TO: Mayor and City Council
THROUGH: Steve Powers, City Manager
FROM: Mina Hanssen, Human Resources Director
SUBJECT:
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Amendment of Resolution 93-59A, establishing a self-insurance policy for the City of Salem.
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
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ISSUE:
Shall the City Council adopt Resolution Number 2016-21 amending Resolution 93-59A to increase the settlement authorities that may be exercised by the City Manager from $25,000 to $50,000, and Risk Manager from $10,000 to $25,000?
RECOMMENDATION:
recommendation
Adopt Resolution Number 2016-21 amending Resolution 93-59A to increase the settlement authorities that may be exercised by the City Manager from $25,000 to $50,000, and Risk Manager from $10,000 to $25,000.
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SUMMARY AND BACKGROUND:
In 1992, the City Council authorized the Risk Manager to resolve tort claims against the City in amounts not greater than $10,000, with settlement of claim in excess of $10,000 subject to approval by the City Council.
In 2006, City Council, through Resolution Number 2006-222, added additional authority for the City Manager to resolve any tort claim exceeding $10,000, but not exceeding $25,000.
In the 24 years since the original resolution, costs associated with claims have risen with the passage of time. While many claims in which the City feels it has potential exposure can still be settled within the current authority levels, some claims have arisen which, although still appropriate for administrative settlement, have had associated costs over the authority levels.
FACTS AND FINDINGS:
The City’s resolution with respect to insurable-type risks is to “efficiently and fairly administer claims so as to protect the City of Salem's economic interest and recognize the public interest in prompt settlement of meritorious claims”.
Claims are best administered when there are appropriate levels of authority to allow for timely resolution.
Since the 2006 resolution amendment, the City has paid 43 claims falling between the $10,000 and $50,000 authority levels, requiring multiple levels of authority to resolve. A majority of these claims include auto property damage (16), minor slip/trips or MVA injuries (11), or public works related property damage (8). Most of the remaining claims involve legal actions with small payouts or defense fees, some of which resolved in mediation or settlement conferences in which it was necessary to obtain settlement authority from Council.
The Risk Manager’s authority no longer allows for the settlement of many claims that would have originally been included. Examples would be property or auto-property damage losses in which more than minor repairs are required, and, general liability claims in which early or expedited settlement efforts are appropriate.
The City’s Manager’s authority does not allow prompt settlement of mid-level claims, including claims that are presented in settlement conferences and mediations, which often require pre-authorized settlement authority.
It is in the City’s interest to periodically update Resolution Number 93-59 and establish additional settlement authority that may be exercised by the City Manager and Risk Manager in order to more efficiently administer the claims program. Section 6 of Exhibit A has been updated to reflect the recommendation, in addition sections 12 and 13 have been removed from the resolution as they are procedural in nature and unnecessary in this document.
Marcus Pitts
Risk Manager
Attachments:
1. Resolution 2016-21
2. Resolution 2016 Exhibit A - City of Salem Risk Management Program
3. Resolution 2006-222
06/27/2016