To renew the County s General Insurance Program for 2018 and consider some optional coverage for increased protection.

Transcription

1 HALDIMAND COUNTY Report CS-SS General Insurance Renewal For Consideration by Council in Committee on October 24, 2017 OBJECTIVE: To renew the County s General Insurance Program for 2018 and consider some optional coverage for increased protection. RECOMMENDATIONS: 1. THAT Report CS-SS Re: General Insurance Renewal be received; 2. AND THAT the 2018 insurance policies and premiums proposed by Jardine Lloyd Thompson Canada Inc. and Pearson Dunn Insurance Inc. be approved as follows: a. General Insurance Program, including liability, automobile, crime and property policies, at a cost of $378,146, plus applicable taxes, taking into consideration any necessary adjustments for additions/deletions of assets included in the Automobile and Property Policies occurring before January 1, 2018; b. The Community Hall Boards Liability Insurance Policy, at a cost of $12,000, plus applicable taxes; c. The Recreation Affiliates Policy, at a cost of $2,400 plus applicable taxes, subject to the agreement of the current recreation affiliate organizations, Dunnville Soccer Park Corporation and Haldimand Youth Soccer, with the two organizations contributions to this policy premium capped at the 2017 amount of $550 each; 3. AND THAT the Cyber Insurance Policy proposed by Jardine Lloyd Thompson Canada Inc. and Pearson Dunn Insurance Inc. as outlined in Attachments 2 and 4 to Report CS-SS , with a coverage limit of $2,000,000 and a $25,000 deductible, at a premium cost of $16,750 plus applicable taxes, be approved; 4. AND THAT the Municipal Volunteers Accident Benefit Policy proposed by Jardine Lloyd Thompson Canada Inc. and Pearson Dunn Insurance Inc. as outlined in Attachments 5 and 6 to Report CS- SS , at a premium cost of $750 plus applicable taxes, be approved; 5. AND THAT the 2018 Closed Landfill Policy be renewed with Jardine Lloyd Thompson Canada Inc. and Pearson Dunn Insurance Inc., at a premium cost of $13,903 plus applicable taxes, to be approved by and cost shared with Norfolk County as joint owners. Prepared by: Dana McLean-Daniels, Risk Management & Insurance Coordinator Reviewed by: Cathy Case, Manager of Support Services Respectfully submitted: Karen General, CPA, CGA, General Manager of Corporate Services Approved: Donald G. Boyle, Chief Administrative Officer Report CS-SS General Insurance Renewal Page 1 of 8

2 EXECUTIVE SUMMARY: Staff recommend renewal of the 2018 General Insurance Program with Pearson Dunn Insurance Inc. & Jardine Lloyd Thompson Canada Inc. Staff further recommend renewal of the 2018 Joint Landfills Policy, subject to approval of the policy and cost sharing with Norfolk County. In addition, there are some optional insurance coverages Cyber Related Incidents/Crime/Damage/Business Interruption and Municipal Volunteers Accident Benefits - that have been recommended by the broker which staff support given the potential risk and low cost of the premiums. BACKGROUND: Haldimand County s General Insurance Program consists of its self insurance program and its external insurance program. The general insurance program operates on an annual basis which is renewable on January 1 st. Funds are allocated annually to the self insurance program to cover the costs of investigation, defense and settlement of all claims falling below the deductible levels, as well as paying the respective deductibles on all claims exceeding these levels. The external insurance program provides coverage for County claims which exceed the current deductible levels. The external insurance program is the subject of this report. In 2016, Haldimand County issued a Request for Proposal (RFP) for the General Insurance Program. After consideration of Report CS-SS , Council awarded the General Insurance Contract to Pearson Dunn Insurance Inc. & Jardine Lloyd Thompson Canada Inc. (PDI/JLT), effective January 1, 2017 and continuing for a five year term, with the option for five additional one year renewals, pending annual approval of the updated premium. Staff met with representatives of PDI/JLT in September 2017 to review the proposed 2018 insurance renewal. The County s favourable claims experience in the first year of the new contract, being zero claims reported, as well as the three year commitment to stable municipal liability rates agreed to as part of the RFP, were the focus of the discussions. At this meeting, PDI/JLT presented further optional insurance programs for consideration. The Community Hall Boards Liability Policy and the Recreation Affiliates Policy also form part of the County s General Insurance Program and, within this report, are details pertaining to the renewal of those policies. This report also contains a separate quote for insurance of the closed Tom Howe and Canborough Landfill Sites, which are jointly owned by Haldimand County and Norfolk County. Insurance coverage for these sites is reflected on a stand alone policy to coincide with the joint ownership and to prevent any claims from adversely affecting only the Haldimand County insurance program. This report excludes information regarding the Special Events Insurance Program and the Facility Users Insurance Program, previously approved by Council. These programs have been fully implemented by staff and are progressing well. Any changes to these community-based insurance programs will be brought forward to Council in a separate report or through the 2018 Tax-Supported Operating Budget, if required. Report CS-SS General Insurance Renewal Page 2 of 8

