Report to/Rapport au:

Corporate Services and Economic Development Committee/

Comité des services organisationels et du développement économique

and Council/et au Conseil

15 August 2001/le 15 août 2001

Submitted by/Soumis par: Kent Kirkpatrick, General Manager/Directeur général

Corporate Services Department/Services généraux

Contact/Personne ressource: Jennifer Popowicz,

Insurance Administrator, Risk Management, Financial Planning/administratrice des assurances, Section de la gestion des risques, Planification financière,

Services financiers

748-4357 Ext. 3624, Jennifer Popowicz@city.ottawa.on.ca

Ref N°: ACS2001-CRS-FIN-0030

SUBJECT: THIRD PARTY INSURANCE PROGRAM AND RISK MANAGEMENT POLICY STATEMENT

OBJET: PROGRAMME DE RESPONSABILITÉ CIVILE ET ÉNONCÉ DE POLITIQUE SUR LA GESTION DES RISQUES

REPORT RECOMMENDATIONS

That the Corporate Services and Economic Development Committee recommend Council approve:

1. The third party insurance program, including eligibility, parameters for acceptance and recovery of insurance cost practices detailed in Attachment 2, be approved.

2. The Risk Management Policy Statement, detailed in Attachment 4, be adopted.

RECOMMANDATIONS DU RAPPORT

Que le Comité des services organisationnels et du développement économique recommande au Conseil d’approuver :

1. Que le programme d’assurance de responsabilité civile, y compris l’admissibilité, les paramètres d’acceptation et les pratiques de recouvrement des coûts d’assurance, exposés en détail dans l’annexe 2, soient approuvés.

2. Que l’énoncé de politique sur la gestion des risques, exposé en détail dans l’annexe 4, soit adopté.

BACKGROUND

City’s Insurance Requirements

All elements of the new City’s insurance and self-insurance requirements were included in the Integrated Risk program developed for the Ottawa Transition Board (OTB). The report, which the Board approved, is included as Attachment 1 for the information of Council. No changes are recommended.

For the information of Council an evaluation of the benefits of implementing RiskMaster as the Information Management System to support the required claims and cost of risk tracking within the Integrated Risk program was conducted by staff and it has been determined RiskMaster meets the tracking system requirements for the City. The system has been fine-tuned over the last seven months to reflect the Integrated Risk program requirements and is being successfully utilized by staff. Work on Phase II of the system is in progress and full implementation of the system is anticipated early in 2002.

Third Party Insurance Program

The OTB report recognized that the City has a vested interest in ensuring insurance coverage is in place for third parties, therefore, third party insurance programs that were previously overseen by a municipality were provided within the Integrated Risk program based on former insurance program requirements. The OTB report identified that existing Community Association premium rates ranged from nil to $1,500 and “eligibility parameters” for the provision of coverage were inconsistent. The OTB instructed new City management to conduct a comprehensive review in order to determine a “fair” insurance cost recovery system and “consistent” coverage eligibility practices.

The report also confirmed that insurance costs would be recovered from various Business Improvement Areas, Special Events Lessees and Renters of Facilities, ByWard and Parkdale Market Vendors and the City of Ottawa Superannuation Fund. Attachment 2 provides recommendations related to the review.

Risk Management Policy Statement

The OTB report identified key elements and the importance of fostering a “proactive” high profile Risk Management program to ensure the success of the Integrated Risk and self-insurance programs. The recommended Risk Management Policy Statement detailed in Attachment 4, will establish the process to achieve this objective.

DISCUSSION

Third Party Insurance Program

Municipalities have historically overseen insurance programs on behalf of certain third parties. This practice should continue based on the following rationale:

Ø Reduced premium rates are provided on a “group” insurance basis

Ø Long term insurance cost stability is experienced

Ø Increased insurance limits are available

Ø Insurance programs are customized to meet third party requirements

Ø Comprehensive insurance coverage is provided

Ø Administration of the programs are overseen by City staff

Ø Premium cost recovery practices and payment of deductibles will ensure third parties remain accountable for their actions during the delivery of their programs

Ø Professional insurance and risk management advice is provided

Ø Program is highly supported by the participating third parties

The program requires standardization. For 2001 a few changes were made. In some instances, third party insurance coverage sub-limits were increased and deductible limits were generally based on former insurance programs. Third party insurance premium recoveries were rated in accordance with previous insurance programs that were overseen by former municipalities. For 2001 the total estimated third party insurance program premium recovery is $93,000.

