I A.P. 5,0001 A.P. 1,0001 A.P. 5,0001 A.P. 5,0001 A.P. 5,0001 A.P. 1,0001 A.P. 1,0001 A.P. 5,0001 A.P. 15,0001
T.P.L. 5,0001 T.P.L. 01 T.P.L. 1,0001 T.P.L. 1,0001 T.P.L. 1,0001 T.P.L. 01 T.P.L. 01 T.P.L. 5,0001 T.P.L. 50,0001
I ,
1 ,
� (NON-OWNED AUTO-LIABILITY I 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 15,000,0001 25,000,000'
1NON-OWNED AUTO-PHYSICAL DAMAGE1 500,0001 250,0001 500,0001 500,0001 500,0001 250,0001 250,0001 500,0001 500,0001
1 DEDUCTIBLE I 5001 5001 5001 5001 5001 5001 5001 5001 500'
1NON-OWNED AIRCRAFT LIABILITY 1 N/AI N/A, N/AI 10,000,000I N/A1 N/A1 N/AI N/AI 10,000,0001
' 1 i 1 , ' 1
(MUNICIPAL LEGAL EXPENSE 1 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001
1(10% DEDUCTIBLE) I I 1
1 i i i
FIRE FIGHTERS ACCIDENT i 100,0001 N/A1 100,0001 100,0001 100,0001 100,0001 100,0001 100,0001 N/Ai
(TOTAL PREMIUMS (2) I 347,0431 115,0001 272,3081 681,4611 (1) 358,0001 112,6201 121,1991 (1) 322 2431 1
1 ,
I 805,000
' 1
1 1
Increase - 1 1 , , ,
1996 cost over 1995 cost 21.15% 25.63% 13.71% 22.08% 21.70% 24.15% 25.48% 22.25% 18.94%
1996 cost over 1994 cost 39.22% 45.02% 25.44% 36.78% 39.11% 42.09% 44.45% 42.44% 29.88%
(1) Includes Transit
(2) Retail Sales Tax not included
ATTACHMENT"B"
Town of Aurora
100 John West Way
Box No. 1000
--- Aurora, Ontario
L4G 6J1
Tel: (905) 727-1375
April 12, 1996 - File: CO3/10-96
APR 15 Am!1:35
Ms. Patti Barrie, Clerk
Municipality of Clarington
40 Temperance Street
Bowmanville, Ontario
L1 C 3A6
Dear Ms. Barrie:
Re: Staff Report - CL96-021-091 - Proposal for Municipal Statutory Immunity from
3rd Party Claims Relating to Provision of Services
Please be advised that this matter was referred to Council for consideration at its
meeting held on April 10, 1996.
In this regard, Council adopted the following resolution:
#209. Moved by Councillor Morris Seconded by Councillor Wallace
THAT the Premier of Ontario be requested to introduce legislation to
provide an appropriate level of statutory immunity for municipalities from
claims made by 3rd parties for personal injury or property damage arising
in connection with the provision of municipal services; and
THAT a copy of this Report and Council's resolution be forwarded to
rug�icipaiiiies within the Greater Toronto Area for their consideration.
CARRIED
Enclosed lease find a co `~ :._
p copy of the Staff Report for your information and a'ri.y_atteriti-rr• : y;..�
deemed necessary.
Yours truly,
Lawrence Allison, A.M.C.T. .�
Municipal Clerk ...........
i -
LA/cd ._. . .. ...._ .
000139.. ,�
April 10, 1996 - 2 - Report No. CL96-021
March 11 , 1996 and the Town's insurer was quoted in that story, requesting the
Government of Ontario to give consideration to this question. Forms of limited liability
currently exist for certain activities of the Provincial Government and for municipalities
in several other provinces.
COMMENTS
Municipalities differ from most natural individuals and corporations, who may act out
of personal or profit-oriented motives, because the motives for municipal actions are
constrained by the role of providing public services. Inevitably, this role will have
adverse impact on some persons affected. At present, the courts and statute law
impose the standards required and make every defendant liable to repay the entire
award. Essentially, this sets up a circumstance where the courts can assist some
individual plaintiffs by transferring repayment of their damages to all municipal fee and
rate payers. The court system itself is slow and costly, its results are not predictable
and its focus on fault-finding obscures the fact that it is really transferring the cost to
the entity considered most able to pay, which is the municipality.
