HomeMy WebLinkAbout05/01/2001, C2 - RISK MANAGEMENT REPORT FOR 1999-00 finM.
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j acEnaa Report C2
C I T Y OF SAN LUIS OBISPO
FROM: Ann Slate,Director of Human ResourceslJ
Prepared By: Karen Jenny,Risk Manager
SUBJECT: RISK MANAGEMENT REPORT FOR 1999-00
CAO RECOMMENDATION
Receive and file the Risk Management Report for 1999-00.
DISCUSSION
The City of San Luis Obispo has invested much time and effort over the past several years in
developing and maintaining a strong risk management program. The 1999-00 Risk Management
Report reflects an evaluation of the most recently completed fiscal year. It will be used to help
determine developing trends,both positive and negative.
The 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 the
commercial insurance program. Graphic representations show claims history by department for
both workers' compensation claims and liability claims. Information is also provided on City
wellness programs.
The most recent statewide data available from the California Institute for Public Risk Analysis
(CIPRA) is from June 30, 1999. The average cost per claim for cities at that time was $7,330;
The City of San Luis Obispo's average cost per claim in 1999-00 was $7,372, slightly above the
statewide average. The five-year claims history understandably shows that the higher risk
departments, such as Police and Fire, have the greatest share of the total expense. While the
number of Police Department claims remained the same, the cost for those claims dramatically
decreased in 1999-00. Fire Department claims increased in 1999-00. The most frequent injury
type for all claims was musculoskeletal injuries to the neck, shoulder, lower back, arms, legs,
ankles and knees, accounting for more than 50%of injuries Citywide.
Liability claim costs have averaged over$200,000 per year over the last five years. Costs for the
last two years are significantly lower than average, although they have increased over the
previous year. The largest number of claims were filed against the Public Works Department,
with the majority of those being for slips and falls as a result of allegedly faulty sidewalks or
street design. The Utilities Department had the next highest number of claims, most commonly
for broken water mains. Unfortunately, even though the City is regularly found not to be at fault,
the legal process of defending claims is still expensive.
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Council Agenda Report—`Risk Management Report for 1999-00
Page 2
Looking at the trends over the last five years,workers' compensation costs and number of claims
were trending upward, but costs and the number of claims were reduced in 1999-00. It is hard to
know exactly what causes a"good"workers' compensation year,but it is our hope that, thanks to
our active Safety and Wellness Programs, this trend will continue. The number of liability
claims and the cost of those claims have decreased over the last five years. Again, we are
hopeful that this trend will continue
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 continues to be 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.
ATTACHMENTS
Risk Management Report for 1999-00
(Council and CAO only. Copy available in City Clerk's Office for review.)
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Attachment 1
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city of san lues osispo
4 aepautment of human aesouuces
Disk Management Report
Fiscal Year.19992000
t
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Table of Contents
Introduction........................................................:........................:...:...:........l
Elements of Risk Management....................................................................1
Risk Exposure
Risk Evaluation
Risk Control
Risk Funding
Risk Management Administration
Costof Risk .................................................................................................3
Workers' Compensation Program................................................................4
Program Structure
Loss Analysis
Activities and Goals
WellnessPrograms........................:...:;:.,..:;.............;..................................10
LiabilityProgram.......................................................................................13
Program Structure
Loss Analysis
Activities and Goals
Commercial Insurance Program...................:......... .....:.::..:...:.......;...;.......15
ACKNOWLEDGMENTS
We would like to acknowledge the help of the following in the preparation of
this report:
Gregory B. Bragg and Associates—statistical information on workers'
compensation claims.
Carl Warren and Company—.statistical information on liability claims.
Prepared by:
Karen Jenny,Risk Manager
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Attachment 1
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CITY OF SAN LUIS OBISPO
1999=00 RISK MANAGEMENT REPORT
INTRODUCTION
The purpose of this report is to summarize the activities and programs of the City's risk
management effort. The intent of the report is to identify the City's cost for risks, the City's risk
experience, and the City's programs for risk management.
The objective of the City's Risk Management Program is a coordinated and continuous effort to
uncover significant loss exposures, apply reasonable and effective risk control, and ensure that
the financial integrity of the City is not impaired after a loss.
