1998-1999 Property Insurance Program

 The Corporate Services Committee recommends the adoption of the report (April 14, 1998) from the Chief Financial Officer and Treasurer:

 The Corporate Services Committee reports, for the information of Council, having requested the Chief Financial Officer and Treasurer to provide all Members of Council with the current insurance protection that continues from former Councils as it relates to accidental death, business travel and out of country travel.

 The Corporate Services Committee submits the following report (April 14, 1998) from the Chief Financial Officer and Treasurer:

 Purpose:

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

 Source of Funds:

 The proposed property insurance program 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 program 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 program 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); and

 (2)the boiler and machinery program 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 and Omissions Liability and Excess and Umbrella Liability policies had been placed.

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

 Discussion:

 Staff from the former municipalities and J and H Marsh McLennan, Limited, have met to develop a comprehensive insurance program 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 program.

 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 and 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 program 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 and Sun Alliance Insurance Company;

Commonwealth Insurance Company;

AXA Pacific Insurance Company; and

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 into 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 percent 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 program 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 program identified for property damage and loss including contents and boiler and 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

Schedule A

  Insurance Premiums Comparison

(PST not included)