Given the current tax burden and economic conditions, this judicial transfer of costs
is coming under scrutiny. The democratic process has not clearly indicated that
individuals should be able to recover their damages from those who support
municipalities when that public service provider's activities fall below the current high
standards imposed by the judiciary.
Accordingly, it is suggested:
• that statutory provisions making a municipal defendant liable for damages
caused by contributing parties be eliminated;
• that statutory duties to carry out certain activities (such as highway
maintenance) should become discretionary, permitting Council to establish its
own policies, taking into account local preferences and costs; and
• that consideration be given to restricting municipal liability, addressing current
case law relating to nuisance and sewer/water main breaks, relating to-the high
standards currently imposed upon municipal staff, such as building inspectors,
and relating to the municipality's duty as an occupier of property.
OPTIONS
Ministry staff engaged in the Municipal Reform Review having been laying the basis
for potential revisions to existing legislation. The consultation process has not formally
commenced. Nonetheless, an expression of municipal concern may be of use at this
early stage. The alternative is to wait until the Provincial Government-has drafted
proposed legislative amendments.
710
000141
r
Current Issues in Municipal Risk Management
Statutory Reform of the Tort Liability Exposure of
Ontario Municipalities
December 19, 1995
Prepared for
Bruce Thom, Q.C., City Manager
and
Thunder Bay Risk Management Committee
by
Colleen S. Laughton, F.I.I.C., C.R.M., A.R.M.
David W. Eryou, B.A., LL.B.
Advisors to the Committee
Address: McVicar Manor
2nd Floor- 131 N. Court Street
Thunder Bay, Ontario P7A 4V1
Tel (807) 346-9226
Fax (807) 346-9270
a
712
000143
2 Laughton&Eryou
December 19, 1995
to maintain roads. Standards of maintenance should be decided by professionals and
at the ballot box, not in already overburdened court rooms.
To facilitate the new order of municipal government, municipalities need greater
freedom in maintaining municipal property. Municipalities should be free of the
affirmative duty of care established by the courts under the Occupiers' Liability Act.
Presently municipal roads are excluded from the Occupiers' Liability Act. We
recommend all municipal property and all - municipal activities be excluded.
Municipalities as responsible local governments will decide the resources to allocate
and the standards of maintenance the community will enjoy. Let the ballot box and
not the courts be the primary agenda setter in defining municipal obligations. Alberta
has given its municipalities legal immunity for their decisions on maintenance *and
inspection of property.
Municipalities need freedom from being sued for the consequences of not doing what
they can in fact no longer do. It is no longer realistic to hold municipalities potentially
liable for failure to inspect buildings or enforce by-laws. British Columbia and Alberta
have already granted their municipalities such freedom and'municipalities in those
provinces will enjoy a competitive advantage.
Ontario municipalities need freedom to govern, a freedom which has been eroded by
Canadian courts which do not hesitate to impose liability on municipalities even when
it disrupts the municipalities' ability to govern. Fundamental principles of constitutional
law require that municipal governments be immune from legal liability in their
processes of governing. Without such immunity, efficient and cost-effective
government is unrealistic. Alberta has given such protection to municipalities. For
decades American municipalities have enjoyed similar- statutory protection. The
statutory immunity proposed for Ontario municipalities in this paper exists in Alberta,
British Columbia and in other provinces. It exists in many American municipalities.
Ontario municipalities need the freedom to benefit from the.lessons of others.
0
714
c ATTACHMENT "C"
iunde�
500 Donald Street East
Superior by Nature Thunder Bay, Ontario P7E 5V3
OFFICE OF THE MAYOR --4 y Fir ! �` . 317) 623 1164
May 7, 1996
Diane Harare, Mayor _
Municipality of Clarington
40 Temperance Street --
L".L, Y iJ
Bowmanville, Ontario m ��� '
Ll C 3A6
CVARiNGTON
MAWl--,'S OFFICE
Dear Mayor Hamre:
We are writing to you about a matter of concern to all Ontario municipalities and
taxpayers. Recent multi-million-dollar liability settlements against municipalities are driving
UP insurance costs and threatening your ability as elected municipal representatives to
govern effectively and responsibly. Municipalities in several other Canadian provinces are
protected from certain kinds of litigation. Ontario municipalities also need protection from
unwarranted lawsuits that cost millions of dollars and waste scarce municipal resources.