3 ANALYSIS: Current Program: General Insurance Program Attachment 1 breaks down the cost of the County s General Insurance Program and compares the 2017 premiums to the proposed 2018 renewal premiums, with the Joint Landfill Sites Policy shown separately. The premiums for the 2018 General Insurance Program - including liability, automobile, crime, property, community hall boards liability and recreation affiliates policies - totals $392,546, plus applicable provincial sales tax. In comparison, the 2017 premiums totaled $399,877 exclusive of provincial sales tax. This represents a net decrease of approximately 1.8% or approximately $7,500. Outlined below are reasons for the changes in the various policy premiums, if any. i) Liability Insurance As shown in Attachment 1, the proposed 2018 Municipal Liability & Excess Liability premiums remain the same. PDI/JLT has advised that this is due to the County not submitting any claims to the insurers in 2017, resulting in an excellent loss history for the first year of the new contract and, therefore, meeting the requirements of the 3 Year liability premium rate freeze agreement. The chart below provides an overview of the annual changes in the County s municipal liability premiums, in the past five years, exclusive of taxes. Note that the deductible under the Liability policy has been maintained at $250,000 during this entire five year period. YEAR TOTAL PREMIUM (excl. taxes) INCREASE/(DECREASE) FROM PREVIOUS YEAR 2014 $210,008 (10%) 2015 $230, % 2016 $230,115 0% 2017 $76,000 (67%) 2018 $76,000 0% ii) Property Insurance The premium for the property line of coverage reflects a minimal increase of about $150 in comparison to 2017; however, the rate applied by the underwriter remained the same. The increase in the premium for this coverage is a result of County-initiated adjustments to the Statement of Values and the changes in the asset inventory in 2017 (i.e. renovations to the Dunnville Library resulting in a higher insured value.) iii) Automobile Insurance The underwriter s rate applied to the Automobile line of coverage also remained the same as the prior year. There is a premium reduction of approximately $7,500 for 2018 due to a net decrease in the insured value of assets in the County s Fleet in comparison to last year. iv) Recreation Affiliates Insurance The Recreation Affiliates component of the General Insurance Program provides liability coverage for incorporated groups who cannot be identified as volunteers under the County s general liability policy, due to their incorporated status, and who operate County-owned sports fields under an agreement or lease. There is no proposed increase to the 2018 premium. Currently, the Dunnville Soccer Park Report CS-SS General Insurance Renewal Page 3 of 8

4 Corporation and Haldimand Youth Soccer Corporation are insured under the Recreation Affiliates Policy. For several years, the County has facilitated this insurance coverage, on the groups behalf, in an effort to get the lowest possible premium. Since 2012, Council has capped these two organizations contributions to the annual premium at $550 each, with the remainder of the premium paid by the County. Staff is not recommending any changes to the cost sharing since the renewal premium of approximately $2,400 plus tax has not changed from v) Community Hall Boards The Community Hall Boards Liability premium also remains at the same premium level as in 2017, that being $12,000 plus applicable taxes. Optional Coverage: PDI/JLT presented several optional insurance policies for consideration, including: Councillors Accident Out of Province Emergency Medical Public Entity Recovery Assistance Plan (Critical Illness) Municipal Volunteers Accident Optional Increased Auto Accident Benefits Cyber Liability and Security County staff discussed the above with PDI/JLT and determined that many of these policies are redundant based on coverage currently provided under other programs (i.e. employee benefits). There were two optional policies, however, that staff are recommending be added to the General Insurance program, as described below. #1. Cyber Insurance With the incidents of cyber crime and data breaches in Canada and globally on the rise, staff have reviewed the needs of the County with respect to the coverage provided in a Cyber Insurance Policy, given the sensitive personal data the County is responsible for. Staff currently have protocols and procedures in place to mitigate cyber incident risks, but a cyber insurance policy would provide added financial protection to the County should a breach of some sort occur. Cyber insurance policies have many variables, due to the nature of cyber incidents & data breaches which have so many facets, including: initial discovery of a breach; investigation of that breach; notification to all affected parties; possible compensation to third parties; recovery of lost data; forensics for protection against any future incidents; possible regulatory fines; and ultimately returning to business as usual. As a result, a Cyber Insurance Policy is complex in the types of coverages and applicable sub limits. The policy quoted for Haldimand County provides both first party and third party protection, after the first eight hours from the time of a breach. Coverages include: First Party Protection: Cyber incident response costs, including IT security & forensics, legal & regulatory costs, crisis communication costs, system damage & restoration costs Cyber crime, including funds transfer fraud, extortion, phishing Reputation harm Report CS-SS General Insurance Renewal Page 4 of 8