During the late 1970's and early 1980's, governmental entities and their public officials were
embroiled in severe financial and insurance difficulties because of the erosion of official
immunity doctrine and the rising tide of litigation in our society. As a result of these trends,
insurance premiums and deductibles rose drastically in the mid-1980's while coverage was
significantly reduced or not available. The City's response to these trends was to enter into self-
insurance for liability and workers' compensation programs through the Central Coast Cities Self
Insurance Fund. The shift in the City's insurance programs to a reliance on self-insurance has
made understanding and controlling City risk exposures a primary concern.
ELEMENTS OF RISK MANAGEMENT
The purpose of risk management within the City is twofold: first, it seeks to protect the resources
of the City from loss or destruction; and second, it seeks to continue the financial viability of the
City by ensuring that expected and unexpected losses are properly financed. This is done
through the following basic elements of risk management:
Exposure Identification is the continuous process of identifying the resources for
which the City is responsible and the accidental loss exposures that could affect them. In
San Luis Obispo, this is accomplished through a program of periodic facility/site surveys,
contract and policy review, a Safety Committee, and active participation in the Central
Coast Cities Self Insurance Fund Risk Management Committee.
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City of Sara Luis Obispo Page 4 of 19
1999-2000 Risk Management Report
Risk Evaluation is the measurement of risk by analyzing past loss frequency and
severity and estimating future frequency and severity. This is accomplished through
analyzing loss reports produced by the City's workers' compensation and liability claims
administrators. This report will provide a summary of these loss reports.
Risk Control is the reduction or elimination of risk or loss through procedures and
practices in security, personal safety, fire prevention, vehicle safety, and emergency
planning. This function is actively pursued by the City's Safety Committee and the Risk
Manager. Since the City self-insures many of the risks, risk control is even more critical
in preventing or reducing losses, thus saving direct costs for the City. Risk control
activities are identified in various sections of this report.
Risk Funding is the provision of sufficient funds to meet loss situations if they occur
by the most effective use of internal and external financial resources, including insurance.
The City participates in a Joint Powers Authority (JPA) called the Central Coast Cities'
Self Insurance Fund (CCCSIF), which is a banking group set up to purchase insurance.
The following section identifies the cost of risks to the City, while Table III provides a
schedule of insurance coverage for the various City insurance programs.
Risk Management Administration is the development of administrative techniques
to carry out the risk management process most effectively, using skills both within and
outside the City. This includes overseeing the administration of claims handled by third
party administrators for the City's workers' compensation and liability programs,
providing direction to the City's Safety Program, and assisting all City departments as
appropriate.
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City of San Luis Obispo Page 5 of 19
1999-2000 Risk Management Report
COST OF RISK
The cost of risk for the City is the sum of costs for all self-insurance and commercial insurance
programs. The self-insurance programs are detailed further to account easily for excess
insurance costs, administrative costs, services, and incurred claim costs. These costs are shown
below in Figure 1.
Risk Cost for 1999-2000
Insurance or 1998-99 1999-00
Self-Insured Coverage Cost Cost
Workers' Com enation Total Expense 758,229 1,025,793
Liabi!Lty Total Expense 570.285 612,745
Property—Multi-Peril, Fire, 30,816 28,836
(Includinp,Boiler and Machine
Mobile Eguipment 19.722 20,386
Volunteer Insurance 1,612 1 612
Faithful Performance Bond 8,372 0
(Three-year 130HU Raid ffM third ear
Total: 1,389,036 1,689,372
Figure 1
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City of San Luis Obispo Page 6 of 19
1999-2000 Risk Management Report
WORKERS' COMPENSATION PROGRAM
Program Structure
The City of San Luis Obispo has been self-insured for workers' compensation coverage since
July 1, 1978. In 1984, we obtained an excess workers'compensation policy that currently covers
any claim in excess of$300,000 up to a maximum limit of$5,000,000. Workers' compensation
claims for the City are adjusted by a third party administrator. The Risk Manager oversees the
claims administrator and reviews and coordinates open claims with the adjuster. The firm of
Gregory B. Bragg & Associates has been the City's claims administrator since January of 1994.
