HomeMy WebLinkAboutCST 19-12 159
cit,, °� z Report To
Executive Committee
PICKERING
Report Number: CST 19-12
Date: June 11, 2012
From: Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject: 2012/2013 Property and Liability Insurance Renewal
Recommendation:
1. That Report CST 19-12 of the Director, Corporate Services & Treasurer be
received;
2. That the City of Pickering renew its property, liability and other insurance policies
through the Frank Cowan Company for the period July 1, 2012 to June 30, 2013
in the amount of $790,690.92 (includes applicable taxes) and inclusive on terms
and conditions acceptable to the Director, Corporate Services & Treasurer;
3. That L.V. Walker & Associates be confirmed as the City's Adjuster of Record for
property, liability and other insurance and related matters;
4. That the Director, Corporate Services & Treasurer, as part of the Risk
Management Program, be authorized to continue the Deductible Program,
including entering into the attached Claims Handling Agreement, through the
Insurance Adjuster L.V. Walker & Associates, and the Frank Cowan Company
and further, that the Director, Corporate Services & Treasurer or the Manager,
Finance & Taxation be authorized to settle any claims including any adjusting
and legal fees where it is in the City's interest to do so;
5. That 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 limit
potential liability exposure and to protect the assets of the City and it's elected
officials and staff; and,
6. That the appropriate officials be authorized to take the necessary actions to give
effect thereto.
• ,�R port CST 19-12 June 11, 2012
I. b
Subject: 2012/2013 Property and Liability Insurance Renewal Page 2
Executive Summary: The City's insurance program continues to operate
successfully and the above Recommendations provide for a renewal of the policies
basically on the same or improved terms and conditions as in past years, which also
provides coverage for the Library, its Board and its employees.
Financial Implications: The insurance premium has been provided for in the
approved 2012 budget and the renewal premium cost is within the 2012 budgeted
amount.
Discussion: 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 on 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. The savings were transferred to the Self
Insurance Reserve. In our opinion, this program has served the city well, and today
there is almost $1 million in this reserve.
Recommendation 4 provides the Treasurer with the authority to continue to review and
adjust insurance coverages where appropriate during the year to reflect business
requirements and current market and business environment conditions.
Every year, staff review the proposed insurance policy terms and conditions to ensure
that the City is adequately protected. The City's municipal liability limit is $25.0 million
which is at an adequate level based on the City's current population and liability
exposure. For comparison purposes, the City of Windsor with a population of
approximately 200,000 has liability coverage of $50.0 million and Toronto with a
population of 2.5 million has a liability limit of $100.0 million. The City's liability policy
provides coverage for bodily injury, property damage, personal injury and is based on a
deductible of $100,000. Bodily injury claims include and are not limited to: sickness,
disease, shock, mental anguish assault and battery sustained during the policy period
by any person. With the current deductible limit at $100,000, the insurance renewal is
$790,690 (including applicable taxes) that is within the budget. Future favourable
premium renewals will be contingent upon the City's claim history or claims experience.
To ensure positive future premium renewals, the 2012 budget included $200,000 for
sidewalk rehabilitation funded 100% from Federal Gas Tax (FGT). It is anticipated that
the FGT funding will help reduce the number of sidewalk "slip and fall" claims.
The Claims Handling Agreement is mainly making formal a working arrangement that
the City has had in place with the Adjuster and Cowan's for many years. Through this
formal arrangement the City should realize cost savings which would be reflected in
lower premium increase in future years.
Report CST 19-12 June 11, 2012
Subject: 2012/2013 Property and Liability Insurance Renewal Page 3
Insurance Market and Trends
Traditionally, the market for municipal insurance providers has been a limited one.
Municipal operations pose a unique challenge to insurers arising out of the wide array
of exposures which fall within the scope of coverage under one policy. The availability
of markets willing to insure municipalities has been further complicated by legislative
changes and by broader court decisions. The Frank Cowan Company is one of
Canada's largest providers of insurance and risk management solutions for public
entities. This company has been in business for over 80 years and is a financially
strong company and is associated with the Guarantee Company of North America.
The current liability and property insurance market remains steady for most standard
lines of insurance business with municipal insurance.experiencing an above average
increase.
The Court awarded damages are getting larger, especially for bodily injury claims.
