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Home My WebLink AboutTR-56-95 THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON REPORT Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE File# Date: July 10, 1995 Res. # (7-, By-Law# Report#: 143656-9,_ File#: Subject: 1995/1996 INSURANCE PROGRAM Recommendations: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report TR-56-95 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, 1995 to June 30, 1996, under the Durham Municipal Group Insurance Program at an approximate cost of $241,995 plus applicable taxes; 3. THAT $25,000 be transferred from the General Surplus to the Self-Insured Losses reserve to cover draws on this reserve resulting from vandalism and insurance claims below the Municipal deductible amount;' 4. THAT a commitment to continue to retain the Frank Cowan Company Limited for a further year on a Regional co-operative basis be agreed to in principle,provided that the level of service and premium renewal rates are not significantly altered; 5. THAT coverage for Board Members'Accident be discontinued effective July 1, 1995; and 6. THAT the Recreation Affiliates Liability policy be discontinued effective July 1,1995 and the Recreation Affiliates be reinstated as Boards and Commissions for insurance purposes. 723. PAPER E��aE THIS LS PRIMEDQ RECYCLED PAPER TR-56-95 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 Per Report TR-15-94, Frank Cowan Company Limited was retained as provider for the Durham Municipal Group Insurance Program for the 1994/1995 premium year with a commitment in principle for a further two years provided that the level of service and premium renewal rates are not significantly altered. The 1995/1996 premium year is the second year in this three year commitment in principle. See Attachment "A" for a Durham Municipal Group Insurance Cost Comparison. It is the opinion of the Group that the Program is operating effectively and that cost comparisons are reasonable. Staff will continue to work with area municipalities to examine other future options for securing the Municipality's general insurance requirements. 1.3 Renewal rates have increased overall from the 1994/1995 premium year by 11.47%. This is primarily a result of increased liability rates due to recent large judgements handed down relating to Municipal liability. There is also a 4% 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 1994/1995 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. 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. This has put undue pressure on the normal repairs and maintenance operating accounts and the reserve. As a result, it is recommended that the reserve be replenished from the operating surplus in order to accommodate the increased number of claims and draws on the reserve. As of May 31, 1995, the balance in the reserve was $77,017. The total draw on the reserve in 1994 was $31,970. The greatest impact stems from Public Works and Community Services due to the scope of their operations and the number of facilities involved. 724 TR-56-95 Page - 3 - 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. BOARDS AND COMMISSIONS 4.0 The Municipality currently provides accidental injury coverage to approximately 175 members of various Boards. This is a very unusual practice adopted by the Municipality and currently costs approximately$1,100 each premium year. In order to be consistent with the Durham Municipal Group, as well as other municipalities, it is recommended that this coverage be discontinued. 