HomeMy WebLinkAboutMinutes - Minutes - Risk Management and Worker's Compensation Trust Board - Meeting Date: 4/29/2015 Minutes
Risk Management Trust Fund
Wednesday, April 29, 2015 - 6:00 PM
City Hall - Council Chambers, Room B5
5850 W. Glendale Avenue
Glendale, AZ 85301
Members Present
Tom Duensing, Trustee
Gary Sherwood, Council Member
John Stern, Chairman
Julie Stiak, Trustee
Ken Wixon, Trustee
Staff Present
Dianne Shoemake, Risk Manager
Lorena Sanchez, Risk& Safety Analyst
Nick DiPiazza, Deputy City Attorney
Jim Brown, Director, Human Resources &Risk Management
1. Call to Order
John Stern called the meeting to order at 6:05 PM.
2. Approval of November 12, 2014 Risk Management Trust Fund Board Meeting Minutes
The minutes were provided to the Trustees. Julie Stiak moved to approve the minutes
as written and it was seconded by Ken Wixon. Motion passed.
3. Executive Session
Tom Duensing moved to enter executive session and it was seconded by Gary
Sherwood. Motion passed. Nick DiPiazza updated the Board on the status of claims in
litigation. No action taken. Tom Duensing moved to exit executive session and return
to open session, which was seconded by Julie Stiak. Motion passed.
4. Execution of Loyalty Oath
Staff advised that Mr. Sherwood was sworn in to serve on the Risk Management and
Workers' Compensation Trust Fund Boards at the January 27, 2015 Council Meeting.
Mr. Sherwood was presented with his Loyalty Oath which was executed.
5. Annual Report of the Risk Management Trust fund for period ending July 1, 2014
Staff presented the Risk Management and Workers' Compensation Annual Report to
Council for period ending July 1, 2014. Trustees were asked for comments to be
submitted to Risk Management by May 1, 2015. If none are received, the report can be
finalized. No motion needed.
6. Discussion of Risk Management Trust Fund 2014/15 Revenue and Expenses
A spreadsheet of the Risk Management Trust Fund 2540 for fiscal year 7/1/201.4
through 7/1/2015 as of 3/23/2015 was provided to the Trustees for discussion. Staff
reported on the following information. Fiscal year total revenue deposited is
$2,152,900. The revenue currently received is broken down by $7,907 for interest
income, $28,806 for stadium security fees, $31,604 for miscellaneous revenue
(subrogation/insurance reimbursements) and $2,084,583 for self-insurance premiums.
Total expenses paid are $1,834,440. Of that amount $1,106,751 is for payment of
professional and contractual fees (brokerage and insurance premiums), $27,035 for
administrative costs (temporary employee) and $1,106,751 for insurance claims.
The ending fund balance is $3,562,118. To comply with GASB #10, the actuary
projects the ending fund balance at a 55% confidence level to pay for known claims.
This is the statistical certainty that an actuary believes funding will be sufficient. For
example, a 55% confidence level means that the actuary believes funding will be
sufficient in five out of 10 years. The actuary's projected confidence level is
$3,166,829. The fund balance is $395,289 above the minimum amount needed to pay
claims.
Administrative costs are now being charged to the fund, which will increase our
expenses. This is allowed per the Risk Management Trust Fund City Ordinance which
became effective 7/1/2014. Administration fees (salaries, employee benefits expenses,
brokerage fees, adjusting, appraisal, drug & alcohol testing, training and safety
expenses) will be moved out of the general fund and paid by the Risk Management
Trust Fund during the last quarter of this fiscal year. Staff will be working with
Finance to make the change. No Action taken.
7. FY 2015/16 Risk Management Insurance Renewals
Staff provided the information on the property and liability insurance and excess
insurance renewals as follows.
City of Glendale Ordinance, Administration, Risk Management Trust Fund, Section 2-
207 Insurance provides that "The city risk manager, acting for the city manager, is
authorized to enter into, on behalf of the city, any appropriate commercial insurance,
alternative risk financing and surety bonding contracts to provide such risk insurance as
determined to be in the best interests of the city". Our broker, Alliant Insurance has
been placing insurance for cities for over 25 years. Their insurance placements include
all lines of coverage placed through a proprietary group purchase program for public
entities across the United States. Placement is underwritten and priced on a group basis
without sharing the risks of the entire group. Alliant obtained quotations for property
including auto physical damage, cyber/privacy coverage, pollution coverage, crime,
excess liability, airport liability, fiduciary liability and special liability policy for
Glendale Regional Public Safety Training Center (GRPSTC). The quotes are based
upon the same terms and conditions but with some deductible changes. The not-to-
exceed cost to purchase the insurance for FY 2015-16 is $1,161,755 (excluding
workers' compensation). The expiring premium was $1,035,139. A Renewal
Projections spreadsheet was provided that lists each type of coverage, the expiring costs
and the estimated costs.