The City of Ottawa is essentially acting as the Insurance Company when administering third party programs within the Integrated Risk program. The Integrated Risk program has a $650,000 self-insured retention, which will be funded from the City’s self-insurance program. In the event of a claim or loss under a third party program, the third party will pay their applicable deductible portion of the claim, the City will pay the portion of the claim above their deductible up to the self-insured retention of $650,000 and the Insurers will pay the amount of the claim above the $650,000 self-insured retention. Third party claim amounts, above applicable deductible limits, will be tracked towards the City’s annual aggregate limit of $3,000,000.

Community Associations

Community Association Group Liability insurance coverage has been provided by former municipalities, in some instances, since 1980. The 121 Community Groups previously insured under a “group” program with the former City of Ottawa, City of Nepean and the Township of Goulbourn, reimbursed the municipality/insurance broker for insurance premium costs. Community Associations operating in the former Cities of Gloucester and Kanata and the Townships of Rideau, West Carleton and Osgoode were previously insured under the former Municipality’s Liability insurance program and did not reimburse the Municipality for insurance premium costs. These Community Associations were added to the new Integrated Risk Community Association Group Liability insurance program in 2001 as named insureds.

During the transition process information regarding former Township of Cumberland Community Associations was not transferred to the new City of Ottawa. It is understood Community Associations directly reimburse the insurance broker for insurance premium costs. The existing program expires September 1, 2001. During the month of August staff will contact the Community Associations operating in the former Township of Cumberland regarding the City of Ottawa group liability program.

It is recommended that effective January 1, 2003, a consistent practice of recovering insurance costs from Community Associations be adopted. The action not to recover insurance premium costs from existing non-paying Community Associations until January 1, 2003 will ensure staff have an adequate time period to consult with affected Community Associations, distribute and review applications with associated operational staff, confirm “partner” relationships, develop prioritization criteria for groups applying for insurance coverage and establish standard insurance requirements. In addition, the delayed implementation date will ensure affected Community Associations are provided with a reasonable notice period regarding the recommended changes and a generous time period to raise funds to pay for their insurance coverage or to request funding through a Purchase of Service Agreement or Sustaining Grant.

Insurance premium rates paid by former Community Associations in the City of Ottawa, City of Nepean, and Township of Goulbourn, which were determined by the insurance company based on the Community Association’s level of activity, were aligned in 2001 into consistent price bands. The annual insurance premiums recovered by the City in 2001 from the 121 Community Associations, formerly paying insurance premiums, was $49,700. The majority of Community Groups (80) received funding from the City in 2001 to pay for their insurance costs through a Purchase of Service Agreement or a Sustaining Grant.

Attachment 3 provides a breakdown of premium costs currently being applied by the Insurer for Community Association Group Liability insurance coverage. The “group” insurance rates are greatly reduced from those offered by the general insurance industry and Community Associations find the premium rates extremely affordable. The program has been well supported by Community Associations over the past years and City staff will continue to oversee the program on behalf of Community Associations to ensure the program continues to offer comprehensive insurance coverage.

It is anticipated several non-paying Community Groups will not consider obtaining coverage under the Community Association Group Liability program. Many of the Community Groups may be insured elsewhere for liability insurance under a league or national association program that provides broader coverage to meet their needs. Other non-paying Community Groups may have ceased operations or do not currently provide a City of Ottawa program.

The task of obtaining addresses and identifying the non-paying Community Associations insured under former Municipal Liability insurance programs has been completed and the process identified in Attachment 2, to encourage non-paying Community Associations to participate in the program, is recommended. It is important Community Associations that have a contractual obligation with the City of Ottawa continue to maintain insurance coverage, in compliance with their contractual requirements, and provide the City of Ottawa with evidence of such insurance coverage.