In Ontario, individuals can sue municipalities for problems arising from sewer
backups, burst watermains, road maintenance, building inspections, or accidents that occur
on municipal property, however caused. For example, individuals have successfully sued
municipalities for accidents that have occurred in private buildings, by claiming that
municipal building inspections were lax. Individuals who get drunk, trespass on municipal
property when it is closed to the public, and injure themselves are holding municipalities
responsible for their injuries. Municipalities are even being sued for damage caused by
sewer backups, even though homeowners are covered by homeowners' insurance for such
damage.
When judges award millions of dollars to individuals in these cases, municipalities
suffer in two ways. First, they must pay the insurance deductible and face increased
insurance premiums in future. Second, the authority to decide how municipal tax revenues
are spent is taken away from municipal councillors by judges, who make decisions that
affect standards for such services as road maintenance or sewer inspections.
As municipal councillors and employees, we are all doing our best to cope with
decreasing revenues and making tough decisions: that is what governing is about. Moreover,
we are trying to do so without putting our employees or taxpayers at undue risk. At a time
when municipalities are trying to do more and more with less and less, one of the biggest
threats to our ability to govern responsibly is the risk of lawsuits in which the judgement
fails to reflect local conditions, priorities, or appropriate levels of care.
continued.....
715
CITY OF
T'hzu�der
Superior l,y Nature
MUNICIPALITIES ON THE HOOD
FOR MILLIONS IN LIABILITY CLAIMS
THUNDER BAY, ON, FEB. 2, 1996 — In 1988 in the town of Tosorontio, Ont., a truck
driver ran a stop sign and badly injured another driver. The stop sign was clearly visible,
but the courts decided that it was not in perfect condition. The injured claimant was awarded
$4.5 million in damages, but the truck driver, who was judged to be 80 percent responsible
for the accident had only $1 million insurance coverage. Guess who paid the other $3.5
million? The municipality.
Cases like this are eating into municipal funds and pushing up municipal insurance
premiums. At a time of funding cutbacks and downsizing, this can seriously affect a
municipality's ability to provide services and maintain its quality of life. However, the City
of Thunder Bay is looking for options that reduce that effect. Even before the Common
Sense Revolution had begun, the City had downsized and restructured, in a far-reaching
exercise that left no department unaffected. Under tine direction of City Manager Bruce
Thom, 20 departments have been reduced to seven, and services have been consolidated and
streamlined. Now the City has formed a Risk Management Committee to assess how the.
cutbacks affect the public and city employees.
As part of its drive to do more with less, Thunder Bay is asking the province for greater
freedom to govern and less harassment from costly and time-consuming nuisance lawsuits.
The Risk Management Committee, at the request of Bruce Thom, has forwarded a report to
the Minister of Municipal Affairs containing proposals that could help every Ontario
municipality save substantial sums of money in an often overlooked area: insurance
premiums and liability claims. The proposals are based on legislation that already exists in
Alberta and British Columbia, where individuals cannot bring certain kinds of nuisance suits
against municipalities.
Ontario municipalities are still seen as having deep pockets and ratepayers are suffering.
Claims against municipalities are clogging Ontario courts and driving up insurance
premiums. Moreover, the cards are stacked against municipalities, which may be required to
pay 100 percent of compensation costs even if they are only one percent responsible for an
accident or loss.
Who should allocate municipal resources: appointed judges or taxpayers and their
representatives? Right now, judges are making decisions in these suits that affect levels of
services and standards of maintenance in municipalities. Thunder Bay believes that these
decisions should be made by municipal councillors on behalf of taxpayers.
Thunder Bay is not the only municipality to be worried about this threat to its ability to
govern and to manage its affairs cost-effectively. However, it may be the first to study the
issue in detail, and it wants Ontario to.catch up to other leading provinces. The report to the
Minister of Municipal Affairs compares the situation in Alberta and British Columbia to that
in Ontario, and proposes model legislation that would take municipal decision-making out of
the hands of judges and return it to municipal councils. Resolutions based on the report will
be presented to the Association of Municipalities of Ontario and the Ontario Good Roads 717
Association ul the next few weeks.