5 Third Party Protection: Privacy breach notification & management costs Damages Regulatory fines & penalties Defence costs Cyber & privacy liability Attachment 2 provides an overview of the various coverages and applicable sub limits for the Cyber Insurance Policy that has been presented for consideration. Included for Council s review as Attachment 3 is an example of some scenarios provided by PDI/JLT where cyber insurance coverage would respond. Attachment 4 provides an overview of the specific coverages under the proposed cyber insurance policy. Given that cyber insurance is a specialty coverage, for the reasons noted above, staff were required to complete an application, with full disclosure of the potential exposures, in order for PDI/JLT to provide a firm quotation. The Manager of Information Systems actively participated in this review. Premiums were requested with varying limits of liability coverage, as well as varying deductibles. The chart below depicts the limits of liability, deductibles and premiums for the various policies. Option Limit of Liability Per Claim including all costs & expenses Annual Premium per claim plus applicable taxes $50,000 Deductible $25,000 Deductible $75,000 Deductible 1. $2,000,000 $16,750 $14,850 $14, $5,000,000 $25,025 $22,523 $21, $10,000,000 $35,025 $31,550 $29,772 Cyber insurance and the incidents triggering claims under such insurance is still fairly new and, as a result, determining the amount of insurance which would suffice to cover a loss is challenging as the ability to benchmark is limited given the loss data available. The County s insurance representatives have indicated that their industry suggests a starting point of allocating $150 - $300 per personal record held for notification costs of a breach. This figure would not include the costs incurred for: investigation and forensic costs related to the breach; audit costs; public relations and communications; and future compliance. Representatives from PDI/JLT have recommended that the County have a policy with a minimum limit of no less than $2 million subject to an annual review as loss trends develop in the industry. Pursuant to the quotes outlined above, staff recommend a Cyber Insurance Policy be implemented as part of the County s 2018 General Insurance Program, with a limit of $2 million and a deductible of $25,000 at a premium of $16,750 plus applicable taxes. In comparing the higher deductibles, staff feel that the minimal savings that can be realized from a higher deductible is not material and would be easily offset by one claim under this policy. Staff will review the justification for this type of policy on an annual basis, including the appropriate limits and deductibles, and taking into account the risk, state of the market and industry trends. #2. Municipal Volunteers Accident Benefit Policy As part of the insurance renewal proposal, PDI/JLT have provided a quote for an optional Municipal Volunteers Accident Benefit Policy to complement the County s current General Insurance Program. Attachment 5 outlines the benefits available under this policy. The proposed policy provides for a Report CS-SS General Insurance Renewal Page 5 of 8

