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HomeMy WebLinkAboutCS 21-10 City Report To Executive Committee PICKERING Report Number: CS-21-10 Date: June 14, 2010 9 1 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: 2010/2011 Property and Liability Insurance Renewal Recommendation: 1. That Report CS 21-10 of the Director, Corporate Services & Treasurer be received; 2. That the City of Pickering renew its property, liability and other coverages through the Frank Cowan Company for the period July 1, 2010 to June 30, 2011 inclusive on terms and conditions acceptable to the Director, Corporate Services & Treasurer; 3. That 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 including any adjusting and legal fees where it is in the City's interest to do so; 4. 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, 5. That the appropriate officials be authorized to take the necessary actions to give effect thereto. 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 in the past years which also provides coverage for the Library, its Board and its employees. Report CS 21-10 June 14, 2010 Subject: 2010/2011 Property and Liability Insurance Renewal Page 2 92 Financial Implications: The premium renewal cost has been provided for in the various cost centers through the approval of the 2010 budget by Council and the renewal premium cost is within the 2010 budgeted amount. Sustainability Implications: Insurance renewal provides the City with financial security and is therefore better able to maintain financial sustainability. 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. 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. Insurance Market and Trends 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. As the severity of awards increases, so does the exposure to municipalities as they are often viewed as having "deep pockets". 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% rule, the joint and several 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 financial unable. 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. Report CS 21-10 June 14, 2010 Subject: 2010/2011 Property and Liability Insurance Renewal Page 3 93 The City also experienced a continued increase in claim costs. 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 diversity 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 (within 24 hours) the claimant, to advise them that the City has received the claim and to ensure 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 to 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 Prepared By: Approved / Endorsed By: Stan Karwowski Gillis A. Paterson Manager, Finance & Taxation Director, Corporate Services & Treasurer SK:vw I Report CS 21-10 June 14, 2010 Subject: 2010/2011 Property and Liability Insurance Renewal Page 4 94 Recommended for the consideration of Pickering ' y Coun 'I Tony Prevedel, P.Eng. Chief Administrative Officer ATTACHMENT #-j-T0 REPORT #4a.a I r F 95 Cowan Frank Cowan Company 2010 MUNICIPAL INSURANCE PROGRAM CORPORATION OF THE CITY OF PICKERING Prepared by: Mr. Viano Ciaglia, C.I.P., C.R.M. Regional Manager Frank Cowan Company Limited 4 Cowan Street East Princeton, ON NOJ 1 VO 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/sh April 20, 2010 T/519-458-4331 F/519-458-4366 96 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 -2- 97 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 tip- 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 ACP 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 40. We deliver a wide range of presentations to our Municipal clients on an ongoing basis that provide continuous education for our clients. Risk Audits a* 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 A-0- 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.frankeowan.com to keep informed of common issues and solutions. Claims Management rt~- 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 -3- 98 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 severityof 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 -4- 99 COMPREHENSIVE INSURANCE PROGRAM 2010-2011 Frank Cowan Company -5- 100 PROGRAM SUMMARY 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 $ 50,000. Sewer Backup per Claimant Deductible including expenses $ 50,000.. 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 $ 50,000. 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 $ 50,000. Frank Cowan Company -6- 101 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 $ 10000. (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 -7- 102 PROGRAM SUMMARY SUMMARY OF COVERAGES LIMITS/AMOUNTS PART B - PROPERTY Property Insurance (including Data Processing Insurance) Total Sum Insured * $ 174,421,800. Valuable Papers $ 500,000. Accounts Receivable $ 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., i Fine Arts Form $ 2,000. Exhibition Form As Per Lists Provided Deductible $ 10,000. Exceptions: Fine Arts Form and Exhibition Form $ 2,500. - Checkroom Liability $ 2,500. - Fire Training Trailer $ 2,500. Peril of Flood 25,000. - Peril of Earthquake 3% or Minimum $ 100,000.. *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 -8- 103: PROGRAM SUMMARY SUMMARY OF COVERAGES LIMITS/AMOUNTS Equipment Breakdown Limit per Accident - Comprehensive: - Steam Engine At Greenwood Museum, 2365 6`h Concession, Greenwood, ON $ 10,000. All Other Locations $ 50,000,000. Extra Expense $ 500,000. Spoilage - Goods under Refrigeration $ 5000. 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 -9- j ' 104 PROGRAM SUMMARY SUMMARY OF COVERAGES LIMITS/AMOUNTS PART 'C - AUTOMOIR LE Automobile Fleet Liability Limit $ 25,000,000. Deductibles Section 3 (Third Party) $ 10,000. Section 6 (Direct Compensation) $ 10,000. No Physical Damage applies to: - 1951 Antique Pumper (Parades) 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 -10-