Fact Sheet on Municipal Statutory Reform
As municipal councillors and employees you are and should be concerned about the
continuing increase in the cost of insurance protection for municipal corporations. However,
these increased costs are part of a much larger problem.
Insurance premiums are driven by the frequency and size of insurance claims. Recent
court decisions have required Ontario municipalities to pay individuals for claims arising from
such problems as sewer backups, burst watermains, or road maintenance, or from accidents
occurring on municipal property or in private buildings that have been inspected by the
municipality. People who suffer a loss have come to expect compensation from municipal
governments, even though the municipality may bear little or no responsibility for the loss.
These expectations have been promoted and encouraged by the courts and by plaintiff lawyers.
What this means is that your ability to govern as representatives of Ontario
municipalities is being eroded by the courts. Judges are making decisions that profoundly affect
your budgets and the services you provide — decisions that should be made by municipal
councillors speaking for local citizens, who expect their tax dollars to be protected.
A fundamental principle of constitutional law is that governments should be immune
from legal liability in carrying out the work of governing. Governments cannot operate
efficiently or cost-effectively without such immunity.
Reduced funding, restructuring and downsizing at a time when your responsibilities are
increasing means that your ability to govern is already being tested to the limit. You urgently
need freedom from unwarranted litigation and from judge-made law that conflicts with your
constitutional mandate to govern.
The kind of protection for municipalities that we are talking about already exists in other
provinces, such as Alberta, British Columbia, Manitoba, New Brunswick, and Nova Scotia as
well as in many American municipalities. Ontario municipalities need protection in the
following four areas.
1. Nuisance Liability
Ontario municipalities have been swamped with thousands of nuisance liability claims because
of sewer backups and flooding from broken watermains. These claims have been brought
following a 1990 decision by the Supreme Court about a case in Newfoundland, in which the
city of St. John's was held liable for damage caused by a sewer backup. Since many
municipalities have aging sewer and water systems, it is likely that the number of such cases
will increase. However, local citizens, through their municipal councillors, should be able to
decide when and how to carry out repairs and upgrades, rather than having these priorities
dictated by judges in court cases.
2. Building Inspection Liability
In a number of cases in Ontario, municipalities have had to pay for damage or accidents caused
by faulty construction of privately owned buildings that were inspected by municipal
employees. In other words, you the municipality are expected to guarantee the work of every
builder, contractor, or renovator working in your municipality. The consequences of adding this
responsibility to those you already bear are serious and far-reaching. British Columbia and
Alberta have foreseen these consequences and moved to protect their municipalities against
these claims, but this protection does not exist at present in Ontario.
1 719
C A N A D A ' S N A T I O N A L N E W S P A P E R
'BE AND MAIL
.r..,Fih GLO.
ts Plus.tsid.Gmter
d1.bYoronto; Toronto, Monday, March 11, 1996 ■
higher outside and In boos
friend's birthday. About 2:30 U.S.-style liability claims,
a.m., he joined two carloads of coupled with an everyone-is-a-
1
T h e ' 90s revellers heading for Sand victim nineties attitude, have
Point Beach, where he -frol- resulted in a rash of huge
icked in the water, then hung judgments against towns and
turn into out on a dock. cities.The sw-ge in litigation is
At one point, Mr. Alchimo- coming at a time when munici-
17 � C wicz;then 26, climbed onto the palities can least afford it.
�,1 ! s docks railing and dived in.The Scarce tax dollars that could be
lake water was about one going to seesaws, sewer sys-
metre deep. "I broke my neck tems and school teachers are
decade
and severed my spinal cord," drained by ever-larger deducti-
he said. bles, sky-rocketing legal costs
Mr. Alchimowicz, a quadri- and insurance premiums that
Municipalities plegic with partial use of his are rising at about 35 per cent a
arms, has filed a $15-million year-
reel from sting suit. In a case scheduled for "If that's what is happening
September in the Ontario, to Canada,all I can say is,`Wel-
of liability claims Court's General Division, he come to the club,'" said Peter
named his host, the driver, his Huber, an insurance analyst
BY JAN WONG friends on the dock,even a par- with the Manhattan Institute.