These awards are primarily driven by the costs of providing future care for injured
persons. Municipal property liability premiums continue to increase as a result of the
legal provision of the joint and several liability application leveraged with large court
awards and with the municipality as being seen as having "deep pockets". The joint
and several provisions of the Negligence Act, indicate, "Where damages have been
caused or contributed to by the fault or neglect of two or more persons ... and, where
two or more persons are found at fault or negligent, they are jointly and severally liable
to the person suffering the loss or damage ..." Also known as the 1°/0 rule, these
provisions may oblige a defendant, which is only 1% at fault, to pay the plaintiff's entire
judgment particularly in cases where the other defendants are financially unable to do
so. In other words, the defendant who is 99% at fault does not have the financial
strength or assets to pay the claim. Therefore, the municipality, who is viewed as
having "deep pockets", pays the remainder of the claim.
Individual claims are becoming more complex, resulting in more time to manage the
claim, more detailed investigation and more experts and legal costs involved in
defending the claim. Even if the City is not liable, there are always costs in defending
the claim.
Basic risk management states that you should diversify your risk. Many insurance
companies have customers throughout the Province or Canada to diversify the risk
associated with a local catastrophic event. With the City of Pickering being a direct
customer of the Frank Cowan Company (who has customers throughout the Province
and beyond), the geographical risk diversification is achieved and maintained.
Service to our Residents
Regrettably, insurance claims or incidents do occur. A key strategic advantage of the
City's insurance and risk management program is that every claim is processed with a
customer service attitude. After a claim or incident is received, City staff quickly contact
R9�ort CST 19-12 June 11, 2012
Subject: 2012/2013 Property and Liability Insurance Renewal Page 4
(within 24 hours) the claimant, to advise them that the City has received the claim and
to assure them that the claim is being investigated by the City's Insurance Adjuster.
The City's Insurance Adjuster has many years of local municipal insurance experience,
which the City uses as an asset to investigate and settle claims. The City's Insurance
Adjuster is familiar with the City and its municipal infrastructure and this experience has
assisted in reducing claims cost due to his knowledge and/or his familiarity with the City,
its policies and procedures. The Insurance Adjuster's service standard is to make
contact with the claimant within two business days. Sometimes, the claimants may not
completely agree with the outcome and City staff may review the claim and/or intervene
to work towards a solution. The strategic advantage of the "local service delivery
model" is that claims are handled quickly, professionally and with a customer service
perspective. In addition, the current "local" service delivery model allows City staff
"hands on" participation in the claims process to better serve claimants who, in the
majority of situations, are City residents.
Attachments:
1. Program Summary of Insurance Coverage
2. Frank Cowan — Claim Handling Agreement
Prepared By: Approved / Endorsed By:
Stan Karwowski Gillis A. Paterson, CMA
Manager, Finance & Taxation Director, Corporate Services & Treasurer
Recommended for the consideration of
Pickering Cit Council
/,1j / Vt 2 ZOI
Tony Prevedel, P.Eng.
Chief Administrative Officer
ATTACHMENT#_d__TO REPORT# /1-i 2
163
6) Cowan
Frank Cowan Company
2012
MUNICIPAL INSURANCE PROGRAM
City eit,
q
CORPORATION OF THE CITY OF PICKERING
Prepared by: Mr. Viano Ciaglia,C.I.P., C.R.M.
Regional Manager
Frank Cowan Company Limited
75 Main Street North
Princeton,ON NOJ 1V0
This is a summary. Nothing herein alters the terms,conditions and viano.ciaglia @frankcowan.com
exclusions contained in the printed insurance contract(s). 1-800-265-4000
REF: 60275/sd
April 19,2012 T/519-458-4331
F/519-458-4366
164
About Frank Cowan Company
Leader in Public Entity Insurance
Frank Cowan Company has grown to become one of Canada's leading providers of Insurance and
Risk Management solutions for public entities. For over 80 years Frank Cowan Company has been
a pioneer in the development and implementation of innovative insurance programs for the
Municipal,Health Care,Education and Social Services sectors.
Frank Cowan Company is affiliated with Cowan Insurance Group, The Guarantee Company of
North America and Millennium CreditRisk Management through common ownership under
Princeton Holdings Limited.
Cowan Insurance Group provides insurance and risk management products and services to
businesses, organizations, and individuals. Cowan Insurance Group is one of the largest
privately owned business and personal insurance brokerage operations in Canada, and provides
retirement and group benefits assistance to employers, as well as financial advice on life
insurance, disability management, critical illness and long term care. The Guarantee Company of
North America specializes in commercial and contract surety, fidelity, directors' and officers'
liability and personal lines insurance including it's high value Guarantee Gold coverage.
Millennium CreditRisk Management specializes in trade credit and political risk insurance.
Outstanding Service
We are more than just an insurance provider. We are a trusted partner in providing insurance and
risk management services. We work with our clients and their affiliated associations to develop
individualized risk management and claims management programs, advise on procedural or
regulatory change as well as an array of other services. Our mandate is clear...help our clients
reduce risk.
