DateOctober 1, 1998

To:Emergency and Protective Services Committee

From:Chief Administrative Officer

Subject:Proposal to Establish Additional Collision Reporting Centres (CRCs) in the City of Toronto

Purpose:

The purpose of this report is to comment on the benefits and feasibility of establishing three proposed additional Collision Reporting Centres and the impact of existing CRCs on auto body shops in the City.

Financial Implications:

There is no financial impact from the recommendations of this report.

Recommendation:

It is recommended that the City Council not establish any additional Collision Reporting Centres.

Council Reference:

At its meeting of June 3, 4, and 5, 1998, the Council requested the Chief Administrative Officer to report to the Emergency and Protective Services Committee on the benefits of possible establishment of three additional Collision Reporting Centers (CRCs) in the City of Toronto and to comment on the impact of existing CRCs on auto body shops in the City.

In addition to the above request, the City Solicitor and the City Auditor were also requested to report on the subject of the City's liability in view of the existing contracts with the private sector operator. That report has now been submitted on the confidential agenda of the Committee and may have an impact on Council's consideration of the recommendation contained in this report. During the 1998 budget process, the City Auditor was requested to report on the operations and profit margins of the existing CRCs.

The Police Services Board, at its January 19, 1998 meeting, approved a motion to establish a sub committee for evaluating the performance of CRCs; hearing complaints from representatives of the towing industry and auto body shops regarding CRCs; and, reviewing on-going problems related to the CRCs.

Discussion and Justification:

Process

Meetings and consultations were held with the CRC operator and site visits were conducted. Staff from the City's Legal, Audit, Licensing, and Police organizations were also consulted and relevant reports and documents pertaining to the establishment and operation of CRCs were examined.

Historical Perspective

The Provincial Highway Traffic Act requires that any incident resulting in a personal injury or property damage above a specified level (currently set at $1,000), must be reported to a police officer. Traditionally, police were summoned to the incident location where the officer would prepare the incident report and then the parties involved would leave the scene. During the period 1990-92, the benefit of dispatching a police officer to the accident site was increasingly questioned and it was concluded that the police could realize substantial savings (up to seventy percent) if the public were required to report accidents at prescribed locations; the only exception would be situations which involved serious injuries or fatalities. From the public perspective, waiting for hours for the police to arrive, particularly in inclement weather, would be avoided; and, the reporting could be completed off site.

In 1994, the police implemented a pilot CRC in North York (113 Toryork Drive), in partnership with North York Accident Support Services Limited - a private sector corporation. The pilot proved to be successful and the police issued a request for proposal for two additional CRCs. Two new CRCs were established in 1995 at 855 Oxford Street, Etobicoke and 39 Howden Road, Scarborough in partnership with Toronto West Accident Support Services Limited and Toronto East Accident Support Services Limited respectively. All the three "Accident Support Services" corporations are operated by the same individuals.

Current Situation

The CRCs provides a facility for the public to report accidents and initiate insurance claims processing; it also allows adequate waiting time to select the auto body shop for vehicle repairs. The Police are currently responsible for recording of the accident report, verification of vehicle damage and investigation of suspected fraud. The CRC operator is responsible for providing a suitable working environment for the Police, adequate space for public use, a vehicle pound service, and the initiation of insurance claims processing. The expenditures incurred by the CRC operator are recovered through the sale of claims processing services to the insurance industry. On average, insurance claims may be initiated in about seventy one percent of the approximately 65,000 collision reports filed each year; the charges for those services range from about $37 per collision report and upwards, based on the services requested by a particular insurance company.

From a public perspective, the CRC offers a one stop facility to deal with all collision related issues. In addition, the public receives other ancillary services provided by the CRC operator and funded by the insurance industry, payment to tow truck operators, free one day parking of unsafe vehicles, initiation of claims processing, disposal of vehicles written off, assistance with vehicle rentals and assistance with completing the accident report form.

Resource Requirements: A typical CRC managed and operated by the private sector is staffed by about 25 staff (uniformed and civilian) from the Police force and 3 officers from the OPP at a combined cost of about $1.8 million. Staff estimates for other annual expenditures are: lease cost, $300thousand; customer service, vehicle pound operation and insurance claims processing cost, $750thousand.

Monitoring of CRC Operations: Since the Police provide collision recording services directly to the public, it monitors its own activity directly; however, the CRC operator does provide monthly activity statistics to the Police. Any complaints received by the CRC operator are immediately forwarded to the Police; during 1997, about five complaints were received relating to tow truck operators or auto body shop owners; and, waiting time during periods of peak demand.