Settlement authority for claims is; $5,000 or less- Bragg & Associates, after consultation with
the Risk Manager, $5,000 to $20,000 - City Administrative Officer or his/her designee; above
$20,000 - City Council.
Loss Analysis
The City receives monthly and annual loss reports from the City's claims administrator,
identifying the nature and cause of each claim, as well as how much has been paid and/or
reserved for each. claim. This information is helpful in determining cost of risks by frequency
and severity, as well as the type of risk control to focus on Citywide or within a particular
department.
Reserves are defined as unpaid claim liabilities. A reserve amount is established for each claim
representing potential costs yet to be paid based on the information known about the claim and
historical costs for similar claims. Reserves are modified over time, as new facts about the claim
are known.
The City of San Luis Obispo's claims represent 29% of the total claims reported by the Central
Coast Cities' Self-Insurance Fund (CCCSIF) during 1999-00. At the same time, San Luis
Obispo's losses represent 31% of the CCCSIF's total losses. The most recent statewide data
available from the California Institute for Public Risk Analysis (CIPRA) is from June 30, 1999.
The average cost per claim for cities at that time was $7,330; The City of San Luis Obispo's
average cost per claim in 1999-00 was $7,372, slightly above the statewide average.
Eighty-six (86)workers' compensation claims were filed during 1999-00, an increase from 80 in the
prior year. Total incurred cost (actual paid-to-date plus estimated reserves) went from $1,030,465 in
the 1998-99 fiscal year to $634,006 in 1999-00, for a decrease of$396,459. It should be noted,
however, that workers' compensation claims tend to "mature" over a period of 2-3 years, so we can
expect the total incurred costs for 1999-00 to increase. It is hard to know exactly what causes a"good"
workers' compensation year, but it is our hope that, thanks to our active Safety and Wellness
Programs,the number can be reduced in the coming year,while also maintaining the reduction in the
overall cost of claims.
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City of San Lues Obispo Page 7 of 19
1999-2000 tusk Management Report
Below is a list of incurred claim costs by year and department for five years:
Fiscal Fire °x6 of Police' °h of _"Public of" -Utilities -%of- - Other %of Total
Year Total .. _ .. _Total_. Worm__ Total Tofal:' Total
1995-96 $ 236,076 27.6% $ 36,973 4.3% $ 20,833 2.4% $ 11,698 1.4% $548,960 64.2% $ 854,540
No.Claims 20 24.1% 28 33.7% 9 •10.8% 9 10.8% 17 20.5% 83
1996-97 57,916 6.8% 706,960 83.1% 12,592 1.5% 1,641 0.2% 71,829 8.4% $ 850,938
No.Claims 14 19.4% 24 33.3% 16 22.2% 6 8.3% 12 16.7% 72
1997-98 569,635 53.6% 374,611 35.2% 6,708 0.6% 1,015 0.1% 111,671 10.5% $ 1,063,640
No.Claims 40 41.2% 29 29.9% 14 14.4% 2 2.1% 12 12.4% 97
1998-99 137,472 13.3% 711,155 69.0% 54,717 5.3% 8,110 0.8% 119,011 '11.5% $ 1,030,465
No.Claims 15 18.8% 36 45.0% 13 16.3% 6 7.5% 10 12.5% 80
1999-00 370,040 58.4% 209,453 33.0% 48,532 7.7% 4,250 0.7% 1,731 0.3% $ 634,006
No.Claims 22 25.6°x6 36 41.9% 15 17.4°x6 7 8.1% 6 7.0% 86
Total $1,371,139 30.9%1 $2,039,152 46.0% $143,382 3.2°x6 $26,714 0.6%1 $a53,202 19.2% $ 4,433,589
No.Claims 111 26.6% 153 36.6% 67 16.0% 30 7.2% 57 13.6% 418
Figure 2
Evaluating all claims, the Police Department accounted for 33% of the City's total incurred claim
cost and nearly 42% of the number of claims filed for fiscal year 1999-00. The Fire Department
had nearly 26% of the total number of claims, but the cost of claims amounted to 58% of the
total cost for 1999-00. The largest reduction in the "Other" category came from the Parks and
Recreation Department,which reduced both the number of claims and the cost for those claims.