Clients also benefit from our affiliations with lawyers, adjusters and others that specialize in the
public sector. The combination of our service network and internal expertise allow us to
continually develop innovative, cost-effective solutions and services tailored to the risks of
individual clients.
Financial Stability
Frank Cowan Company, as an Underwriting Agent,represents a select group of financially strong
Canadian based insurers that have made a long-term commitment to public sector risk. Our
business model creates a very stable market for your insurance requirements, and gives our
customers the comfort of knowing that they will always be protected by long-term, high-quality
continuous service.
Frank Cowan Company
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165
Cowan Service Solutions
More Than Just Insurance
Cowan offers a full range of services to assist in the management and reduction of risk, which is
equally vital to our clients. Risk Management, Claims Management and our other value-added
services were initiated by Cowan and have evolved throughout our history. Most often we can
provide the services listed below at no additional cost to the client.
Liability Hazard Assessment Pao Our Municipal clients are involved in a wide range of
diverse activities to serve the public. These lead to various
potential public liability situations. We work with our
clients to provide specific hazard identification and
analysis of these exposures.
Building Valuations tb. We conduct periodic detailed inspections of property and
buildings with formal reports, replacement cost valuations
for insurance purposes, photographic inventory with
recommendations to correct potential hazards.
Seminars&Staff Training tbe We deliver a wide range of presentations to our Municipal
clients on an ongoing basis that provide continuous
education for our clients.
Risk Audits t1. We help our clients audit systems and processes to reduce
potential losses within their operations and specifically
focus on documentation, reporting and consistency with
accepted standards and practices.
Contractual Review to Our experience contributes insight on the suitability and
effectiveness of liability transfers and appropriate
insurance and indemnity clauses within your various
contracts.
Publications,Bulletins& Because constant two-way communication is important,
Information Packages our website is available on a 24 hour basis for access to
information on our Services, Publications and programs.
Anyone in your organization can visit us at
www.frankcowan.com to keep informed of common
issues and solutions.
Claims Management to We handle your claim fairly and efficiently. Claims that
are made against you are handled with the consistent
strategy of defending or discouraging those claims that are
without merit, or reaching a reasonable settlement on
claims that do merit payment. Detailed claims progress
reports are produced and can be organized by type of loss
or department to suit your needs.
Frank Cowan Company
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166
MARKETPLACE CONDITIONS
The Canadian Property& Casualty Insurance marketplace continues to witness consolidation yet
remains one of the most saturated insurance markets in the world, with over 200 players.
However, amongst the majority of the insurers operating in Canada, specialization continues to be
the trend. Only a limited number of insurers are willing to risk their capital on high liability
exposure classes such as Municipal, Healthcare, Education and Social Services sectors. While the
last few years have brought some stability for the general Property & Casualty market, specialty
classes continue to present unique Underwriting and Claims Management challenges.
The Public Entity sector continues to experience significant losses. Some of these losses have
been driven by landmark cases, but overall, frequency and severity of claims have increased
dramatically. As well, the overall cost of claims, which takes into account escalating court
awards, claims administration expenses and the ever-increasing replacement costs of assets, has
continued to rise. Insurers and Reinsurers are extremely cautious about public entity liability
exposures due in part to the complexity of services provided by public sector organizations.
A number of insurers have either imposed coverage restrictions or withdrawn from the public
entity market entirely. Frank Cowan Company, a specialist in public entity insurance, continues
to receive the support and capacity of our insurers. We continue to provide long-term stability for
the insurance and risk management needs of our public entity clientele. Our policies and services
continue to evolve in response to the exposures faced by our clients.
We are confident that our product, service and pricing will reflect our continued commitment to
this sector.
Frank Cowan Company
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167
COMPREHENSIVE INSURANCE
PROGRAM
2012 - 2013
Frank Cowan Company
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1 6 8 CHANGES TO YOUR
INSURANCE PROGRAM
Please be advised of the following changes to your insurance program that now apply:
• PROPERTY POLICY
Property values have been increased in order to reflect inflationary trends.
• EQUIPMENT BREAKDOWN POLICY
Electronic Equipment coverage is now included under the definition of objects insured.
Frank Cowan Company
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PROGRAM SUMMARY 1 6 9
SUMMARY OF COVERAGES LIMITS/AMOUNTS
PART A—CASUALTY
Municipal Liability
Limit of Protection per occurrence $ 25,000,000.
(No Annual Aggregate Limit)
Third Party Claims Deductible including expenses $ 100,000.