4.1 The Municipality currently carries separate liability coverage (limit of $1,000,000) for Recreation Affiliates. By Council Resolution dated April 3, 1995, the Affiliates were reinstated to their former status of Boards and Commissions for financial statement purposes. As a result, the Boards and Commissions now qualify for coverage under the standard Municipal Liability policy (limit of $15,000,000). This makes the separate Recreation Affiliate liability policy unnecessary. It is therefore recommended that the Affiliates be considered Boards and Commissions for insurance purposes and that the Recreation Affiliates liability coverage be discontinued. CONCLUSION 5.0 The recommendations outlined above are respectfully recommended for approval for the 1995/1996 premium year to be retroactive effective July 1, 1995. . Respectfi fly submitted, Reviewed by, t f (66 A. Marano, H.BSc.,A.M.C.T., W.H. Stockwell, Treasurer. Chief Administrative Officer. MM/NT/hjl Attachments 725 FSf ( Gi I -. 1 G, - DURHAM MUNICIPAL GROUP INSURANCE COST COMPARISON ACCIDENT, CRIME, LEGAL EXPENSE CLARI^1G1C TYPES OF COVERAGE MUNICIPALITY CURRENT PROPOSED % INCREASE TERM TERM (OR DECREASE) COMMENTS - Councillors' Accident Ajax $ 10,054 $ 9,985 (0.7%) Ajax does not have Firefighters' Accident under this plan - Firefighters' Accident Brock - Crime - Fidelity Bond $ 3,885 $ 3,494 (10.1%) - Legal Expense - Defence Costs Clarington $ 16 705 - Legal Expense - Conflict of Interest ' $ 16,886 1.1% Durham $ 14,153 $ 14,153 0 Oshawa $ 18,091 $ 18,091 0 Pickering $ 10,581 $ 10,707 1.2% Scugog $ 5,277 $ 5,286 .2% Uxbridge $ 3,069 $ 3,164 3•1% �. Whitby $ 13,052 $ 12,895 (1.2%) PHYSICAL ASSETS FBrock: $ 66,124 $ 67,321 1.8� Value of assets increased by 3.8% - Buildings/Contents/Equipment- Boiler and Machinery $ 22,632 $ 23,855 5.4% - Electronic Data Processing $ 65,792 $ 68,678 4.4% Due to revaluation for 1995 Durham $ 106,000 $ 132,606 25.18 Value of assets increased/revised upwards by 64% Oshawa $ 83,465 $ 85,457 2.4% Value of assets increased by 3.8% Pickering $ 63,140 $ 66,026 4.6% Value of assets increased by 3.2% Scugog $ 26,121 $ 26,075 2� (• ) Value of assets increased by 8.2% Uxbridge $ 21 868 $ 22,787 4.2$ Value of assets increased by 3.8% Whitby $ 41,824 $ 43,530 4.1% Value of assets increased by 4%. DURHAM MUNICIPAL GROUP Page 2 INSURANCE COST COMPARISON THIRD PARTY LIABILITIES TYPES OF COVERAGE MUNICIPALITY CURRENT PROPOSED % INCREASE COMMENTS TERM TERM (OR DECREASE) - Municipal Liability Ajax $ 121,185 $ 148,389 22.4% - Errors and Omissions Brock $ 52,782 $ 64,194 21.6% - Environmental Liability - Non-Owned Automobile Clarington $ 131,165 $ 152,680 16.4% - Owned Automobile Fleet - Excess Liability Durham $ 499,664 $ 528,140 5.7% Oshawa $ 396,667 $ 435,578 9,8% Pickering $ 107,963 $ 131,394 21.7% Scugog $ 47,865 $ 58,770 22.8% Uxbridge $ 58,967 $ 70,566 19.7% C� Whitby $ 138,519 $ 168,695 21.8% THIRD PARTY LIABILITIES Ajax $ 51,926 $ 59,485 14.6% Transit Automobile Fleet Brock N/A N/A Excess Liability Clarington $ 3,432 $ 3,947 15.0% Insurance for Recreation Affiliates Durham N/A N/A Oshawa N/A N/A Pickering $ 75,679 $ 85,814 13.4% Scugog N/A N/A Uxbridge N/A