The most frequent injury type for all claims was musculoskeletal injuries to the neck, shoulder,
and back, hands, arms, legs, ankles and knees, accounting for more than 50% of total injuries
Citywide. Of these injuries, back injuries were the most common, making up 17% of the total
claims filed. Shoulder injuries comprised 14% of total claims filed, knee injuries another 9%,
cuts, abrasions and punctures 8%, with the remainder falling into a variety of miscellaneous
categories..
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Attachment 1
City of San Luis Obispo Page 8 of 19
1999-2000 Risk Management Report
Five Years of Workers Compensation Claims
153
140
120
100
V _.. _.
`0 80 57
- _ _p
CD 60 E JUZ 40
20PublicUtilities
Fire Police Works
Figure 3
Figure 3 is a graphic illustration of the total number of claims filed over five years by
department. Note that the total number of claims reported does not have a direct correlation to
the total cost of claims as shown in Figure 4 below..
Five Years of Workers Compensation Claims
$2,039. 2
2.00 —�
1.80
4ti 174 1.Q
E 1.60
m
U 1.40
�+ 1.20 =
1.00
5 20.80
o .. 0.60
V 0.40 `I
0.20
Public
Fire Police Works Utilities Other
Figure 4
Figure 4 is a graphic illustration of five years total of workers' compensation claims costs by
department.
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City of San Luis Obispo Page 9 of 19
9999-2000 Sisk Management Report
History of Claims Costs by Department
m 800
,c
C700 ----------- ------------ --- ----- ----------
co
600 --------- ----- ------ ------ - 0 Fire
G 500 - - -- -' ---- - - —Ci—Police
v400 ------ --- - -- ---- - 6—Public Works
£ --X—Utilities
a 300 -- --
—O—Other
200 -___ - ----------- ----
100
c
1995-96 1996-97 1997-98 1998-99 1999-00
Figure 5
Figure 5 is a graphic illustration of each department's changing Worker's Compensation claim
costs by year from 1995-96 to 1999-00.
100°io
90%
80%
o
V 70/o O Police
mm % f
. 60� I I 0 Public Works
a 50% � � 0UUIIties
40%-
13 Other
c.
30%-
20%-
10%-
0%-
1995-96
0%20%10%0% 1995-96 1996-97 1997-98 1998-99 1999-00
Figure 6
Figure 6 shows each department's Workers'Compensation claim costs as compared to the total claim costs
in the years from 1995-96 to 1999-00. Costs are illustrated as a percentage of total claim costs.
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City of San Luis Obispo Page 10 of 19
1999-2000 (tisk Management Report
1999-00 WORKERS' COMPENSATION CLAIMS OVER $5.100.0.
nPnartment 1pu ry rause Incurred
Fire Left shoulder strain Attempting to catch a falling trash can 1371948
Fire Lower back strain Lifting a patient 121,970
Fire Left foot,ankle and wrist sprain Fall from roof of structure fire 48,600
Fire Lower back strain Lifting a chair 20,422
Fire Upper back strain Lifting and pulling patient 14,900
Fire Lower back strain Bending over 9,100
Police Strained left hip,back and knee Combative suspect 153,800
Police Strained left knee Barricade gave way 20,800
Police Bruises and abrasions Traffic accident 11,500
Public Works Bruised right bicep Fall in truck bed 14,300
Public Works Lower back strain Getting out of truck 13,360
Public Works Left ankle abrasion Boots too small 71700
Public Works Lower bark,strain Beating floor mat 7,000
Activities and Goals
The City of San Luis Obispo implemented an Injury and Illness Prevention Program in 1991-92.
The program is designed to reduce and keep to a minimum occupational accidents and injury as
required by the passage of SB 198 in October 1989.