The Globe and Mail tygoer who was supposed to Several provinces, including
AN-T fight city hall? drive him home that night but British Columbia, Nova Scotia,
Think again. hadn't shown up in time. And Manitoba and, most recently,
On a hot July night in in a move that has alarmed Alberta, have passed legis-
Windsor, Ont.,three years ago, municipal officials across Can- lation limiting certain munici
a dishwasher-cook named ada, Mr. Alchimowicz included pa4 liability.But others,includ-
Derek Alchimowicz got very, the City of Windsor. ing New Brunswick, Quebec
very drunk. Athletic, six feet "Most certainly we-are con- and Ontario, remain vulnera-
tall, with a John 'IYavolta cerned about it," said Patrick ble. '
dimple in his chin, Mr. Alchi- Brode, a city solicitor for Wind- Please see Liability I A6
mowicz was celebrating a sor.
721
Suggested Resolution for Council
If you agree with the need for reform of Ontario legislation to protect municipalities from
unnecessary lawsuits, here is what you can do:
1. Request your municipal council to pass a resolution urging the provincial government to
give municipalities statutory protection against unwarranted nuisance and liability
claims. Here is a sample resolution that will help you form your own resolution:
WHEREAS the Province of Ontario has indicated its intention to revise the
Municipal Act;
AND WHEREAS recent judicial interpretations of the provisions of the Municipal
Act and the Occupier's Liability Act have increased the financial burden on
municipalities by shifting responsibility for allocating resources away from elected
municipal representatives and towards appointed judges;
NOW THEREFORE BE IT RESOLVED THAT the Minister of Municipal Affairs
be requested to amend the Municipal Act and the Occupier's Liability Act to
protect municipalities from unwarranted litigation arising from sewer backups,
burst watermains, road maintenance, building inspections, or accidents occurring
on municipal property, as requested by the Corporation of the City of Thunder Bay
in its risk management submission of 19 December 1995.
2. Please forward a copy of your resolution to:
Hon. Michael D. Harris Association of Municipalities of Ontario
Premier of Ontario 250 Bloor Street East, Suite 701
Room 281, Legislative Building Toronto, Ontario
Toronto, Ontario M4W 1E6
M7A lA8
Your local MPP at his or her constituency
Hon. Al Leach office
Minister of Municipal Affairs
777 Bay Street, 17th floor Your local newspaper
Toronto, Ontario
M5G 2E5 Bruce Thom, city manager
City of Thunder,Bay
Mr. Dan Burns City Hall, 500 East Donald Street
Deputy Minister of Municipal Thunder Bay, Ontario
Affairs P7E 5V3
777 Bay Street, 17th floor (to let us know that you have taken action)
Toronto, Ontario
M5G 2E5
723
ATTACHMENT"D"
r ONTi4RIO
GOOD ROADS
ASSOCIATION
530 OTTO ROAD.UNIT 2
MISSISSAUGA.ONTARIO
L5T 21.5
TELEPHONE 905 725-2555
FAX 905 795-2660
ONTARIO GOOD ROADS ASSOCIATION
1996
RESOILUTIONS
1996 Annual Conference
Royal York Hotel
February 25 - 28, 1996
724
ONTARIO GOOD ROADS ASSOCIATION
1996 RESOLUTIONS INDEX
RESOLUTION
PAGE
96-01 Request that OGRA change its name to Ontario Municipal 1
Transportation Association.
96-02 Request that MTO continue to provide technical, financial 2
and organizational advice to municipalities.
96-03 Request that the Negligence Act be amended to limit a defen- 3
dant's liability.
96-04 Request that the Negligence Act be amended to limit a defen- 5
dant's liability.
96-05 Request that the Provincial Government abolish suburban 6
roads commissions.
96-06 Request that Ontario Government review liability associated 7
with roads being used as recreational facilities.
96-07 Request that winter road maintenance in northern Ontario 8
be exempt from reduced funding.
96-08 Request that Provincial transit subsidy be allocated on a pro- 9
portional basis among all municipalities prepared to offer
public transportation systems to their citizens.
96-09 Request that Provincial Government give municipalities statu- 10
tory protection against nuisance and liability claims.
96-10 Request that the Ministry of Natural Resources amend the 11
Aggregate Resources Act to permit upper tier municipalities
to levy the same fee as lower tier municipalities. .
