HomeMy WebLinkAboutFND-013-03
v
, .
Cl!llmglOn
REPORT
FINANCE DEPARTMENT
Meeting:
GENERAL PURPOSE AND ADMINISTRATION
MONDAY, JUNE 16,2003 Resolution #:0Pti-?;);)-03
Date:
Report#: FND-013-03
File#:
wI;
By-law #:
Subject:
DURHAM MUNICIPAL INSURANCE POOL STATUS AND INSURANCE
COVERAGE FOR THE MUNICIPALITY OF CLARINGTON
Recommendations:
It is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
1. THAT Report FND-013-03 be received; and
2. THAT the Director of Finance/Treasurer be authorized to finalize the general
insurance placement for the period July 1, 2003 to July 1, 2004 for the
Municipality of Clarington including the option to place insurance with the Frank
Cowan Company, as a pool member should the Durham Municipal Insurance
Pool not secure pool coverage from the insurance market.
Submitted by:
O~---cJ.~
Reviewed by:
Franklin Wu
Chief Administrative Officer
NMT/hjl
1301
REPORT NO.: FND-013-03
PAGE 2
BACKGROUND
1.0 INTRODUCTION
. In January 2003, an insurance consultant was retained by the Durham
Municipal Insurance Pool based on the company's competitive access to the
general insurance marketplace. The consultant was authorized to negotiate
directly with any insurance companies with respect to the general insurance
program of the Durham Municipal Insurance Pool.
. Insurance market conditions since 2001 have been extremely challenging,
with underwriters continuing to be particularly restrictive on coverage, pricing
and capacity in the insurance market. Clients are experiencing a wide range
of increasing premiums for recent renewals.
. Capacity continues to be a major concern for insurers in the municipal sector.
Markets that were able to offer $10 million in limits in the past are now only
offering $1 million.
. Our consultant is continuing to negotiate the DMIP insurance coverage.
However, significant challenges have been encountered and the consultant
may not able to finalize the placement for July 1, 2003.
. If they are able to make appropriate arrangements, the Pool members will not
be notified until the end of June.
. Our consultant has recommended that alternate arrangements be made
available if the need arises.
. Regardless of the final option recommended by the Board of Directors of the
Durham Municipal Insurance Pool, insurance coverages will be in place
effective for July 1, 2003 to July 1, 2004.
2.0 The members of the insurance pool are committed to continuing with the pool
concept provided that coverage can be obtained. However, the pool has
explored alternatives in the event that this does not occur.
. Through the pool, Clarington has received a quote from the Frank Cowan
Company.
. The direct quote from Cowan is $459,237 for one year. It does not include
adjusting costs and deductible levels would be $25,000 for liability coverage.
This represents a 52% increase over what we contribute to the pool on an
annual basis ($302,797).
1302
REPORT NO.: FND-013-03
PAGE 3
. The other successfully operating municipal pool in Ontario is based in
Waterloo. Their three year term for their existing coverage expires May 1 ,
2004. Should the Durham Pool be unable to secure coverage under the pool
structure, it may be advantageous to approach the market place co-incidental
with the Waterloo pool in an effort to leverage the interest in the market.
· As an intermediary measure, if the consultant is unable to secure coverage
for July 1, it is proposed that the pool work together to secure placement
through Frank Cowan Company, with the view to approach the market again
in conjunction with Waterloo as mentioned above.
· The overall premium quote increase to the entire pool group members is
approximately 23%. The pool is proposing that each member contribute to
the pool, the prior year contribution plus 23%. In this way, all members are
limited to 23% increase as an interim measure.
. For Clarington, this will result in a contribution to the pool for insurance
coverage of approximately $375,000.
3.0 It is therefore recommended the Director of Finance/Treasurer be authorized
to finalize the general insurance placement on behalf of the Municipality of
Clarington and report back to the Council in September 2003.
4.0 NEXT STEPS
· The Director of Finance/Treasurer will continue to work with the consultant,
the insurers and the Durham Municipal Insurance Pool to finalize the July 1,
2003 insurance renewal. A subsequent report will be forwarded to Council
regarding the placement of insurance and the status of the Durham Municipal
Insurance Pool, after Council recess.
CORPORATION OF THE MUNICIPALITY OF CLARINGTON
40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L 1 C 3A6 T (905)623-3379 F (905)623-4169
1303