6 Principal Sum of $50,000 for accidental death or dismemberment and a table of losses with corresponding benefits to a maximum indemnity of $1,000,000 depending on the nature of the injury. Attachment 6 is a brochure provided by the insurance carrier which identifies further benefits that may be applicable dependant on the injury sustained to the volunteer. The premium associated with this policy has been quoted at $750 per year. Given the low premium, staff recommend implementation of the Municipal Volunteers Accident Benefit Policy given the many volunteers that support the County s activities. It should be noted that PDI/JLT expect that the County will show due diligence in management of the volunteers in order to provide this coverage. Recommended management approaches, which the County is already doing, include: formal sign-up, awareness of volunteer activities, health and safety training, etc. Such an approach is also recommended in order to protect the County from claims related to volunteer activities under other existing policies (General Liability, Community Halls, Property, Automobile, Recreation Affiliates, etc.) Value Added Services As part of the insurance program offered by PDI/JLT, value added services are also included, at no additional charge, to assist the County with its risk management practices. These services include magazines & periodicals on current risk and insurance matters, as well as customized seminars, webinars and other training opportunities for County staff with regard to best risk management practices (for example, current topics include flood mitigation and the impacts of climate change, claims mitigation, the legalization of marijuana and the associated risks to the County, defensive driving.) Staff are working with PDI/JLT representatives to implement a plan for 2018 of the training opportunities to be provided to staff throughout the upcoming year. In order to take advantage of these value added services in 2017, staff have reviewed the defensive driving training information to confirm it will complement what is currently provided to staff who operate County vehicles with the intent of commencing this training prior to the end of this year and continuing to offer it into Property Valuation Services are also available through PDI/JLT to ensure the accuracy of insured values which are used in determining the County s property policy premiums and replacement values. The formal valuation of 10 County properties per year is available at no additional cost to the County. Ten of the County s properties are scheduled to be valued before the end of this policy year, with a further ten selected for valuation in Joint Landfills Coverage PDI/JLT has provided a separate quote for the standalone Joint Landfills Policy. As shown in Attachment 1, the premium proposed for all lines of coverage remain the same as they were in Staff recommend renewal of the Closed Landfills Policy for the 2018 policy year, in the amount of $13,903 plus provincial sales taxes. This policy must also be approved by Norfolk County as a coowner, with the annual premium also cost shared with Norfolk. Report CS-SS General Insurance Renewal Page 6 of 8

7 FINANCIAL/LEGAL IMPLICATIONS: The chart below shows the current insurance program, including a comparison of the 2017 premium to the proposed 2018 premium, inclusive of Provincial Sales Tax where applicable. It excludes the recommended optional insurance policies for 2018 which, if approved by Council, would add approximately $19,000 to the annual premium. POLICY Municipal General Liability (includes Public Officials Liability, Environmental Impairment Liability, Employee Benefits Liability, Legal Expense Insurance, Non- Owned Automobile) Excess Liability ($45 Million Excess of $5 Million Primary) 2017 PREMIUM (including tax) 2018 PROPOSED PREMIUM (including tax) $82,080 $82,080 $17,496 $17,496 Crime $2,160 $2,160 Owned Automobile $110,639 $103,158 Property (includes Boiler & Machinery) $195,089 $195,251 Community Hall Boards Liability $12,960 $12,960 Recreation Affiliates $2,592 $2,592 Landfill Policy (gross amount; to be cost shared with Norfolk County) $15,015 $15,015 TOTAL $438,031 $430,712 As shown above, the cost for status quo coverage is decreasing by approximately $7,300 or 1.7%. As noted, in addition to the above status quo coverage, staff have recommended optional insurance for Cyber and Municipal Volunteers Accident Benefits at an annual premium cost of $16,750 and $750 plus taxes, respectively. If Council approves both recommended optional coverages, the gross 2018 insurance premium, including taxes, would be $449,612. This represents an increase of $11,581 or 2.6% over the 2017 gross premium but provides greater coverage of potential risks/liability, at a relatively low dollar impact. Again, the amounts quoted for the insurance policy renewals in this report exclude the Special Events Insurance Program and the Facility Users Insurance Program which are expected to be maintained at the base budget level for Report CS-SS General Insurance Renewal Page 7 of 8

8 STAKEHOLDER IMPACTS: All departments and various County Boards are insured under and impacted by elements of the General Insurance Program. The Manager of Information Systems was consulted and supports the optional Cyber Insurance program. Human Resources and Community Development & Partnerships staff have already recognized a need to improve the management processes related to volunteers who supplement the municipal services; this optional Volunteers Accident Policy will support those efforts. REPORT IMPACTS: Agreement: No By-law: No Budget Amendment: Yes Policy: No ATTACHMENTS: 1. Premium Breakdown Comparison 2. Cyber Coverage Overview 3. Cyber Claims Scenarios 4. Coverage Description Overview 5. Volunteer Accident Benefits 6. Brochure Report CS-SS General Insurance Renewal Page 8 of 8