HomeMy WebLinkAboutTR-59-93 THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON
REPORT
Meeting: General Purpose & Administration Committee File#
#
Date: July 19, 1993 Res, .Ss
B
File#: w
Report#:__T_R_- -_93_
By-La w#
Subject: 1993/94 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-59-93 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 lst, 1993 to June 30, 1994, with a
total premium renewal rate of $205,679 . 00 (a decrease of
2 .54% over 1992/93 premium of $211,029 . 00) ;
3 . That the value of the Provincial sales tax, estimated to
total approximately $15,300. 00 ( 1/2 or approximately
$7,700. 00 applicable to 1993) be expensed appropriately;
4 . That the 1993 Budget overprovision for insurance amounting
to approximately $27,000. 00 be transferred to the
Self-Insured Losses Reserve;
5 . That the updated Fleet and Property schedules be forwarded
to the Frank Cowan Company as they are received from
Department Heads;
6 . That the level of coverage provided by the Crime Insurance
policy be reviewed by the Treasury department to determine
it's adequacy;
7 . That the Frank Cowan Company be advised of the
Municipality's name change effective July 1, 1993 and be
requested to adjust all policies and certificates
appropriately.
TR-59-9 3
1.0 BACKGROUND & COMMENTS
1. 1 The overall decrease in the insurance premium for the 1993/94
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 Liability Insurance
policy, the good experience record resulted in Frank Cowan
Company paying out less for every dollar of insurance
premium paid by the Municipality. Also, the decrease in the
insurance premium is due to a stabilization trend in the
insurance market.
1.2 Due to the recent change in the Provincial Sales Tax
legislation, all general insurance premiums are to be taxed at j
8% and automobile insurance premiums, are to be taxed at 5%.
Total Provincial Sales Tax applicable to the 1993/94 premium
year is estimated at $15,300. This value has been included in
the recommendation #3 for increases in the 1993/94 expense
years. The value to be expensed in 1993 is approximately
$7,700.
1.3 The Frank Cowan Company continues to service the insurance
needs of the greater percentage (approximately 75%) of the
municipalities in the
p province, and they are considered a I
consistent and financially stable insurer.
1.4 Department Heads are currently reviewing and updating the Fleet
and Property schedules that were included in the 1993
Comprehensive Insurance Program, and as they become available
they will be passed along to the Frank Cowan Company so they
may update their records accordingly.
1.5 Frank Cowan Company generally recommends that Crime Insurance
coverage should be increased if an excess of $20,000 in cash is
received daily at the Municipal Offices. Staff recommends that
the current levels be reviewed in order to determine if the
Crime Insurance coverage is adequate. There is significantly
more cash received over the counter in the past few years with
the changes made to the Tax/Banking procedure. If it is deemed
to be not adequate, Frank Cowan Co. will be requested to adjust
the coverage and premium accordingly.
1.6 A policy coverage u pg rade has been
provided by Frank Cowan to
the Town at no additional premium cost for the 1993/94 premium
years . The policy improved is: Boiler and Machinery Insurance
Limits increased to $10,000,000 from $5, 000,000 in 1992/93.
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TR-59-93 PagP 3
1. 7 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 $7,331 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 policies or premiums in the other classes of insurance
and thus further indepth analysis is not deemed to be
warranted.
1. 8 The Region of Durham is currently awaiting the outcome of 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.
The results of the study have not been finalized at the time of
this report. The municipalities within the Region of Durham
are maintaining the status quo, pending the outcome of this
study. It is suggested that the Municipality of Clarington
also await the results of the study before any changes are
recommended to Council for consideration.
2 .0 The combination of the 1993 Budget provision for insurance
(estimated at $243,303) and the premium year straddling two
fiscal years, results in an overprovision of approximately
$27,000 . 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 liability deductible is $5,000 and property
damages deductible is $10,000) . Draws on this fund during 1992
were approximately $17,000. The current balance in the Self-
Insured Losses Reserve is approximately $118,000 .