The former “parameters for acceptance”, recommended in Attachment 2, were applied by the City of Ottawa, City of Nepean and the Township of Goulbourn when a Community Association made application for coverage under the “group” policy. It is important “parameters for acceptance” be defined to ensure the City of Ottawa is providing insurance coverage to Community Associations that have a direct shared interest with the City of Ottawa, such as; receive funding to run a City program, or operate on a regular basis from a City owned facility, or offer a program to the community in partnership with the City. There are approximately 5,000 to 6,000 Community Groups operating in the new City of Ottawa and without defined “parameters for acceptance” the program will grow to an uncontrollable risk level and become an administrative burden.

The Community Association Group Liability insurance program provides broad insurance coverage that was specifically underwritten by the Insurers to protect the interests of Community Associations. Attachment 3 summarizes the coverage provided under the Community Association Group Liability program.

For the information of City Council, the City does not administer a property insurance program on behalf of Community Groups; however, a “group” property insurance program is available to Community Associations directly through the City’s Insurance Broker. The program insures Community Association owned assets at reduced premium rates.

Business Improvement Areas and the City of Ottawa Superannuation Fund

Business Improvement Areas and the City of Ottawa Superannuation Fund were previously insured under an insurance program overseen by a former municipality and have been added as named insureds under the Integrated Risk program based on their former insurance programs, at the same premium rates applied in 2000. The annual insurance premium recovery for this group of insureds is $22,600.

Special Events Lessees and Renters

Several municipalities previously provided a Special Events Liability insurance program to renters of City owned facilities. The insurance premium rates applied by the Insurer for this program are; $75.00 for an event where alcohol is served, $75.00 for Centrepointe Theatre Users, $40.00 for an event where alcohol is not served and $5.00 for a small gathering/meeting. The program is available and offered directly on-site to third party special event renters at 110 City owned facilities throughout the new City of Ottawa.

Generally, former municipalities had adopted an Alcohol Policy that required third party special event renters to maintain liability insurance coverage during the event. Former Alcohol Policy requirements and practices will continue to be enforced at city owned facilities until Council approves a new Alcohol Policy to include operating guidelines, terms and conditions, insurance requirements and risk avoidance controls.

The estimated annual insurance premium recovery generated by this program is $9,000 to $12,000.

By-Ward and Parkdale Market Vendors

A Group Liability program for Market Vendors operating at the ByWard and Parkdale Markets was previously provided by the former City of Ottawa. The premium rates applied by the Insurer for this program are; $5.00 daily, $30.00 monthly, $100.00 for six months and $200.00 for 12 months.

The estimated annual premium recovery for this group of insureds is $11,700.

Risk Management Policy Statement

The OTB report also identified key elements and the importance of fostering a “proactive” high profile Risk Management program. A formal Risk Management program aimed at reducing costs and safeguarding the City against excessive loss periods will ensure the financial success and stability of the new City of Ottawa. To achieve this objective it is recommended City Council adopt the Risk Management Policy Statement outlined in Attachment 4.

RURAL IMPLICATIONS

Insurance requirements of previously insured rural entities have been considered and are included within the Integrated Risk program.

CONSULTATION

Departments working with Community Groups, who deliver services on behalf of the City, were consulted and their operational requirements were incorporated in the report.

A copy of the report was circulated to the Director of Legal Services, Manager of the Volunteer Sector, Community Services Managers and the Manager of Community Funding and Development with Innovations, Development and Partnerships.

Community Associations and other named insureds that reimburse the City for insurance costs under the various insurance programs were provided with copies of their applicable insurance programs and have compensated the City for their 2001 premium costs.

FINANCIAL IMPLICATIONS

The OTB report authorized payment of insurance coverage at a total annual upset amount of $1,336,473.

Third party insurance premium recovery practices in effect for Business Improvement Areas, City of Ottawa Superannuation Fund, Special Event Lessees and Renters, ByWard and Parkdale Market Vendors; fully offset the costs to purchase insurance coverage in the estimated amount of $43,300.

The insurance premiums recovered by the City in 2001 from the 121 Community Associations, formerly paying insurance premiums, was $49,700. The majority of Community Groups (80) received funding from the City in 2001 to pay for their insurance costs through a Purchase of Service Agreement or a Sustaining Grant.

