Claims budgeting is not an exact science, but based on an actuarial estimate. It is anticipated that in some years, Claims will come under budget, and will be over budget in other years. The goal is to set the budget at an amount that will allow a buildup of surplus to be transferred to the Self Insurance Reserve in those years, and the Self Insurance Reserve can in turn fund annual shortfalls, assist in reducing the City’s overall claims deficit, and fund contingencies such as an insurance retro-assessment or unanticipated Claim behaviour.

The 2019 surplus was transferred to the Self-Insurance Reserve (SIR), which currently has a balance of $7.38M. In 2011 and 2017, actuarial reviews were conducted, and both reported an actuarial SIR deficit of over $6M. While the recommendations were to immediately fund this deficit, Council, based off of Administration’s recommendations, opted to increase the annual claims budget and slowly fund the SIR with any annual surplus realized. This method proved to be effective, and as of 2019, the actuarial deficit is now fully funded. In other words, if all projected claims became due and owing immediately, there would be adequate funds to do so.

In addition to the claims surplus, there was also an insurance surplus that assisted in funding the SIR. Typically insurance surpluses are not realized, but in the 2019 budget, insurance funds were allotted to the purchase of insurance relating specifically to Lou Romano Water Reclamation Plant. Due to the extensive underwriting requirements, this insurance was not purchased in 2019, but is planned for purchase in 2020.

Consultations:

Mark Spizzirri, Manager of Operating Budget Control and Financial Administration Mark DiPasquale, Financial Planning Administrator

Conclusion:

The number of Claims received in 2019 was unremarkable. Claim payments continued to decline over 2018. Despite the hard market, insurance rates were relatively stable in comparison with industry trends. The Risk Management recoveries in 2019 were the highest seen to date, as the program gets more traction, aggressive efforts are made to collect, and collecting on some higher valued damaged assets. All around, 2019 was the best year Risk Management has seen since the division’s inception.

Approvals:

Name	Title
Dana Paladino	Deputy City Solicitor – Purchasing, Risk Management and Provincial Offences
Mark DiPasquale	Financial Planning Administrator
Shelby Askin Hager	City Solicitor
Janice Guthrie	On behalf of City Treasurer
Onorio Colucci	Chief Administrative Officer