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HomeMy WebLinkAboutCS 19/01 - 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; - 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: - 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 - 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: - 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 - 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 .- Not applicable Prepared / Approved / Endorsed By: GAP:vw Recommended for the consideration of Pickering City Council Thomas 1. Quinn, Chief Administrative Officer - - ~~~-~ ----Gillis A. Paterson, Director, Corporate Services & Treasurer