The key elements of the Injury and Illness Prevention Program are:
✓ Identification of the person(s)responsible for implementing safety programs;
✓ A system for identifying and evaluating work place hazards including inspections and
accident investigations;
✓ A program to correct unsafe and unhealthy conditions in a timely manner;
✓ Health and safety training instructing employees in safe practices;
✓ A system to communicate with employees regarding safety, including means for
employees to report hazards and unsafe work practices without fear of reprisal(i.e., safety
committee); and
✓ A system ensuring that employees comply with safe and healthy work practices, which
may include disciplinary action..
The Safety Committee continued to be active in promoting safety awareness and training. In the
process, the following activities took place during 1999-00:.
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1999-2000 Risk Management Report
10- QxyLEuel Gas Equipment Training
The CCCSIF sponsored a training program on welding operation and safety. Two sessions
were held in San Luis Obispo and two were held in Santa Maria.
POP- Personal F.rganomics Training
Training classes in personal ergonomics included discussion of how the various parts of the
neck, shoulders and arms work together and how employees can protect themselves from
injury; a self-assessment by employees; and an evaluation of a typical worksite.
Pop, Works atinn F,valnations
The City's Wellness Coordinator received training in evaluating office workstations to
identify ergonomic improvements that would achieve a comfortable, healthy and productive
environment. Individual workstation assessments were conducted as requested and specific
ergonomic improvements have been made.
10- First Render Awareness
The City's Industrial Waste Coordinator instructed Public Works and Utilities Field staff to
increase their awareness of safe and competent hazardous material response actions.
Participants learned to recognize a hazardous materials event; basic identification and hazard
assessment techniques; and how to make the required notifications.
10- Back Safeto Training
The Police Department conducted back safety training customized for the law enforcement
environment.
10- Fire F,xtinguirher Training
The Fire Department conducted fire extinguisher training for City Hall employees and
emergency evacuation training for Parking Division employees.
10o-Sa�incentive Program
The Safety Incentive Program continued for the sixth year with individual awards to
employees who suggested safety improvements in their work areas. Safety suggestions
included safer propane cylinder storage at the water distribution shop; improvement and
delineation of a narrow traffic lane at the Water Reclamation Facility; convex mirrors to
improve visibility around corners at the Water Reclamation Facility; maintenance platforms
and door protection at the Water Reclamation Facility; blue reflectors on pavement at the
Water Reclamation Facility to indicate where fire hydrants are located; and reflector tape to
increase the night-time visibility of parking lot gates at the Police Department.
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City of San Luis Obispo Page 12 of 19
1999-2000 Risk Management Report
WELLNESS PROGRAMS
The City's Overall Wellness Program
The City implemented a voluntary Wellness Program for all regular City employees in
November of 1986. The Wellness Program for the City of San Luis Obispo was inspired by a
desire to develop a preventative program that would increase employee productivity and at the
same time decrease the City's health-related costs. Currently, the program has over 200
members.
By encouraging employees to participate in this program, the City believes that a new attitude of
health and fitness awareness will result. From this knowledge, a healthier and more fit work
force will emerge. Benefits to the City include a safer, healthier, more productive work force;
benefits to the employee include reduced injuries, illness and accidents, and improvement in the
quality of life.
The program consists of the following components:
1. A health risk appraisal, which provides computerized feedback, based on blood tests and
employee supplied health information. This appraisal is interpreted for the employee by a
health professional.
2. A Nutrition Profile for each employee based on answers to a questionnaire.
3. A Fitness Evaluation which includes blood pressure measurement,body fat measurement,
and testing of muscular strength, endurance, flexibility, and aerobic capacity.
4. Fitness goal setting done individually by each employee to provide direction for his/her
own particular fitness activities.
5. Fitness and educational activities selected by the employee which allow him/her to meet
established goals.
6. Re-testing and re-evaluation of goals at the end of each 6-month session. Partial subsidy
of expenses is available to employees who follow pre-determined requirements and
achieve their goals.
7. Educational programs offered on a bi-m6nthly basis.
A survey of employee participants showed Wellness employees to have a higher understanding
of proper nutrition and be more satisfied with the elements of work life,interpersonal life and the
direction of their life. Wellness participants also have fewer and less severe worker's
compensation injuries.