The total annual third party insurance program premium recovery in 2001 was $93,000.

The action not to recover insurance premium costs from existing non-paying Community Associations until January 1, 2003 will ensure associated departments have sufficient time to consult with affected Community Associations and obtain approval for additional funding within their budgets. For 2003 it is anticipated the People Services Department and other associated departmental budgets will require additional funding to compensate non-paying Community Associations for insurance costs in the estimated amount of $16,000 to $26,000.

ATTACHMENTS

1. Insurance Project Team OTB report dated 08 November 2000

2. Third party eligibility, parameters for acceptance and recovery of insurance cost practices

3. Community Association Group Liability Insurance “Summary of Coverage”

4. Risk Management Policy Statement

DISPOSITION

The Manager of Financial Planning will contact non-paying Community Associations regarding the recommended process referenced in Attachment 2.

ATTACHMENT 1

BACKGROUND

Early in the process, the Insurance Project Team identified that there was a clear opportunity to explore beyond the traditional methods of insurance procurement with an aim to experience immediate financial success and stability. To achieve this objective, the Team conducted a review of the insurance and risk management programs in order to determine “best” risk management practices and to develop a guaranteed long-term risk financing strategy.

Previously, the Municipalities, RMOC (including police) and OC Transpo negotiated insurance programs with 12 brokerage firms and 13 Insurers. In excess of 200 insurance policies were administered annually. Deductibles varied from nil to $2m and limits differed from $5m to $25m. The self-insured losses funded within the various self-insurance budgets were $2.2m. Combined financing requirements for premium costs were $2.9m. Combined estimated Insurance Reserve Funds totaled $8.3m. The previous “cost of risk” was $6.5m.

The Insurance Project Team identified the need to obtain legislation from the Province to authorize the Transition Board to initiate the new Integrated Risk Program on January 1, 2001. On September 27, 2000 the Province granted authority to the Transition Board to enter into an insurance contract.

The Transition Board, at its meeting of May 29, approved the award of Phase I, contained in the “Review of Insurance and Risk Management Programs” Request for Proposal (RFP) to conduct a review and recommend an insurance and risk management strategy for the new City, to the consulting firm of Dion-Durrell & Associates Inc. On July 10, 2000 the Transition Board approved the recommended Integrated Risk strategy and awarded Phase II of the RFP to Dion-Durrell & Associates Inc. to assist the Insurance Project Team to prepare a Request for Qualification (RFQ) to pre-qualify Insurance Brokers and tender for insurance.

The Request for Qualifications (RFQ) was developed with the assistance of the RMOC Supply Management Division. Personal invitations were provided to the existing brokers and the Request for Qualification (RFQ) was posted on MERX. Four (4) responses to the (RFQ) were received and evaluated by the Selection Committee. All four (4) brokers were pre-qualified and provided with a Request for Proposal (RFP) to obtain a priced proposal from assigned insurance companies for the City’s Property/Casualty Insurance Program. Three (3) priced proposals were received from the pre-qualified brokers. The evaluation criteria assigned to the proposal was based on; coverage (30 points); price (40 points); service (10 points); stability (10 points) and security (10 points). The “best value” coverage, provided by financially sound Insurers, at the lowest price meeting the RFP specifications, was received from the consortium of Halpenny Insurance Brokers and Cowan Public Entity, as they achieved the highest score in accordance with the evaluation criteria stipulated in the (RFP).