Sewer Backup per Claimant Deductible including expenses $ 100,000.
Wrongful Dismissal(legal expense)Limit per claim $ 250,000.
Annual Aggregate Limit $ 250,000.
Deductible $ 5,000.
Voluntary Compensation Included
Municipal Marina Liability Included
Malpractice Liability Included
Errors and Omissions(Claims Made Form)
Limit of Protection per claim $ 25,000,000.
(No Annual Aggregate Limit)
Deductible including expenses $ 100,000.
Non-Owned Automobile
Limit of Protection per occurrence $ 25,000,000.
(No Annual Aggregate Limit)
Legal Liability for Non-Owned Vehicles(S.E.F.No. 94)
Third Party Liability Deductible $ 10,000.
All Perils Physical Damage Limit $ 500,000.
Deductible $ 500.
Environmental Liability(Claims Made Form)
Liability of Protection per claim $ 1,000,000.
Annual Aggregate Limit $ 2,000,000.
Self-Insured Retention $ 100,000.
Frank Cowan Company
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17 0 PROGRAM SUMMARY
SUMMARY OF COVERAGES LIMITS/AMOUNTS
Comprehensive Crime
Commercial Blanket Bond $ 2,000,000.
Money Orders and Counterfeit Paper Currency Included
Depositors'Forgery Included
Audit Expense $ 100,000.
Money and Securities-Blanket any Location $ 100,000.
Excess on Securities $ 100,000.
Computer Fraud or Funds Transfer Fraud $ 200,000.
Councillors' Accident
One City Mayor/Regional Councillor,Three Regional Councillors(Durham)/
City Councillor and Three City Councillors and Nine Library Board Members
Accidental Death&Dismemberment $ 100,000.
(No Annual Aggregate Limit and No Deductible)
Weekly Income—Total Disability $ 500.
Weekly Income—Partial Disability $ 250.
Twenty-Four Hour a Day Coverage applies.
Municipal Conflict of Interest
Percentage of Legal Fees and Expenses 100%
Maximum Limit of Reimbursement per claim $ 100,000.
(No Annual Aggregate Limit)
Legal Expense
Percentage of Legal Fees and Expenses 100%
Maximum Limit of Reimbursement per claim $ 100,000.
Annual Aggregate Limit $ 250,000.
Frank Cowan Company
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PROGRAM SUMMARY 1 7 1
SUMMARY OF COVERAGES LIMITS/AMOUNTS
PART B—PROPERTY
Property Insurance(including Data Processing Insurance)
Total Sum Insured* $ 181,444,900.
Valuable Papers $ 500,000.
Accounts Receivable(other than Data Processing) $ 500,000.
Extra Expense(other than Data Processing) $ 1,000,000.
Business Interruption
Rent or Rental Value Form $ 500,000.
Gross Revenue Form $ 2,584,500.
Checkroom Liability $ 5,000.
Data Processing
System and Equipment $ 1,440,800.
Media $ 47,000.
Extra Expense $ 50,000.
Fine Arts Form $ 2,000.
Exhibition Form As Per Lists Provided
Deductible $ 10,000
Exceptions:
-Checkroom Liability $ 2,500.
-Fire Training Trailer $ 2,500.
-Peril of Flood $ 25,000.
-Peril of Earthquake 3%or Minimum $ 100,000.
-Fine Arts Form and Exhibition Form $ 2,500.
*Note: Please refer to the insurance contract for an itemized list of assets containing specific limits of insurance or
that are excluded from the policy.
Frank Cowan Company
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1 7 2 PROGRAM SUMMARY
SUMMARY OF COVERAGES LIMITS/AMOUNTS
Equipment Breakdown
Limit per Accident—Comprehensive:
-Steam Engine At Greenwood Museum,2365 6th Concession,Greenwood,ON $ 10,000.
-All Other Locations $ 50,000,000.
Extra Expense $ 500,000.
Spoilage—Goods under Refrigeration $ 50,000.
Business Interruption—Loss of Profits(Gross Revenue)
-All Buildings&Facilities,Greenwood Museum,Pickering,Ontario $ 94,500.
-Don Beer Arena,940 Dillingham Road,Pickering,Ontario $ 600,000.
-Dunbarton Indoor Pool,655 Sheppard Ave.E.,Pickering,Ontario $ 100,000.
-Pickering Recreation Complex, 1867 Valley Farm Road,Pickering,Ontario $ 1,790,000.
Expediting Expenses Included
By-Law Cover Included
Errors and Omissions $ 100,000.
Hazardous Substance(including PCB Contamination) $ 500,000.
Ammonia Contamination $ 500,000.
Water Damage $ 500,000.
