By Mary Katherine Keown, The Sudbury Star
Despite a record number of insurance claims, the city saved taxpayers more than $250,000 last year – all part of the P6M initiative the city has launched to uncover $6 million in permanent savings.
Robert Walz, the city’s co-ordinator of insurance and risk management, told the finance and audit committee on Tuesday that some of those savings were realized by eliminating an external insurance broker and by re-examining the city’s need for earthquake coverage.
“It made an awful lot of sense,” he quipped.
Walz pointed out the city owns $1.2 billion in assets spread over 700 properties, and manages more than 770 vehicles.
“Your department is working on ways to save us some money, and that’s much appreciated by this committee,” Ward 7 Coun. Mike Jakubo, who chairs the finance committee, told Walz.
The city also found savings by converting some of its vacant holdings to storage facilities, which allowed them to be classified as unoccupied (costing the city about three times less than if they were considered vacant). Finally, the city saved about $45,000 on its airport insurance.
But there were challenges. The municipality faced a record-breaking 676 claims in 2014 – up from 426 in 2013 and 321 in 2012 – costing taxpayers more than $4.3 million. More than $470,000 was paid out to residents who made successful claims.
“In 2014 we had the most claims ever,” Walz said.
Most of them – 210 claims – were related to potholes, followed by sewer back-ups (161) and property damage (152), a catch-all term that encompasses various issues related to road conditions, sanding or plowing operations, as well as construction work.
“I’m not an expert on paving and asphalt, but basically seasonal trends is what causes pothole conditions on our roadways. We go through a freeze-thaw cycle, continually,” Walz explained. “The temperature itself has caused a number of the pothole issues.”
As of the end of April, the city was already embroiled in 192 insurance claims.
“If we have a mild winter until the end of this year, we do expect those numbers to go back to the 2013 range – 400 to 500 claims,” Walz projected. “However, if we have extreme temperatures, we certainly see ourselves back up in the 600 range.”
Despite their ubiquity on the city’s roads, only two percent of pothole claims are successful. As Walz explained, there is legislation in place to protect municipalities.
“The city is not responsible if someone drives their car into a pothole,” he said. “We have to respond to a pothole condition within a period of time. If we don’t respond once we’ve been notified, there is some liability there. But of those 210 claims, we would have paid out for only a handful.”
Walz attributed the spike in claims related to sewer backups to home insurance companies, many of whom have reduced their coverage. He said often those insurers recommend filing a claim with the municipality, even if it is unlikely to be successful.
“It’s unfortunate that’s become the problem of the city, and we’re seeing it more and more,” he added.
He pointed out the city is currently working on a claims map to highlight the pothole and infrastructure hotspots in and around Greater Sudbury. Once complete, it will be forwarded to the infrastructure department.
“It’s another tool they can use, in looking at spending money on our infrastructure,” Walz concluded.