725
i,
96-09 REQUEST THAT PROVINCIAL GOVERNMENT GIVE MUNICIPAL-
MES STATUTORY PROTECTION AGAINST NUISANCE AND LIABIL-
ITY CLAIMS
FROM: City of Thunder Bay
WHEREAS the Province of Ontario has indicated its intention to revise the Municipal
Act; and
WHEREAS current provisions of the Municipal Act and the Occupier's Liability Act
have shifted responsibility for allocating municipal resources from taxpayers and their
representatives to appointed judges and have sizably increased the financial burden
on municipalities at a time of cutbacks and d.Dwnsizing;
THEREFORE BE IT RESOLVED THAT the Provincial Government give municipalities
statutory protection against nuisance and liability claims arising from municipal
maintenance of roads, sewers, water pipes and municipal property and the municipal
inspection of private buildings; and
FURTHER BE IT RESOLVED that the appropriate provincial legislation be amended so
that municipalities are not liable on the basis of:
- the performance of discretionary functions;
- systems of maintenance or inspections of municipal property, provided that
municipalities follow through on their own systems as determined by Councils
- failure to enforce a by-law;
- approval of plans or inspection of buildings;
- the operation of public utilities, ditches and dams;
- accidents caused by snow or ice, unless the municipality is found to be grossly
negligent in its standard of care;
- the obligation to repair roads and maintain traffic signs and devices, since
municipalities would have a discretionary obligation rather than a statutory
obligation to keep roads and traffic signs in reasonable repair.
SUPPLEMENTARY INFORMATION: Recent court decisions in nuisance and liability
cases have forced sorne Ontario municipalities, to pay millions of dollars in compensa-
tion costs, in proportions far exceeding municipal responsibility for the losses or
accidents. These decisions are not only driving up municipal insurance costs, but
allowing judges to set priorities for the allocation of municipal resources. In other
Canadian provinces, municipalities have statutory protection that prevents certain
nuisance and liability cases from being brought against municipalities and that gives
municipalities greater freedom to govern themselves and set their own spending
priorities.
10
726
A. Emmink Associates Ltd. ATTACHMENT "E"
corporate conflict management and dispute resolution specialists
Mayor Diane Hamre r� June 12, 1996
The Municipality of Clarington J�P? L3�
40 Temperance Street Bowmanville, Ontario "
AGENDA
DA L1 C 3A6 JUN 1 7 199:9
Dear Mayor Hamre: MUNICIPALITY QF CL.4RINGTON
MAYOXIS OFFICE
I am writing to you and a number of large organizations in Durham Region to inform
you of our services in the area of dispute resolution and conflict management.
Alternate Dispute Resolution (ADR) is rapidly becoming an accepted -indeed, sought
after-alternative to lengthy and expensive litigation. Over the past several years in
Ontario, the insurance industry has saved enormous amounts of money in legal fees,
disbursements, court costs and unpredictable jury verdicts by utilizing the services of a
neutral mediator to resolve the issues in dispute. More recently, both public and private
sector organizations are beginning to realize the tremendous potential that ADR offers
as a non-threatening mechanism for resolving internal conflict, disputes with suppliers,
customers, creditors and special interest groups.
Since 1989, 1 have mediated approximately 200 disputes for the insurance industry,
with a settlement rate approaching 80%. As a trained and experienced mediator, I
have seen first hand how mediation provides a "win win"solution to conflicts. As a
consequence, relationships are preserved, valuable clients are retained, service is
maintained and scarce resources are not needlessly expended.
Municipal governments are particularly prone to becoming involved in disputes with a
vast array of groups and individuals. Consider for a moment, the time Council could
save and apply to other business, by utilizing a neutral mediator to resolve issues
between the Town and some special interest groups. In some cases, the application of
a mediated approach could well avoid many thousands of dollars in legal and other
fees as disagreements escalate into litigation.
I would like an opportunity to meet with you or your designate to discuss how our
services will benefit the Municipality of Clarington. Often, a pilot project with limited
scope and an opportunity to evaluate the effectiveness of the process, is an attractive
means of introducing the dispute resolution concept. I will call your office in a few days
to arrange a time that is convenient for you, and I look forward to our discus�sion—_ ______.
DISTRIBUTION admm-5n , CLERK
Med. ( ORIGINAL
G S TO.
3370 Greenwood Road, Greenwood, Ontario LOH 9H0 f —�
Telephone 905-686-2399 Fax 905,48$4402 ^` r