City councillors took a look at the city’s insurance costs this week, which have risen to more than $1 million a year.
Councillors got an update on the city’s overall risk management strategy at their finance and audit meeting on Tuesday.
One of the biggest ticket items on the city’s insurance bill is the cost of insuring the public transit fleet. In order to help control costs the city’s insurance is divided in two parts. The first portion pays smaller claims through a city-administered internal fund.
When claims rise above the threshold for that fund the city then uses its external insurance company. As of the early part of September, St. Albert Transit had cost the city $121,931 from the internal fund and another $138,756 in premiums to the external insurance company.
In contrast, the city’s overall insurance premium to the outside company including all city property and legal liability is $883,999 and the total cost to the city’s internal fund is $151,393.
The city pays the cost of insurance because it owns the public transit fleet, but the drivers are contracted from a private company, Diversified Transportation Ltd.
Coun. Cam MacKay admits it is an unusual arrangement for the city, but said the contract with the company is the best way to manage the fleet.
“Diversified has got a long track of operating the fleet; we have never had any problems with them,” he said. “It outsources a lot of the things that a city our size can’t do affordably.”
MacKay said some of the claims he has heard about, including incidents where a person fell on the bus after the bus came to a sudden stop, are troublesome to him.
Bob McDonald, director of St. Albert Transit, said the city does have some input with the company about drivers even if it doesn’t hire them directly.
He said the company has an obligation to the city to make sure good people are behind the wheel.
“That includes hiring and training the drivers, monitoring their performance, doing remediation up to and including termination to correct problems,” he said.
McDonald said both sides of the agreement have responsibilities.
“It is a contract and we have obligations on both sides and they understand that one of their obligations is to minimize any collisions or any claims.”
McDonald said the company works with the city on every accident.
“They have certified accident investigators on staff that do the appraisal to determine whether they are preventable or not preventable,” McDonald said.
As part of the contract, when an accident is determined to be driver error, Diversified pays part of the insurance deductable, he said.
The city’s manager of risk and insurance service, George Klassen, who gave the presentation to council, pointed out that the transit fleet is a high cost to insure for anyone.
“You have to bear in mind we are running 60 buses and we are running them all day long,” he said.
McDonald said the city has begun to take some other steps to try and reduce its insurance risk, including onboard cameras. He said the cameras will face outward and inward and will be used for training purposes with drivers.
He said the inward-facing cameras would also be helpful in the cases where a person falls on the bus, because right now there is very little information about incidents that happen.