DISCUSSION

The Integrated Risk program provides comparable coverage to the existing programs maintained by the RMOC, OC Transpo and the 11 municipalities. The recommended coverage limit of the program is $50m with a $650,000 self-insured retention and annual aggregate limit of $3m. The rationale to increase the coverage limit and the self-insured retentions was based on:

· cost effective to procure an additional $25m of coverage for $25,000

· increased financial capacity of the new City of Ottawa estimated to be $1.7 billion

· an endorsement identified within the actuarial analysis conducted by Dion-Durrell Inc. confirming the new City of Ottawa could absorb a $650,000 self-insured retention with an annual aggregate retention of $3m

· moderate risk tolerance position creating a balance between risk assumption and procurement of insurance to protect against catastrophic loss

Notable advantages, provisions and enhancements included in the Integrated Risk Program are:

· increased coverage limit of $50m

· an annual aggregate limit of $3m to protect the City against a build-up of claims within the self-insured retention level

· a guaranteed premium for the three-year term

· an evergreen and notice of non-renewal clause that will offer premium, terms and conditions to the City no later than ninety (90) days prior to the expiry date of the policy

· administrative efficiencies, replaces 200 existing policies with 1 policy consisting of 19 lines of coverage

The Integrated Risk Program provides coverage to:

· City of Ottawa, including Volunteer Fire Fighters

· Various City Boards

· Business Improvement Areas

· Community Associations

· Market Vendors

· Lessees and Renters

· City of Ottawa Superannuation Fund

The Community Associations Liability program, for approximately 150 groups, and the Market Vendor program will be insured within the Integrated Risk Program based on existing program requirements, however, will be administered directly by the Broker. This action will ensure insurance costs remain constant and will provide a high level of service to the Community Associations and Market Vendors by the recommended insurance broker. Current Community Association premium costs range from nil to $1,500 and eligibility parameters for the provision of coverage are inconsistent. The new City management will conduct a comprehensive review in order to determine a “fair” insurance cost recovery system and “consistent” coverage eligibility practices. Insurance costs will also be recovered from the various City Boards, Business Improvement Areas, Lessees and Renters and the City of Ottawa Superannuation Fund.

Environmental impairment risks will not be insured under the recommended Integrated Risk program and will be funded within the self-insurance program. Presently the RMOC and the City of Ottawa do not carry Environmental Liability insurance coverage.

Lines of coverage included in the Integrated Risk Program include:

· Municipal Liability, including Errors and Omissions

· Non-owned Automobile

· Garage Liability

· Automobile Fleet Liability

· Public Officials and Employment Practices Liability

· Conflict of Interest Reimbursement

· Legal Expense Reimbursement

· Comprehensive Crime

· Buildings, Contents, Vehicle Fleet and Equipment Property

(including the Walter Baker Centre)

· Electronic Data Processing

· Boiler and Machinery

· Councillor’s Accident

· Volunteer Firefighter’s Accident

· Travel Accident

· Community Association Group Liability

· Lessee/Renters Special Events Liability

· Market Vendors Group Liability

· City of Ottawa Superannuation Fund Comprehensive General and Errors and Omissions Liability

The risk financing requirements, detailed in Appendix 1, to implement the recommended Integrated Risk Program are fundamental requirements and must be accepted by the Transition Board and the new City of Ottawa as essential. The long-term objective of the Integrated Risk and Risk Management Programs is to work towards a financial solution that will provide a cushion to absorb “high loss periods” to ensure there is minimal, or no impact, on the local taxpayer.

The Insurance and Broker Service Request for Proposal (RFP) invited participants to identify a suggested claims and cost tracking tool that would assist the new City of Ottawa to manage and implement the Integrated Risk program and “best” risk management practices. Participants were requested to include the identified program costs as a separate optional component. The recommended consortium indicated that the RiskMaster software package was, in their opinion, the preferred program. Cowan Public Entity indicated in their proposal that they had formed a partnership with Mynd Corporation, who have been providing risk management software products in Canada since 1977. The partnership offered a database solution to the City at a discounted initial license charge of 30%. In order to expedite implementation, they have obtained agreement from the City of Hamilton to provide the City of Ottawa with a municipal coding system, to be applied to the RiskMaster program. The coding information will differ in some areas; however, this arrangement will provide a “quick-start” solution resulting in reduced costs.

One of the key functions to be provided within the Information Management System is management of an estimated 2,700 annual claims volume and an even greater number of reported incidents. Members of the Insurance Project Team and a representative of the Ottawa Transition Project 1980 (Other Functional Systems) conducted a cursory review of the four (4) programs currently being used to manage claims data. The preliminary findings of the group identified that it would be difficult and costly to convert any of these systems into a program to meet the immediate and future needs of the Integrated Risk and Risk Management Programs.