To further aid employees in their effort to stay physically and mentally fit, the City offers an
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City of San Luis Obispo Page 13 of 19
1999-2000 Risk Management Report
Employee Assistance Program administered by Managed Health Network (MHN). MHN
provides a wide-range of counseling services to all employees and eligible family members
including: marital and family problems, alcoholism, drug dependency; financial and credit
concerns, legal issues and questions, tax problems, emotional problems, stress, childcare,
eldercare, interpersonal conflicts and situational life problems.
Fire Department Wellness Program
The Health and Fitness Program for the San Luis Obispo City Fire Department assists the
members of that organization in maintaining a high level of physical fitness.
Since January 1, 1990, a physical fitness program has been in place to meet the training
requirements of each Fire Department safety employee. This program adopted as-guidelines the
policies outlined in Chapter 8 of the 1987 edition of the National Fire Protection Association
Standard 1500. Physical conditioning programs in public safety departments have shown
beneficial physiological changes, improved physical performance, and a reduction in cardio-
respiratory disease risk factors. A properly designed and managed physical conditioning
program is the best solution to the problem of low fitness, high injury rates, and excessive
cardiovascular disabilities among firefighters.
Program Components:
The design of an effective fitness program must include certain essential factors to insure its
success in the Fire Department. These factors include,yet are not limited to:
a) a comprehensive health and fitness evaluation;
b) an hour during the scheduled work day which allows the participant to workout and
attend to his/her fitness needs;
c) provide proper equipment, exercise area and an atmosphere which permits each
individual to strive to reach a high fitness level.
d) cooperative arrangement for ongoing fitness evaluations at Cal Poly University at varying
intervals..
e) fitness evaluation available every six months through the City-wide Wellness Program.
Through the ongoing implementation of its program, the San Luis Obispo Fire Department has
become an organization committed to assisting its personnel in reducing the health risks resulting
from occupational demands. The department strives to develop and maintain a level of fitness in
each employee that contributes to the wellness of that individual and to the department as a
whole. The objectives of the program are:
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City of Sara Luis Obispo Page 14 of 19
1999-2000 Risk Management Report
1. Provide each employee an opportunity to learn more about making positive lifestyle
changes for themselves and their families.
2. Increase employee morale and effectiveness.
3. Reduce early retirement due to disability.
4. Reduce the number of sick days taken due to stress,injury or illness.
5. Maintain the health of all safety personnel above levels of disease and injury risk.
2000 vs. 1999 On-The4ob Injuries/Accidents by Fire Suppression Personnel.
There were four reported incidents of back strain in 1999-00 among fire suppression personnel,
with two resulting in lost time. This number is an increase in reported incidents from the prior
year's two reported back injuries.
Knee injuries also increased in 1999-00 from two.to three, and shoulder injuries increased from
one to two. All other types of injuries ranged from various musculoskeletal injuries to infectious
disease exposure and throat and lung irritation while responding to a fire. The annual total for
work-related injuries increased from 15 injuries in 1998-99 to 22 in 1999-00, a 47% increase.
Despite the extensive physical fitness activities of employees of the Fire Department, injuries do
occur, due to the nature and physical aspects of the job. For example, two of the back injuries
were as a result of lifting patients during medical aid responses. The patients were unable to
assist in their movement and their locations required the employees to be in an awkward position
in order to move the patient.
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1999-200+0 Risk Management Report
LIABILITY PROGRAM
Program Structure
On July 1, 1978, the City joined the Central Coast Cities Self Insurance Fund (CCCSIF) for
liability coverage. The City is self-insured.through the CCCSIF for the first $100,000 for liability
claims, which include bodily injury, personal injury and property damage to the public. Carl
Warren and Company adjusts claims for the CCCSIF member cities. Driver Risk Services provides
administrative services to the CCCSIF. Settlement authority for claims is: $1,000 or less - Carl
Warren and Company; $1,000 to $10,000- City Administrative Officer or his designee; $10,000 to
$100,000 - City Council. For claims in excess of $100,000, the CCCSIF has purchased excess
liability insurance through Zurich American Insurance Company, Travelers Indemnity Company,
Reliance Insurance Company, The Royal Insurance Company, and Lexington Insurance
Company up to a total of$70 million. The City paid a deposit premium to the CCCSIF in 1999-00
of$612,745. This deposit includes the estimated cost of claims, administrative charges and the cost
of purchasing excess liability insurance.