Property Insurance
The quote for property insurance for FY 2015-16 is $369,248 compared to $315,408 for
the prior FY. The city's total insured property values are $766,428,811 which is a
1.80% increase from the prior year due to an increase in property values. The primary
factors that go into the increased values are the cost of construction from building
supplies and labor costs which are driven by job opportunities and the economy.
Marshall Swift provides the construction trends on a quarterly basis by region. The
attached chart shows the trends from 2004 through 2014. As you can see the cost of
construction has dropped slightly in 2014 which is why the increase in values is
minimal.
The property insurance program provides $1,000,000,000 in property damage limits.
The policy provides coverage for boiler and machinery, city automobiles, cyber/privacy
and pollution. We have had some significant losses in the past five years. These are:
• 10/19/09 fire residential housing $248,748
• 10/5/10 hail loss $1,054,903
• 7/13/14 vehicle fire $28,196
•
7/13/14 fire in Old Station 151 (Resource Center) $511,000
• 9/8/14 flood/storm $1,350,000
Due to the loss history the carrier has increased our rate per$100 value of property.
Last FY our rate was .04189. This year's rate is .04817 or a 15% increase. Attached is
the property premium year over year history for comparison. The rate had started to
decrease but we were hit with three losses in one year. The deductibles are increasing.
The all-risk property, boiler and earthquake deductible was $50,000 and are being
increased to $100,000. The auto physical damage vehicle deductible stayed at $25,000
EXCEPT vehicles with a value greater than $250,000 the deductible is $100,000. Hail
deductible remains at $250,000. Flood deductible increased from $100,000 to
$250,000. This again is due to the large losses.
The broker went to market to obtain quotes from Liberty Mutual and Travelers
Insurance who would offer this type of program to a public entity. Liberty Mutual
advised that they could not be competitive and declined to quote. Travelers advised
they have a$0.05 rate and the deductibles would be slightly higher than the deductibles
proposed above. I checked with several of our benchmark Cities who are currently in
the middle of renewals. Their rates from last year were $0.08 or greater.
The city purchases crime insurance which provides protection for the city's money and
securities up to $10,000,000 in limits. The quote for FY 2015-16 is $29,000 compared
to $28,462 last FY. This is a 2% increase due to the increase in employee count. The
city purchases a fiduciary liability policy which covers the Deferred Compensation
Plan/Deferred Compensation Committee with $5M limits with a $5,000 deductible.
The quote for fiduciary liability is $12,221 compared to $11,644 last FY. This increase
is due to an increase in the plan assets from $78.9M to $85M. The city purchases a
public employees blanket bond (required by ordinance) which covers the Risk
Management and Workers' Compensation Trust Fund board with limits to $10,000.
The policy cost $180, same as the expiring policy. We are recommending renewing
with Alliant's Property Insurance Program as detailed above. Our broker is still
negotiating the costs and we expect final, firm quotes in mid-June. The premiums will
not exceed the estimates provided above.
Excess Liability
The city's excess liability insurance provides coverage on an occurrence basis including
bodily injury, property damage liability, errors and omissions liability, employment
practices liability, employee benefit liability, wrongful act or employee benefits
wrongful act and products and completed operations hazard. The city purchases a total
of$50,000,000 in limits. The city has a $1,000,000 self-insured retention(large
deductible). The FY 2015-16 quote is $737,800 compared to $666,656 last FY. The
expiring policy provided coverage for terrorism up to $10M. FY 2014-15 terrorism.
coverage is included up to $50M limit. All coverage's expected to remain the same.
Alliant is marketing this program. The coverage is currently insured in three layers,
$1.0M by Alliant's Municipal Liability program, $15M (excess the first $10M) by Starr
and $25M (excess the first $10M and second $15M) by Endurance. Endurance is
leaving the public entity market so that coverage has to be replaced. The quotes
provided are not to exceed numbers. We expect final, firm quotes in mid-June. We
expect the estimates to come in less than projected.