N/A Whitby $ 32,836 $ 37,880 1! Increase reasonable, based on huge increases received by others. i DURHAM MUNICIPAL GROUP Page 3 INSURANCE COST COMPARISON TOTAL ANNUAL PREMIUM TYPES OF COVERAGE MUNICIPALITY CURRENT PROPOSED $ INCREASE COMMENTS TERM TERM (OR DECREASE) Ajax $ 249,289 $ 285,180 14.4% Brock $ 79,299 $ 91,543 15.4% Clarington $ 217,094 $ 242,191 11.6% Durham $ 619,817 $ 674,899 8.9% Oshawa $ 498,223 $ 539,126 8.2% 0o Pickering $ 257,363 $ 293,941 14.2% N Scugog $ 79,263 $ 90,131 13.7% Uxbridge $ 83,904 $ 96,517 15.0% Whitby $ 226,231 $ 263,000 16.3% =E F tE 011161N"AL: DURHAM MUNICIPAL GROUP !; 1"J' H INSURANCE COST COMPARISON ACCIDENT, CRIME, LEGAL EXPENSE -'�;-�-_._ i__ FIN TYPES OF COVERAGE MUNICIPALITY CURRENT PROPOSED % INCREASE COMMENTS TERM TERM (OR DECREASE) - Councillors' Accident Ajax $ 10,054 $ 9,985 (0.7%) Ajax does not have Firefighters' Accident under this plan - Firefighters' Accident Brock $ 3,885 $ 3,494 (10.1%) - Crime - Fidelity Bond - Legal Expense - Defence Costs Clarington $ 16,705 $ 16,886 1.1% - Legal Expense - Conflict of Interest Durham $ 14,153 $ 14,153 0 Oshawa $ 18,091 $ 18,091 0 Pickering $ 10,581 $ 10,707 1.2% Scugog $ 5,277 $ 5,286 .2% �r Uxbridge $ 3,069 $ 3,164 3.1% Whitby 1 $ 13,052 $ 12,895 (1.2%) PHYSICAL ASSETS Ajax $ 66,124 $ 67,321 1.8% Value of assets increased by 3.8% - Buildings/Contents/Equipment Brock $ 22,632 $ 23,855 5.4% - Boiler and Machinery - Electronic Data Processing Clarington $ 65,792 $ 68,678 4.4% Due to revaluation for 1995 Durham $ 106,000 $ 132,606 25.1% Value of assets increased/revised upwards by 64% Oshawa $ 83,465 $ 85,457 2.4% Value of assets increased by 3.8% Pickering $ 63,140 $ 66,026 4.6% Value of assets increased by 3.2% Scugog $ 26,121 $ 26,075 ( .2%) Value of assets increased by 8.2% Uxbridge $ 21,868 $ 22,787 4.2% Value of assets increased by 3.8% I. Whitby $ 41,824 1 $ 43,530 4.1% Value of assets increased by 4%. DURHAM MUNICIPAL GROUP Page 2 INSURANCE COST COMPARISON THIRD PARTY LIABILITIES TYPES OF COVERAGE MUNICIPALITY CURRENT PROPOSED % INCREASE COMMENTS TERM TERM (OR DECREASE) - Municipal Liability Ajax $ 121,185 $ 148,389 22.4% - Errors and Omissions Brock $ 52,782 $ 64,194 21.6% - Environmental Liability - Non-Owned Automobile Clarington $ 131,165 $ 152,680 16.4% - Owned Automobile Fleet - Excess Liability Durham $ 499,664 $ 528,140 5.7% Oshawa $ 396,667 $ 435,578 9.8% Pickering $ 107,963 $ 131,394 21.7% Scugog $ 47,865 $ 58,770 22.8% Uxbridge $ 58,967 $ 70,566 19.7% ' Whitby $ 138,519 1 $ 168,695 21.8% THIRD PARTY LIABILITIES Ajax $ 51,926 $ 59,485 14.6% Transit Automobile Fleet Brock N/A N/A Excess Liability Clarington $ 3,432 $ 3,947 15.0% Insurance for Recreation Affiliates Durham N/A N/A Oshawa N/A N/A Pickering $ 75,679 $ 85,814 13.4% Scugog N/A N/A Uxbridge N/A N/A Whitby $ 32,836 $ 37,880 15.4% Increase reasonable, based on huge increases received by others. i DURHAM MUNICIPAL GROUP Page 3 INSURANCE COST COMPARISON TOTAL ANNUAL PREMIUM TYPES OF COVERAGE MUNICIPALITY CURRENT PROPOSED % INCREASE COMMENTS TERM TERM (OR DECREASE) Ajax $ 249,289 $ 285,180 14.4% Brock $ 79,299 $ 91,543 15.4% Clarington $ 217,094 $ 242,191 11.6% Durham $ 619,817 $ 674,899 8.9% Oshawa $ 498,223 $ 539,126 8.2% co N Pickering $ 257,363 $ 293,941 14.2% Scugog $ 79,263 $ 90,131 13.7% Uxbridge $ 83,904 $ 96,517 15.0% Whitby $ 226,231 1 $ 263,000 16.3%