3. 0 Summary
3. 1 A copy of the summary of insurance limits is provided as
attachment "A" . A copy of the full Insurance Risk
Management Report 1993/94 is also available in the Council
library for information and reference.
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TR-59-93 page 4
4.0 CONCLUSION
4. 1 The recommendations outlined above are respectfully
recommended for approval for the 1993/94 premium year to be
retroactive effective to July 1, 1993.
Respectfully submitted, Recommended for presentation
to the Committee
Max-le A. Marano, H.BSc . ,A.M.C.T. Lawrence E. Ko
Treasurer Chief Adminis r�eff
tive Officer
MAM/jlc
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SCHEDULE A.
HIGHLIGHTS OF COVERAGE
CLASS OF INSURANCE SUMMARY OF COVERAGES LIMITS/AMOUNTS
Environmental Liability Limit of Liability Any One Claim $ 1,000,000.
Annual Aggregate 2,000,000.
Self-Insured Retention 5,000.
Municipal Liability This cover is designed to
Errors and Omissions provide $ 10,000,000.
Owned Automobile of protection through a $ 10,000,000.
Non-Owned Automobile $ 5,000,000. primary and a
$ 5,000,000. excess layer.
INCLUDED
- Municipal Liability - Third Party Claims Deductible $ 5,000.
- Wrongful Dismissal Defense Costs and
Voluntary Property Damage (PUC) Included
- Errors & Omissions - Deductible $ 2,500.
- Owned Automobile - All Perils Deductible $ 1,000.
- Basis of Claim Settlement:
- Replacement Cost and Valued
- Non-Owned Automobile - Physical Damage Limit $ 250,000.
- Deductible 500.
- Contractual Liability Included
Recreation Affiliates Limit of Protection $ 1 ,000,000.
Liability Blanket Tenants' Legal Liability Included
Property Damage Deductible 250.
Non-Owned Automobile Included
- Physical Damage Limit 100,000.
- Physical Damage Deductible 250.-
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NOTE: Risk Management Services(Property Inspections, Liability Hazard Reviews
and Loss Control Seminars as required) are included in the total premium
shown below.
- COST ANALYSIS -
- TOWN -
1992 - 1993 EXPIRING ANNUALIZED COST $ 207,597.
1993 - 1994 ANNUAL COST $ 202,247
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- RECREATION AFFILIATES -
205 679
1992 _ 1993 EXPIRING ANNUALIZED COST $ 3,432./
1993 1994 ANNUAL COST $ 3,432.
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HIGHLIGHTS OF COVERAGE
CLASS OF INSURANCE SUMMARY OF COVERAGES LIMITS/AMOUNTS
Councillors' Accident Accidental Death & Dismemberment $ 100,000.
Weekly Income - Total Disability 500.
Weekly Income - Partial Disability 250.
Municipal Conflict 90% of incurred Legal Fees and
of Interest Expenses to a maximum limit of $ 100,000.
Legal Expense 90% Each Individual Claim $ 100,000.
(Defence Costs) Annual Aggregate 250,000.
Board Members' Accident Accidental Death & Dismemberment $ 10,000.
Weekly Income - Total Disability 300.
Weekly Income - Partial Disability 50.
Fire-Fighters' Accident Accidental Death & Dismemberment $ 100,000.
Funeral Expenses 6,500.
Blanket Accident Expenses 5,000.
Crime Insurance Commercial Blanket Bond $ 1 ,000,000.
Counterfeit Paper and
Depositors' Forgery Included
Audit Expense (Sub-Limit $ 100,000.) Included
Money - Blanket any Location 20,000.
Loss of Securities 100,000.
Property Insurance Total Sum Insured $ 53,052,830.
Deductible 250./10,000.
Electronic Data Total Sum Insured $ 600,000.
Processing Deductible 1 ,000.
Boiler and Machinery Limit per Accident - Comprehensive $ 10,000,000.
Deductible 1 ,000.
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