The city purchases a separate airport owners and operators general liability policy with
$20,000,000 in limits on an occurrence basis including bodily injury and property
damage liability, products and completed operations, personal injury and advertising
injury, hangar keepers, non-owned aircraft liability, and fire damage liability. This
policy is needed to provide coverage for the airport operations hazards which are not
covered in the excess liability policy. There is no self-insured retention and no
deductible. The carrier held the premium at $7,800, which is the same as last year.
The city also purchases a small liability insurance policy to protect the Glendale
Regional Public Safety Training Center (GRPSTC) with $2M in limits and a$5,000
deductible. This policy is required to meet our financing obligations. We are
beginning to market this coverage (policy doesn't expire until 9/29/15) and are
expecting a 10% increase due to claims experience. The FY 2015/16 quote is $5,686
compared to $5,169 last FY.
The property and liability insurance premiums are paid from the Risk Management
Trust Fund. For the coverage's described above, the total not to exceed premium is
$1,161,755 (excluding workers' compensation) which is included in the budget being
proposed to City Council. Last FY total premium was $1,035,139, an estimated
increase of$126,616.
Gary Sherwood moved to recommend City Council approve purchasing the insurance/
excess insurance for the 2015/16 fiscal year not to exceed $1,161,755. The motion was
seconded by Julie Stiak. Motion passed.
8. City of Glendale Fire Loss July 13, 2014
Staff reported on the status of the Fire Loss as follows. On.July 13, 2014 an electrical
fire started in the bathroom of the Old Fire Station 151 at 7501 N. 55th Ave Glendale
AZ 85301. This facility is used as the resource center for all materials, equipment(fire
gear) and supplies used by the fire fighters. The fire started when light ballast shorted
and melted the plastic and wiring. The ballast was located above a large trash container
which subsequently caught fire. Due to amount of materials stored in the station,the
contents quickly caught fire. The facility does not contain fire sprinklers due to its age
(built in the late 1950s). The fire alarm did go off and the fire department responded.
There was extensive damage to one-half of the interior of the facility wiring, drywall,
soffits and ceiling, windows and doors. Luckily the exterior of the building and roof is
constructed of brick and concrete and it did not suffer any damage with the exception of
an area where the fire department tried to vent the roof. The insurance company used
ATI to complete interior demolition and cleaning, asbestos removal, tear out and repair
of the damaged building materials. Due to the age of the building, the wiring, electrical
lines, phone system, fire alarm and HVAC systems had to also be upgraded as part of
the repairs. Due to the potential safety and theft risks, security was hired to protect the
station after the tear out and until the building was secured. The building repairs are
completed. The building repair costs total approximately $416,000. We are working
with the insurance company and ATI to obtain the final building invoices and submit
them to the insurance carrier for reimbursement. To date the insurance company has
paid ATI $121,244.
Damage to contents consisted of gloves, masks, cases of Gatorade and bottled water
(stored for use when fighting fires), drying system, SCBA racks for cleaning
firefighting clothing, folding tables, chairs, sound system, podium, refrigerator, storage
racks and bins, ice (melted when electrical was lost), wheeled totes, boots, hoses,
nozzle gaskets, turnout gear and all cabinetry. After the fire occurred, many fire staff
responded to sort out damaged contents and clean up the site. Damage to contents,
labor and other miscellaneous costs are approximately $60,000. Fire will provide their
documentation for all costs and it will be submitted to the insurance company for
reimbursement subject to our $50,000 deductible. Risk is hopeful that this claim can be
concluded before 7/1/2015. No Action taken.
9. City of Glendale Storm Loss September 18, 2014
Staff report on the storm loss as follows. On September 8, 2014 there was a record
breaking rain event that caused flooding throughout Glendale. Some areas received up
to 6 inches of rain in a couple hours. This amount of rain surpassed our 10 year flood
amounts. The large amount of rain backed up into city buildings, leaked in through
-roofs, windows and doors, flooded streets and washed out catch basins, storm drains
and manholes.
The following locations were damaged:
• Sub-basement of city hall
• Multiple areas of the council building
• City auditor's office
• HR training room
• CAP office
• Gateway Fire/PD station
• Fire station 154 and 156
• Fire Administration
• Main library
• Most city parks and trails (some were closed for months while repairs were
made)
• Facilities warehouse
• Camelback Ranch
• Six retention basins
• Storm drains and manholes throughout the City
• GRPSTC
• Road failures (washed out) in eight different locations.
• Contents damage was minor consisting of furniture, boxes, surge protectors
Many residents and business owners also experienced their own flooding to homes and
businesses. The repairs to City owned property has been completed with a few
exceptions (water syphon at Grand Linear Park, Patrick Channel, portions of
Thunderbird Conservation trails and three retention basins). City staff is working to get
repairs completed as they work through the procurement process.