RiskMaster is a leading risk management software product with more than 200 public sector clients including the Toronto Transit Commission and the cities of Calgary, Hamilton and Mississauga. The cost projection for 21 standard workstations and 50 remote workstations, including taxes, is:

· Basic software, licenses and fees $199,300

(30% discount has been applied)

· Basic implementation services and training $ 85,600

· Partnership to implement and redesign workflow

of the risk management function $ 85,600

· 20% contingency on services $ 34,200

· Hardware and upgrades allowance $ 41,700

It is anticipated the total cost of the Information Management System will not exceed $446,400. Annual support service fees for 2001, and subsequent years, will be $39,800.

RiskMaster is compatible with the City’s technical infrastructure and has a large technical support staff contingent and sufficient customization flexibility to handle the recommended integrated risk model with its intricate requirements to track local deductibles, self-insured retention and annual aggregate costs.

In order to expedite the procurement of the Information Management System and to ensure the City is prepared on Day 1, and into the future, to manage the required claims and cost of risk tracking function within the Integrated Risk Program, it is necessary to immediately conduct an evaluation of the benefits and feasibility of implementing the RiskMaster program. If the system meets the requirements of the new City, it is recommended the Director of Financial Services be delegated authority to acquire the required hardware upgrades and to enter into negotiations with Mynd Corporation and Cowan Public Entity to procure RiskMaster.

The recommended Information Management System will facilitate the determination of the “optimum risk tolerance level and cost of risk” over the next three-year term. The collection and centralization of this data will assist the City to conduct a comprehensive financial analysis and, if expected savings are achieved, the City will be in a position to access the feasibility of increasing its self-insured retention level and ensure an appropriate Insurance Reserve Fund is in place to respond to uninsured losses or unexpected claim situations.

CONCLUSIONS:

The recommended Integrated Risk Program provides:

· the “best value” coverage, at the lowest priced proposal meeting specifications

· limits exposure to insurance premium cost fluctuations as a result of the recommended $650,000 self-insured retention and the guaranteed three-year cost

· reduction of over $1.5m in annual premium costs and insurance broker fees, which were previously paid to the insurance industry

· assumes more risk, to prudent levels, which is expected to result in long-term financial success and stability

· the overall expected annual savings under the Integrated Risk Program are $663,527.

· cost of risk will be reduced from $6.5m to $5.8m.

Required key elements to reduce costs and safeguard the new City of Ottawa against excessive loss periods with an aim to ensure the financial success and stability associated with the Integrated Risk program are:

· delivery of a high profile “proactive” Risk Management Program

· consistent claims handling practices and procedures

· establishment of a comprehensive Information Management System to track, establish and manage claim, insurance, self-insurance, reserve funding and administrative functions

· an adequately funded retention program for expected self-insured losses in the amount of $4.5m

· a prudently managed Insurance Reserve Fund

Submitted by:

Jennifer Popowicz

Project Leader

Insurance Project Team

APPENDIX 1

Expected Costs to Fund the Integrated Risk Program

Insurance and Broker Service Costs · annual premium costs to purchase Excess Insurance for a limit of $50m with a $650,000 self insured retention and annual aggregate insurance for a limit of $3m ($9m over the three year period) · annual City Broker Fee for Service · annual Community Assoc. and Market Vendor Broker Fee for Service	$ 1,207,257 + $96,581 PST = $ 1,303,838 $25,000 + $1,750 GST=$26,750 + $ 5,500 + $385 GST= $ 5,885 Total Insurance and Broker Service Fee costs are: $ 1,336,473
Other Expected Costs to Fund the Integrated Risk Program · annual self-insurance costs to fund claims received under the $10,000 internal deductible. The recovery of deductible costs from departments is subject to further review by the new City administration + · annual costs to pay expected losses between $10,000 and $650,000	$ 1.7 m + $ 2.8 m = $ 4.5 m
Total Expected Cost of Risk	$ 5.8 m
Other Financial Action Required · current estimated Insurance Reserve Fund, to respond to existing outstanding claims and future unexpected claims and uninsured losses of the 11 municipalities, RMOC, OC Transpo and other identified insureds. · the appropriate Insurance Reserve Fund limit for the new City is subject to further actuarial analysis and should be reviewed annually.	The existing estimated combined Insurance Reserve Fund amount is $8.3m. To be determined