Loss Analysis
The City receives monthly loss reports from Carl Warren and Company. These loss reports
indicate each claim with a brief description, and identify expense reserves, paid loss reserves and
total incurred expense, which is the total of actual expensesplus reserves. The report is organized
by year of claim occurrence. Table I shows the City's claim experience for the past five years.
Table II summarizes individual liability claims over$10,000.
Reserves are defined as unpaid claim liabilities. A reserve amount is established for each claim
representing potential costs yet to be paid based on the information known about the claim and
historical costs for similar claims. Reserves are modified over time, as new facts about the claim
are known.
The total liability claim costs for the City in fiscal year 1999-00 were $99,940. Although this is an
increase of 34% over the previous year, it.is significantly less that two years prior. The Public
Works Department had the highest number of claims (26) and the largest claim cost of$59;566,
representing nearly 60%of the City's total claim costs. Of the 26 claims filed for Public Works, 13
were for alleged sidewalk and street design defects, which was the most common claim type filed
in fiscal year 1999-00. Trip-and-fall claims accounted for $18,000 of the total claims costs, and
vehicle accidents involving Public Works employees accounted for $23,600 of the total. The
Police Department had the next highest number of claims (17) representing a total claim cost of
$14,225. The Utilities Department had 11 claims, six water main claims and five sewer back-up
claims.
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City of San Luis Obispo Page 16 of 19
1999-2000 Risk Management Report
Figure 7 below displays the total cost associated with these claims by department.
Liability Claims by Department
1999-2000
60,000
50,000
40,000
30,000
$20,669
20,000 $14.225
10,000 $810 $1,555 $3,113
Fire Police Public Recreation Utilities Other
Works
Figure 7
Activities and Goals
Departments are becoming more and more conscious of the need for analyzing the certificates of
insurance received from contractors, and with the help of the Risk Manager,they have worked with
many different contractors to achieve compliance with the City's insurance requirements. These
requirements help to insure that the transfer of risk to the contractor responsible for the work will be
supported by sufficient insurance to pay claims in the event of losses due to something the
contractor does which causes damage to City or private property.
The Public Works; Utilities and Finance Departments are mostly involved in monitoring
compliance, and, during 1999-00, the Risk Manager reviewed exceptions to the requirements and
waived or modified the requirements, as necessary, depending on the scope of the contract and
potential risk to the City.
The City also continues to use its Tenant User umbrella policy under which public groups or
individual may purchase insurance for their special events. In order to streamline the purchasing
process, the Recreation Department sells tenant user insurance as part of it parks user permit
process. This means the public can purchase insurance as well as reserve a City park all in one
stop.
The Risk Manager sat in on the pre-event discussions for a number of special events such as the
Holiday Parade, Criterium, Mardi Gras, City to Sea Mini-Marathon, and Street Painting Festival to
assure that there was compliance with City Risk Management policies.
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City of San Luis Obispo Page 17 of 19
1999-2000 Risk Management Report
COMMERCIAL PROPERTY INSURANCE PROGRAM
Insurance is purchased by the City through Driver Risk Services to cover all insurable property.
Generally, insurable property is covered for all risks except earthquake and flood with a total of
nearly $72 million in insured values. The City also purchases boiler and machinery insurance to
cover heavy mechanical equipment such as water well pumps. We also participate in the California
Public Entity Mobile Equipment Program,which insures large pieces of mobile equipment, such as
fire trucks, which have a value in excess of$50,000. The total value of insured equipment under
this program is approximately $3.3 million. In addition, the City purchases honesty and faithful
performance bonds for its employees. There was one claim made for damage to a fire engine
during the 1999-00 fiscal year. See Table III for a schedule of City insurance.