The immediate removal of water damaged contents, building repairs and parks and
trails repairs were completed by the insurance company's approved contractor ATI
restoration. City staff completed emergency clean up and repairs. The insurance
company has been paying ATI Restoration for the work that they have completed. To
date they have paid $500,023. The City will submit to the insurance company, the total
of all City costs once all work has been completed. The City carries a$100,000 flood
deductible and a $500,000 un-scheduled property deductible. This would include
damage to roads, storm drains, catch basins, etc. The estimated total cost of repairs to
damaged city property is $1,350,000. Please see attached breakdown.
City staff had to respond to the public to close roads that were washed out, barricade
unsafe areas, assist with flooding of private property. This type of emergency response
to the public is not covered under the insurance policy. It is work associated with the
protection of the citizens. Due to the severity of the rain event across the Phoenix
Metropolitan area, FEMA and Arizona Department of Emergency Services declared the
event an emergency which qualifies for assistance. FEMA has guidelines on the type
of costs and the amount that can be reimbursed. For any costs not covered by insurance
(the deductibles, emergency response to the public, etc.)the City will submit a claim
for consideration to FEMA for potential reimbursement.
When the claim is finalized we will report the final results to the Trustees. We do not
anticipate the claim to be resolved for an additional 10-12 months. Total estimated loss
is $1,350,000. No Action taken.
10. Safety Security Alliance Update
Staff reported the Safety Security and Alliance (SSA)have been working on the
following.
• Working together with PD, the SSA developed a new badge/access
policy. Richard Franzen did an excellent job putting the draft together. It has
been vetted by the committee. Members are being asked to obtain comments
from their departments. Finalized document will become an HR Policy.
• It was recommended that Security provide a list by department of who has
authorization to enter into their respective locations. Each department will review
and provide additions and deletions to Security. The SSA and all Directors were
reminded that employees leaving the City or changing work location, Security
should be notified within 24 hours or less.
• Communicate on-boarding and off-boarding procedures for all supervisors. No
one knew that a checklist existed. The group recommended HR review the
procedures and send out a reminder to all staff. They recommended that the
requirements for collecting badges, keys and other personal property be included
in the outboard process and minimum training requirements, defensive driving,
blood borne pathogens and GHS be included in the on-boarding checklist.
• SSA recommended that signs be posted on pillars in parking garage on each floor
and outside the doors to City Hall who to call in the event of an emergency. "In
the event of an emergency, please call Security at xxx-xxxx."
• SSA is reviewing and asking for department feedback on the following policies: -
(CMD 15) City Safety Policy & Program Responsibility, (CMD 18)
Authorization and Operation of City Vehicle/Equipment, (CMD 20) Risk
Management Policy Statement, HR Policy 505-Drug, Alcohol, and Substance
Abuse and Human Resource AND HR Policy 515-Commercial Driver's License
(CDL) Policy. We will be updating the policies.
• Proof of Insurance for City of Vehicles. Through Risk Management and the
City's Vehicle Shop, we are verifying that all City vehicles have a copy of
Vehicle Card-What to Do-Referrals, Evidence of Self-insurance, Post Accident
Determination Form and Accident Report Form. These forms are available on
line. However, all vehicles should have a copy of these forms in their glove
box. The Shop has been provided with the documentation. When vehicles are
brought in for service, they will make sure the paperwork is in the vehicle and if
not will add it. In addition all Departments have been asked to ensure employees
who are regularly assigned a vehicle make sure the documents are in the vehicle.
• Training database—Each SSA member is responsible for their own
department's information in the training management system. This includes
training, communication and compliance.
• OSHA requires that all employees be trained on the new Global Harmonizing
System for Safety Data Sheets by July 1, 2014. We have rolled out the required
training to all our employees. Employees have 30 days to complete the training
(this includes all administrative staff, not just people in the field, EVERYONE,
from CM on down). In July, we will do the same for Defensive Driving.
• City Hall emergency evacuation procedures— SSA is working on updating the
rolls and responsibilities of each department, the floor monitors, fire alarm drill
process, responsibilities and staff training. Once the boilerplate document is
finalized it will be used to develop the process for all City buildings.
No Action taken.
11. Adjournment
Julie Stiak moved to adjourn the meeting which was seconded by Ken Wixon. The
meeting was adjourned at 7:40 PM.
Submitted by:
Dianne Shoemake