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HomeMy WebLinkAbout02/01/1994, C-6 - RISK MANAGEMENT ANNUAL REPORT FOR 1992-93 IIIIN^lyllll�lllll^�„ II MEETING DATE: c�vJ or san pais oB�spo 2/01/94 COUNCIL AGENDA REPORT ITEM NUMBER:n�L I` FROM: Ann Slate, Personnel Director PREPARED BY: Wendy George, Personnel Analyst vu 7� SUBJECT: Risk Management Annual Report for 1992-93 CAO RECOMMENDATION: By motion, receive and file the Risk Management Annual Report for 1992-93. DISCUSSION: The City of San Luis Obispo has invested much time and effort over the past few years in developing a Risk Management Program. With the adoption of the Risk Management Manual by Council in 1992, the program policies and procedures were formalized. The City spent almost $1.1 million dollars during the 1992-93 fiscal year either to purchase commercial insurance or as part of our self-insured program through the Central Coast Cities Self-Insurance Fund. This is an increase of almost $50,000 over the previous fiscal year and constitutes a significant expenditure out of the General Fund. (This increase is nothing compared to what will be reflected in next year's report after we were forced to augment the 1993-94 budget by over $675,000 for our combined liability and workers' compensation deposit to the CCCSIF.) As a result, it is important that close attention be paid to methods of reducing risk and controlling costs. In order that the City may evaluate the success of its program, last year we prepared our fust Risk Management Annual Report covering the 1991-92 fiscal year. The attached report reflects an evaluation of the most recently completed fiscal year, and will be used to help us determine developing trends, both positive and negative. This report is divided into sections covering the elements of risk management, the cost of risk, the workers' compensation program, City wellness programs, the liability program and our commercial insurance program. Graphic representations show claims history by department for both workers' compensation claims and liability claims, as well as data on City wellness programs. Nationally, the average claim cost per employee in 1991 was$535 with the highest average costs found in the transportation service industry at$1559 per employee. The City's average cost per employee in 1992 was $1261, which puts us well above the national average from the prior year. The five year data for workers' compensation understandably shows that higher risk departments, such as Fire, Police and Public Works, have the greatest share of the total expense. In the past, we have seen a downward trend in claims expense from the Fire Department, thanks to their aggressive departmental wellness program. However, two major claims, one a heart attack and the other requiring back surgery, drove the department costs way up this fiscal year. Those two claims alone willcost the City a total of almost $200,000 before they are closed. C-(o- ��++►��►�ullVlllllllllll► ����`� MY Of san LaIS OBISPO COUNCIL AGENDA REPORT Risk Management Annual Report for 1992-93 Page 2 The most frequent type of claim was musculoskeletal injuries to the neck, shoulder, back lower ! back, arms, legs and knees, constituting 43% of injuries City-wide. i Liability claims costs have averaged about $384,000 per year over the past five years. Again, this number shows an increase from the previous five year annual average of $350,000. The total number of claims filed has also been steadily rising. The largest number of claims were filed against the Public Works Department, the majority for "slip and falls" due to allegedly faulty sidewalks or street design. The Police Department had the next highest number of claims, most commonly for alleged police harassment and false arrest. Unfortunately, even though the City is commonly found not to be at fault, the legal process of defending claims is still expensive. Looking at the trends from last year's annual report to this year's report, it is apparent that the costs of risk are increasing, in both workers' compensation and liability, even with a formal Risk Management program in place. This reality is consistent with the experiences of businesses nationwide. The City has taken aggressive stances to reduce these costs, especially with our wellness programs and our safety program. However, recent budget cutbacks resulted in the elimination of the Work Health Coordinator position which has significantly impacted both the City-wide and Fire Department wellness programs, as well as the safety program, by shifting the position's responsibilities to others. Although our Risk Management program continues to function adequately, there is an unavoidable reduction in quality of service by doing more with less. I At the same time, we have continued to look for avenues to shift risk responsibility from the City whenever possible, for example, by selling "tenant user" liability insurance for users of City buildings and facilities. This program allows the users of City facilities to assume the insurance and any losses that may occur because of their usage. Although this program is prudent from a risk management standpoint, it represents a significant workload increase in the Personnel Department which experienced additional staff reductions at the clerical/public counter position. The Personnel Department is working with the City Clerk's office to develop a streamlined notification of expired insurance process. This will ensure that all outside contractors continue to meet City insurance standards after the projects are underway and avoid any expiration of required insurance coverage. C-' -� ��I++»��►►Iu►I1I11111i► q�lU City Of san WIS OBISPO COUNCIL AGENDA REPORT Risk Management Annual Report for 1992-93 Page 3 It is inevitable that even with an aggressive risk management program the City will experience an increase in the number of claims as our society becomes more litigious. The City will need to continue to devote adequate resources to an already strong Risk Management Program so that those losses that are associated with the kinds of exposures California cities face can be minimized. FISCAL IMPACT: None. Attachment: I Risk Management Annual Report for 1992-93. (Council and CAO only. Copy available in City Clerk's Office for review.) I