15 C2-19
Attachment 1
City of San Luis Obispo Page 18 of 19
1999-2000 Risk Management Report
TABLE
RveYew H1storgaf UdAllty Clalrrs
Net Reseves Not Paymei-s I _dw loomed
Na
awrrs i Lass 60 Total Lois. _.'_ Taal_ ( _Loss.. EM Total I
07/01195-06130196 _ I
Open 0 0 0 0II 0 0 0I 0 0 0
Closed 72 _ - _0 . _ .0 - 0 101,309 161,651_2630001 1101,309 161,681 253,000
Total 72 _.. . _0 -----0--- 01 101,309_ 16,11,691-,=OCQ 1 101,309 161;691 263,000
07/01/96-06130^97 I
Closed 79 0 0, 0 74,360 176,662. 251,02 74,360 176,662 251,022
Total 79 1 0 _0 Q 1 74,360 776,662, 251,022 1 74,360, 176,652, 251,022
07/01/97-06MGB
Open 0 0 _0 0 0 0 0 0 0
Closed 69 _ 0 0 0 198;427 139,673 338;1 198,427 139,673 338,100
Tata) 69 1 0 0 01 1 198,927 139,673 3381001 1 198,427- 139,673 338,100
07/01/96-06M(99 _ . .- __ _
open 11 19,000 1$,640 32640 0 3360 3 ,_ 19,000 17,000 36,000
Closed 64 6 0 0 16,207r22,183: 38 _ 162137 .71;183 38,390
Total 75 1 0 0 32,6401 1 16=,' '25,543-- 41,7501 1_...35,207 -39,183 -74,390
07/01/99-0613400 -� ---- - - -- - -
Open 33 41,913 28,049 69,952 -3,365r4,951 8,31 i 45;278 33,000 78,278
Closed 31 0 0 0 15,409 6,253 21,662! 15,409 6;253 21,
TOW 64 1 - - - 0 - -0 .69,9621 I 181774 11204 29;9781 1 60,687 39= 99,940
TABLE II
Total Incurred costs for Open Claims Over$10,000
As of June 30, 2000
RES ERVE§' PAYMENTS TOTAL:
DATE_ALLEGEQ CAUSE LOSS EXPENSE LOSS EXPMES_1NCU..
1998-99
1120/99 Violation of Civil Rights 10,000 8,901 0 1,099 20,000
1999-00
8123/99 Retaining Wall Failure 1,500 8,078 0 1,922 11,500
5/30/00 Sewer B2,500
16 C2-20
Attachment 1
City of San Luis Obispo Page 19 of 19
1999-2000 Risk Management Report
TABLE III
Purchased Insurance Policy Summary
Type Company Limit Deductible Premium Expiration
Property
LU9927884 S.R. Intl. Bus. Ins. Co. $75,000,000 $10,000 41,125 7/1/98
Great Lakes
XL Europe Ins. Co.
Lloyds London
NZA0156960 Reliance Ins. Co. of Illinois
CPP3994645 Agricultural Insurance Co.
651-008826 Coregis Ins. Co.
FPL387964-0 Westchester Fire Ins. Co.
Flood and Earthquake
N/A
Boiler and Machinery
BMCR-228D8736-IND-99Travelers Indemnity Co. 5,000,000 10,000 1,446 7/1/00
FBP3917011 Hartford Steam Boiler 1,446
Inspection & Ins. Co.
Municipal Liability
(Incl. E&O)
4797-2065 Ins. Co. of PA 10,000,000 $100,000 173,346 7/1/00
Automobile Liability
4797-2065 Ins. Co. of PA 10,000,000 100,000 Incl.w/liability 7/1/00
Limited Pollution Liability
4797-2065 Ins. Co.of PA 2,000,000 100,000 Incl.w/liability 7/1/00
Mobile Equipment
KG 00002501 Twin City Fire Ins Co. 3,347,000 2,000 20,386 7/1/00
Fidelity Bond
CCP1285648(Police) Fidelity and 300,000 2,500 2,034 7/1/02
CCP1285649(Others) Deposit Co. of MD 300,000 2,500 6,338 7/1/02
Excess
Workers'Compensation
DRE 1531699 United States Fidelity 5,000,000 300,000 10,840 7/1/00
& Guaranty Co.
Volunteer Medical
SPS 900303 Ins. Co. of North America 25,000 0 1,612 7/1/00
17 C2-21