April 14, 1998

  To:Corporate Services Committee

 From:W.A. Liczyk

Chief Financial Officer and Treasurer

 Subject:1998-1999 Property Insurance Programme

 Purpose:

 To report on the development of a property insurance programme for the City of Toronto for the period June 1, 1998 to June 1, 1999.

 Source of Funds:

 The proposed property insurance programme which includes coverage for property damage or loss to buildings, facilities and electronic data processing equipment, boiler and machinery insurance has a total cost of $895,320.00 ($829,000.00 plus $66,320.00 PST). Funds have been requested in various 1998 Operating Budgets for these costs. Since the beginning of the year, it has been necessary to extend the property insurance programme for some of the former municipalities to allow a proper proposal process to occur as well as create one coverage date for all of the former municipal policies. These extensions and costs were identified as part of the information in Schedule A which was submitted to the last Corporate Services Committee meeting.

 In total, the property insurance programme premiums including PST from June 1, 1998 to June 1999 are $895,320.00 resulting in savings of $982,924.20 over the combined premiums paid in 1997 of $1,878,244.20.

 Recommendations:

 It is recommended that:

 1.the insurance programme proposed for property damage or loss including electronic data processing equipment be approved for the period June 1, 1998 to June 1, 1999 at a total cost of $788,400.00 ($730,000.00 plus $58,400.00 PST).

 2. the boiler & machinery programme be approved for the period June 1, 1998 to June 1, 1999 at a total cost of $106,920.00 ($99,000.00 plus $7,920.00 PST).

 Background:

 We have previously reported that the Comprehensive, General Liability, Automobile, Garage Automobile, Medical Malpractice, Excess Public Officials Errors & Omissions Liability and Excess and Umbrella Liability policies had been placed.

 This report covers the property insurance component of the 1998 - 1999 programme.

 Discussion:

 Staff from the former municipalities and J&H Marsh McLennan, Limited have met to develop a comprehensive insurance programme for property coverage. This coverage will be extended to the buildings and facilities occupied by the City, some of the agencies, boards and commissions such as the Library and Police Services Board, but excluding the Toronto Transit Commission and Hydro. Further reports will follow as necessary for accidental death and business travel, user group liability coverage and the balance of the insurance programme.

 A Request for Proposals was made to twenty-one (21) markets dealing with this type of property insurance coverage. We received comprehensive proposals from nine (9) firms. A similar Request for Proposals was made to four (4) firms specializing in boiler & machinery coverage. All four (4) firms responded to the proposal call.

 Schedule A outlines the status of the coverages and Schedule B provides information on the 1997 policies which were in effect in the former municipalities.

 The components of the insurance programme are identified as follows:

 1.Property Damage and Loss

 This coverage is extended to all of the City=s facilities, buildings and contents to a total value of $8,578,640,175.00 and carries a deductible of $100,000.00. In addition, there are various sublimits in place for matters such as zoological specimens, valuable papers and accounts receivable.

 The insurers for this coverage on a prorated basis are:

Royal & Sun Alliance Insurance Company

Commonwealth Insurance Company

AXA Pacific Insurance Company

Reliance Insurance Company

 The cost of coverage is $788,400.00 ($730,000.00 plus $58,400.00 PST). The 1997 comparative cost was $1,649,770.00 ($1,527,565.00 plus $122,205.00). The savings in premium are due in part to the combining of the assets of the former municipalities in to one body for insurance purposes as well as the creation of a common deductible.

 2.Boiler and Machinery:

 This coverage is extended for losses which may occur from the failure of any boiler or machinery located within a facility and carries a $100,000.00 deductible.

 The cost of coverage is $106,920.00 ($99,000.00 plus $7,920.00 PST). The 1997 comparative cost for the former municipalities was $228,474.20 ($211,550.00 plus $16,924.20 PST).

 The insurer for this coverage is Royal & Sun Alliance Insurance Company.

In 1998-1999 the total premiums are $895,320.00 ($829,000.00 plus $66,320.00 PST), or a total of 52.3% less than the combined premiums paid by the former municipalities in 1997. The former municipalities had various deductibles ranging from $5,000.00 to $250,000.00. The proposed programme provides for deductible amounts of $100,000.00 for both policies.

 These limits are recommended as a result of a comprehensive financial analysis which has considered the City=s ability to carry higher deductibles, the combined value of the facilities and the potential of any major losses at more than one site. The deductible amounts identified above are considered to be the levels offering the greatest savings to the City.

 Conclusion:

 It is recommended that the insurance programme identified for property damage and loss including contents and boiler & machinery as described above be approved.

 Contact Name:

 Report prepared by:Glenn Kippen

Telephone:778-2063

Facsimile:778-0109

E-Mail:gkippen@borough.eastyork.on.ca

 Respectfully submitted,

   W.A. Liczyk

Chief Financial Officer and Treasurer

SCHEDULE A

 Insurance Premiums Comparison

(PST not included)