Observations: The operation of the three CRCs represents a collaborative partnership between the Police, the CRC operator and the insurance industry that results in enhanced levels of services to the public. The Police and the insurance industry also benefit from lower costs while the operator is able to generate sufficient return on investment to remain financially viable.

Proposal to Establish City Operated CRCs

Assuming that the additional CRCs would provide an equivalent level of service to that of the existing CRCs, the following factors need to be considered:

Cost: The annual operating expenditure for the proposed three CRCs is estimated at between $7.5 to $9.0 million annually (excluding the cost of vehicle pound operation and insurance claims processing). In addition, one time costs are estimated at about $1.2 million for the three proposed CRCs.

Revenue Generation: Depending on the number of accidents reported at the proposed CRCs, the range of services provided and the potential number of accident reports purchased by the insurance industry, the total revenue for the three proposed CRCs is estimated at between $ 300 thousand to $ 450 thousand. However, this will not represent additional revenue for CRC operations as a whole because revenues generated by the three proposed CRCs will, by definition, arise from the loss of revenues by the existing CRCs.

Impact on existing CRCs: The proposed CRCs will take away the accident reporting volume and the resulting business from the existing CRCs causing them to be financially non viable. That situation may cause the existing CRC operator to withdraw from the arrangement and consequently require the Police to bear additional costs relating to the three existing CRCs; total incremental cost to the police is estimated at about $ 2.8 million annualized.

Diversion of Police resources: Unless the Police/City increase the staffing level by about 129 full time equivalents, establishment of the three proposed CRCs will result in the diversion of scarce resources away from higher priority police initiatives such as neighborhood policing.

-Market Demand: Increasing the number of CRCs assumes an increased growth in the demand for services of CRCs; the current CRCs have adequate capacity to handle the existing volumes of collisions reported within the City. Three additional proposed CRCs will double the overall capacity, thereby resulting in the under utilization of all the CRCs.

-Traffic Implications: CRCs generate considerable traffic; therefore, its location requires proximity to a major arterial roadway, wide streets to permit tow truck and tractor trailer traffic, and sufficient open space for operation of a vehicle pound. In addition, parking space is also required for Police use and for tow trucks and vehicles reporting accidents. Typically, CRCs are housed in industrial/commercial zoned areas.

-City Role: The City's current role in the operation of the CRCs is exercised through the provision of police services and the licensing and monitoring of CRC operations. Extending this role to that of a CRC operator which is currently provided by the private sector may not be appropriate.

Assessment

The operation of three proposed CRCs is not recommended as it will not result in any incremental benefits to the public, the Police or the City. Further, the establishment of the proposed CRCs would result in the diversion of scarce police resources and may jeopardize the financial viability of the existing three CRCs.

Impact of Existing CRCs on Auto Body Shops in the City

The operation of the CRCs is governed by the Licensing By-law 20-85, amended by By-law 168-97, Municipality of Metro Toronto, which requires that persons arriving at the CRCs to report accidents may not be canvassed by the tow truck operators, the Police, any employee of the CRC operator or any other person with a view to recommending a particular auto body shop for carrying out the repairs. Further, any vehicle towed in to the CRC location must be "dropped" off by the tow truck and the tow truck operator must leave the premises.

The By-law was enacted in response to some unfair past practices at the CRC premises where tow truck operators or agents of the auto body repair shops were alleged to have influenced the owners of damaged vehicles to direct the repair work to specific auto body repair shops. The By-law "capped" tow rates and provides a "cooling off" period to the person involved in the accident so that the selection of the auto body shop is made without coercion. Under the provisions of the existing Licensing By-law, auto body shops have been restricted in their ability to canvass for business at the CRC premises. The Licensing Commission is also encouraging the concept of accreditation of auto body shops for doing collision repair work.

Conclusion:

The CRCs represent a collaborative partnership between the Police, the insurance industry and the CRC operator in the interest of all the participants and the public. The existing CRCs are conveniently located, equipped to handle the mandatory drops, provide valuable services and have sufficient capacity to service the current volume of collisions. The proposed CRCs will not result in any additional benefits to the City and cost about $7.5 to $9.0 million annually. In addition, the proposed CRCs may jeopardize the financial viability of the existing CRC operations, resulting in incremental police expenditures of about $2.8 million. Therefore, it is recommended that the City not consider establishing the three proposed CRCs at this time.

Contact Name:

Firoz Kara, 392-8678

Michael R. Garrett

Chief Administrative Officer