HomeMy WebLinkAboutCS 19/01
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REPORT TO COUNCIL
FROM:
Gillis A. Paterson
Director, Corporate Services & Treasurer
DATE: June 18,2001
REPORT NUMBER: CS 19-01
SUBJECT: 2001/2002 Property and Liability Insurance
RECOMMENDATION:
It is recommended that Report CS 19-01 of the Director, Corporate Services & Treasurer be
received by Council and that:
1. the City of Pickering renew its property, liability and other coverages through the Frank
Cowan Company at a 2001/02 renewal premium of $259,721 plus applicable taxes for the
period July 1, 2001 to July 1, 2002 inclusive. (In 1999 Council approved a three year
program with Cowan with a maximum annual premium);
2. the Director, Corporate Services & Treasurer, as part of the Risk Management Program, be
authorized to continue the Reimbursable Deductible Program through the Insurance Adjuster
and the Frank Cowan Company and further, that the Director be authorized to settle any
claims within the total deductible limit where it is in the City's interest to do so;
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3. the Director, Corporate Services & Treasurer be authorized to pay the total cost of any
insurance claims settled that fall between the previous deductible and the new one, including
any adjusting and legal fees, from the Self Insurance Reserve;
4. the Director, Corporate Services & Treasurer be authorized to purchase additional insurance,
make changes to deductibles and existing coverages, and alter terms and conditions as
becomes desirable or necessary in order to protect the assets of the City and it's elected
officials and staff; and,
5. the appropriate officials of the City of Pickering be given authority to give effect thereto.
ORIGIN:
Director, Corporate Services & Treasurer
AUTHORITY:
The Municipal Act, Sections 251 and 252, R.S.O. 1990 as amended
FINANCIAL IMPLICATIONS:
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In 1999 a three year guaranteed maximum renewal premium was negotiated with the Frank
Cowan Company. This guarantee has been maintained with the increase arrtibutable to two
factors: increase in the value of assets such as the new Petticoat Creek Library and Community
Centre and the excess liability premium coverage increased due to the outside reinsurance
market. The foregoing has resulted in a renewal premium increase of$13,093.
Report to Council CS 19-01
Date: June 18,2001
Subject: 2001/2002 Property and Liability Insurance
Page 2
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EXECUTIVE SUMMARY:
Not applicable
BACKGROUND:
Each year on July 1, the City's general liability and property insurance policies come up for
renewal. As approved by Council at the time of the 1998 renewal, the Treasurer undertook an
extensive review of all aspects of the City's insurance program. The City of Pickering embarked
in a Risk Management Program, the initial phase of which involved negotiating renewing
premiums with the City's broker. The result of the negotiations was a decrease of approximately
$75,000 or 20 percent, in the premiums from that of the prior year. This premium was also
approximately $98,000 less than the 1998 budget provision which, after claims under the
increased deductible were paid, resulted in a transfer of approximately $50,000 to the Self
Insurance Reserve.
In 1999,2000 and 2001 the review ofdeductibles, coverages, policies, procedures, and adjusting
services has continued. In 1999 approximately $92,000 was transferred to the Self Insurance
Reserve as a result ofthe continued savings. In 2001 and 2001, the amount of$100,000 in each
year was included as a revenue item in the annual budget. This resulted in the savings being
taken into consideration in assisting keeping the tax rate down.
As previously mentioned, this year's renewal premium is considerably less than that of the mid
1990s and is close to the 1992 premium as noted below:
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1989 - $255,512
1990 - $270,842
1991 - $266,341
1992 - $245,656
1993 - $238,392
1994 - $257,363
1995 - $294,166
1996 - $356,865
1997 - $377,586
1998 - $302,589
1999 - $245,485
2000 - $246,628
2001 - $259,721
Self Insurance Reserve
This years renewal maintains the higher levels of deductible approved by Council in 1998. By
putting the savings aside in the Self Insurance Reserve, funds should be available to [mance
predictable losses resulting from the increase in deductib1es. By building up the reserve financial
flexibility to assist with future possible options is also made available. The Self Insurance
Reserve currently has a balance of $531,139 as at December 31, 2000 up from $467,809
December 31, 1999 and $376,146 as at December 31, 1998 and $250,000 in 1997. In addition,
for the 2000 and 2001 budgets, a total of $200,000 that would have gone to the insurance reserve
was used to assist in reducing the budgetary levy increase.
In the area of Risk Management, reference should be made to the 1998 report to Council No.
TR23/98.
Conclusion
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The City's Insurnce and Risk Management Programs appear to be working satisfactory.
Premiums continue to not only reflect the three year guarantee but remain at levels comparable to
1992 while at the same time the balance in the Self Insurance Reserve has increased substantially
(112 per cent). All this is in spite of recently increasing insurance costs in North America and
events that have traditionally increased insurance costs such as the Walkerton Water tragedy.
The City's higher deductibles have assisted greatly in keeping the City's premiums constant for
the last few years. Therefore renewal through the Frank Cowan Company with our present
carriers is recommended.
Report to Council CS 19-01
Subject: 2001/2002 Property and Liability Insurance
Date: June 18,2001
ATTACHMENTS:
Page 3
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Not applicable
Prepared / Approved / Endorsed By:
GAP:vw
Recommended for the consideration of Pickering
City Council
Thomas 1. Quinn, Chief Administrative Officer
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----Gillis A. Paterson,
Director, Corporate Services & Treasurer