ATTACHMENT 2

THIRD PARTY INSURANCE COVERAGE

ELIGIBILITY, PARAMETERS FOR ACCEPTANCE

AND RECOVERY OF INSURANCE COST PRACTICES

Community Association Group Liability Program “Parameters for Acceptance”

Insurance coverage will be available to Community Associations provided the following parameters are met:

Ø must operate as a non-profit Group, and

Ø must receive from the new City of Ottawa, funding that is associated with the delivery of a service on behalf of the City, or

Ø must operate from a City of Ottawa owned or leased facility on a regular basis, under an agreement, or

Ø must offer a program to the community, in partnership with the City of Ottawa, under an agreement

Community Association Group Liability Program “Process to Obtain Coverage”

The recommended process for existing non-paying Community Groups to obtain insurance coverage, effective January 1, 2003, is as follows:

Ø each Community Associations will receive a letter regarding the approved eligibility parameters

Ø Community Associations will be requested to complete an application for coverage

Ø the applications will be received by the Risk Management Section and reviewed in consultation with associated operational staff

Ø applications will be rated based on reported activities

Ø insurance rates will be provided in accordance with assigned premium bands

Ø Community Associations that meet the recommended “parameters for acceptance” will be advised of the insurance premium rate to be applied

Ø Community Associations will be given an opportunity to accept the premium rate offered, or

Ø the Community Association may decide to procure a more comprehensive insurance program elsewhere to meet their insurance needs, or

Ø the Community Association may be insured for liability insurance under a league or national association insurance program and, therefore, will not require insurance coverage under the “group” liability program.

It is important Community Associations that have a contractual obligation with the City of Ottawa continue to maintain insurance coverage, in compliance with their contractual requirements, and provide the City of Ottawa with evidence of such insurance coverage.

The action not to recover insurance premium costs from existing non-paying Community Associations until January 1, 2003 will ensure staff have an adequate time period to consult with affected Community Associations, distribute and review applications with associated operational staff, confirm “partner” relationships, develop prioritization criteria for groups applying for insurance coverage and establish standard insurance requirements. In addition, the delayed implementation date will ensure affected Community Associations are provided with a reasonable notice period regarding the recommended changes and a generous time period to raise funds to pay for their insurance coverage or to request funding through a Purchase of Service Agreement or Sustaining Grant.

The annual insurance premiums recovered by the City in 2001, from the 121 Community Associations, formerly paying insurance premiums, was $49,700. The majority of Community Groups (80) received funding from the City in 2001 to pay for their insurance costs within a Purchase of Service Agreement or a Sustaining Grant.

Business Improvement Areas, City of Ottawa Superannuation Fund, Special Event Lessees and Renters Liability, ByWard and Parkdale Market Vendors Group Liability “Insurance Coverage Eligibility”

Insurance coverage was provided to the above referenced third parties in 2001 and will continue to be made available based on former processes and practices.

Insurance Cost Recovery Practices

The City of Ottawa shall continue to procure and administer insurance programs for the following third parties based on the premium recovery costs detailed in the report.

Liability Program

Ø Community Association Group Liability

Ø Special Event Lessees and Renters Liability

Ø ByWard and Parkdale Market Vendor Group Liability

Complete Insurance Program

Ø Business Improvement Areas

Ø City of Ottawa Superannuation Fund

ATTACHMENT 3

COMMUNITY ASSOCIATION GROUP LIABILITY PROGRAM

SUMMARY OF COVERAGE

Conditions and coverage to include, but not limited to, all operations and activities of Community Associations, unless specifically excluded below under “Notable Exclusions”. The program provides insurance coverage for loss or damage as a result of claims against Community Associations by third parties for bodily injury, death or damage to property.

Coverage provided

Ø Premises, operations and completed operations

Ø Personal injury (libel, slander, defamation of character, etc.)