Professional Fees $ 500,000.
Data Restoration $ 25,000.
Denial of Access 2 Weeks
Deductible $ 10,000.
Frank Cowan Company
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PROGRAM SUMMARY 1 7 3
SUMMARY OF COVERAGES LIMITS/AMOUNTS
PART C-AUTOMOBILE
Automobile Fleet
Liability Limit $ 25,000,000.
Deductibles
No Physical Damage applies to 1951 Antique Pumper(Parades)
Section 3 (Third Party Liability) $ 10,000.
Section 6(Direct Compensation—Property Damage) $ 10,000.
All Perils $ 10,000.
Garage Automobile
Third Party Liability Limit $ 3,000,000.
Customer Vehicles
Collision Limit $ 200,000.
Deductible $ 500.
Specified Perils Limit $ 300,000.
Deductible $ 500.
Frank Cowan Company
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•
1
7 4 Revised August 2007 ATTACHMENT#_ TO REPORT Csf /q-/
D. Sarluis
6k) Cowan
Frank Cowan Company
Claim Handling Agreement
This agreement is by and between Frank Cowan Company Limited ("Cowan") and
(the "Insured")
PURPOSE:
➢ To ensure all claims are handled effectively and appropriately.
➢ To reduce the cost of claims handling
➢ To ensure,all arms-length expenses incurred on internally handled claims matters
are tracked accurately and completely.
➢ To provide an early warning system for claims that may exceed the policy
deductible.
BACKGROUND:
Whereas reporting conditions and requirements are present in and form part of the
policies of insurance issued to the Insured by Cowan; and
whereas the policy wordings authorize Cowan to handle all claims; and
whereas the Insured desires to continue handling certain claims internally; and
whereas Cowan authorizes the Insured to handle certain claims internally subject to the
terms of this agreement; and
whereas this agreement is intended to remain in force until all claims handled by the
Insured and covered by the policies of insurance issued by Cowan are resolved,
therefore, the Insured agrees to the following terms and conditions.
REPORTING REQUIREMENT:
If at any time during the handling of a claim it becomes apparent that the claim:
➢ has reached or is expected to reach a total incurred value in excess of 75% of the
policy deductible or,
•
Frank Cowan Company Limited
175
➢ is the type of claim set out below, or
➢ triggers coverage under the Errors and Omissions policy,
The Insured shall immediately report the claim, despite the insured not assessing any
liability, to Cowan who may elect to assume handling of the claim.
Type of Claim That Must Be Reported Immediately:
➢ Fatalities
➢ Brain damage resulting in mental or physical impairment
➢ Injuries resulting in total or partial paralysis
➢ Third degree burns (10% of body) or second degree burns (30% of body)
➢ Impairment of vision or hearing (50% or more)
➢ Massive internal injuries affecting body organ(s)
➢ Multiple fractures involving more than one member or significant shortening of
limbs
➢ Fracture of both heel bones
➢ Total disability of more than 1 year regardless of injury
➢ Multiple cases of drug or vaccine reaction
➢ Class action suits
➢ Pollution, environmental or contamination
If at any time a claim is not reported to Cowan that otherwise should have been as per the
above criteria, Cowan reserves the right to deny coverage.
TRACKING:
The Insured must maintain a claims reporting and tracking system on which all claims
will be entered. The system must be acceptable to Cowan. An up to date claims report
must be forwarded to Cowan every six (6) months or as requested by Cowan.
EXPENSES:
Arms-length expenses will not include salaries for Insured personnel, administrative and
overhead expenses.
Arms—length expenses will include the following paid to third party vendors:
➢ Defence legal
➢ Adjusting
➢ Investigation
➢ Experts
Page 2 of 3 Claim Handling Agreement
1 7 6 Frank Cowan Company Limited
AUDIT:
The Frank Cowan Company Limited will have the right to audit claims handled by the
Insured having provided reasonable notice. The results of all audits will be shared with
the Insured.
The audit will address proper documentation to support coverage, liability and quantum,
claim handling quality, reserve timeliness, settlement level appropriateness, quality of
defense and adherence to this agreement.
TERMINATION:
If at anytime the terms of this agreement are not being met, Cowan reserves the right to
terminate this agreement immediately and assume carriage of all or some of the insured's
claims at the sole discretion of Cowan.
We the undersigned have the authority to execute this agreement.
Dated at the day of , 200_
(The Insured):
Name and Title of Authorized Representative
Signature of Authorized Representative
Frank Cowan Company Limited
Name and Title of Authorized Representative
Signature of Authorized Representative
Page 3 of 3 Claim Handling Agreement