Ø Voluntary compensation for employees

Ø Employers’ liability

Ø Liquor Law Liability extension

Ø Occurrence property damage

Ø Cross liability clause

Ø Non-owned Auto Liability

Ø Legal liability for physical damage to non-owned vehicles, excluding long-term leased vehicles

Ø Tenants’ Legal Liability, Broad Form

Ø Employees and volunteers are added as additional insureds

Ø City of Ottawa is added as an additional insured

Ø Incidental Malpractice Liability

Ø Fireworks displays

Ø 90 day cancellation clause

Named Insureds

Community Association including executive officers, directors, members, employees and volunteers while acting within the scope of their duties as such.

Notable Exclusions

Ø Third Party Contracted Instructors

Ø Competitive sporting activities

Ø Professional liability exclusion

Ø Absolute Pollution exclusion

Ø Licensed Child Care Programs

Policy Limit: $5,000,000

Deductible Limits: $250 (Property Damage)

Premium rates applied by the Insurer

Ø $275 for seasonal rink operations

Ø $350 for regular activities common to most Community Groups

Ø $400 to $800 for large Community Groups or complex operations to include but not limited to, Youth Programs, Food Bank operations, etc.

Ø $800 to $1,675 for Community Groups involved in large group activities

.
ATTACHMENT 4

RISK MANAGEMENT POLICY STATEMENT

Statement

The City of Ottawa shall:

Ø establish programs and best practices to preserve and protect the physical and financial assets of the City against loss and damage

Ø provide and maintain safe conditions in its workplace, programs, services and infrastructure in order to protect its employees and members of the public

Ø consider risk financing strategies, which are consistent with corporate financial resources, to include but not limited to; an adequately funded self-insurance program, a prudently managed Insurance Reserve Fund and the procurement of insurance coverage

Ø be committed to and strive for excellence in its management of risk

Ø provide sound claims management practices.

Objective

The risk management objective is to limit the City’s liability, protect human life and corporate assets against loss and damage while reducing to a prudent minimum the cost of managing risk with an aim to safeguard the City against excessive loss periods. To accomplish this objective, the City is committed to the application of sound risk management processes, which includes a systematic approach to the anticipation, and identification of loss exposures, the analysis of those exposures in terms of frequency and severity and the application of risk control measures.

Responsibilities

To ensure the personal safety of staff and the public, the City shall be committed to build upon what staff and the community are currently doing right by providing recognized corporate risk related programmes and tools to assist them to strive for and achieve the highest level of personal safety and protection possible, given the corporate resources available.

It is the responsibility of all staff to maintain appropriate risk management programs and practices within their areas of responsibility and to act in accordance with the City of Ottawa Risk Management Policy Statement.

Administration

In recognition of its financial resources, the City of Ottawa will self-insure to various acceptable levels and procure appropriate insurance coverage as recommended by the General Manager of Corporate Services and as approved by City Council.

The City Manager and General Managers shall promote and facilitate the application of sound corporate risk management techniques and processes consistent with the Risk Management Policy Statement.

Managers and Supervisors shall ensure employees are aware of the appropriate risk management programs and practices available within their areas of responsibility and shall act in accordance with the Risk Management Policy Statement

Action Plan

Ø Reinforce the importance that staff must be liability conscious on a daily basis

Ø Make staff aware of their responsibility in the corporate Risk Management process to report incidents, assess exposures, reduce, control and monitor risk in corporate programs and operations

Ø Promote and facilitate appropriate risk avoidance techniques with an aim to protect human life, mitigate liability and protect corporate assets against loss and damage

Ø Make staff aware of and ensure they are familiar with the risk related tools, programs and practices available to them within the corporate infrastructure

Ø Promote risk management training within appropriate areas of responsibility

Ø Reinforce the importance that staff must communicate with risk management representatives to ensure City operations, in their planning stages, are addressed from a risk management perspective

Ø Review and determination of an Internal Local Deductible Policy

Ø Establish a Risk Management Committee, facilitated by the Risk Management Centre of Expertise, to assist with the review of corporate programs and operations from a risk perspective, review risk management related corporate guidelines, policy and procedures and provide recommendations to further reduce and control risk