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Nov 2018 | High Priorities for 2019

REDUCING COST & AVOIDING LIABILITY: THE IMPORTANCE OF DETAILED RECORDS AND DOCUMENTATION FOR MUNICIPALITIES
LARRY RYAN, PRESIDENT, FRANK COWAN COMPANY

For decades, insurance has been thought of as a commodity – something you buy, put on a shelf, and use only when a claim occurs. Insurance can be much more valuable if it’s thought of as a service. Instead of a mere policy, it’s an extension of your municipal operation with ties to finance, risk management, public works, legal, and more. This shift has already happened at Frank Cowan Company. Take, for example, how we’re using technology to reduce your total cost of risk through efficiency gains, compliance and better claims management.

Maintaining roads is one of the main areas of responsibility for municipalities. This responsibility brings liability when personal injuries are caused by dangerous icy and snowy road conditions that challenge municipal public works departments. But missing road signs, improper curve signs, inappropriate guard rails, broken surfaces, and potholes are just as hazardous to motorists. It’s not difficult to see why roads are a source of significant lawsuits. From Frank Cowan Company’s perspective, non-repair of roads is the biggest driver of claims and are costly to settle especially when Joint & Several comes into play.

Municipalities can avoid liability if they prove reasonable steps were taken to prevent hazardous road conditions from developing. When it comes to defending road claims, documentation is required to prove that reasonable steps were taken. Often these records simply do not exist, they go missing, or are produced in the form of anecdotal recollection; this is a challenge – in fact, it represents the biggest challenge when a claim goes to court.

The answer to documenting accurate detailed records of road maintenance is sophisticated GPS technology. Kirk Boggs, a leading municipal defense attorney at Lerners LLP, states, “The judiciary has welcomed and generally not challenged GPS evidence, provided it is presented in a manner that is credible and which provides the required level of assurance that its integrity is not open to question. For these reasons, in cases involving municipal road winter maintenance, GPS data is far superior to written records and often devastating in undermining a plaintiff’s case.”

Boggs goes on to explain how digital data aids in faster claims resolution which is a key component in reducing a municipality’s total cost of risk, “Since plaintiff’s counsel and their experts know the persuasive value of GPS records, when well organized, reliable data is produced as part of the discovery process and that data shows an organized, early response to a weather event, the end result is often a case that ends shortly after discoveries. Plaintiff’s counsel realizes there is nothing to exploit and moves on to focus on another defendant, against whom there exists a greater likelihood of success.”

Now an app can be downloaded to your smartphone which will help to save thousands of municipal tax-payer dollars by providing reliable digital records that prove reasonable steps were taken, thereby reducing litigation expenses and deductible costs should a claim occur. The first steps in reducing insurance premiums is to decrease claims frequency and severity, which therefore has a positive impact on claims payouts. But it’s not just about litigation costs. The technology continues to save valuable dollars year after year by increasing operational efficiency for resource allocation planning, route optimization, work order management, vehicle positioning and regulatory compliance such as salt management, and in Ontario, meeting the Minimum Maintenance Standards.

How can an app on a smartphone save money? Let’s look at a few examples. Prior to implementing GPS technology, one Ontario municipality had 120 plowing routes. After the technology was implemented, they were able to overlay their route maps and in doing so noticed multiple plows were maintaining several of the same routes as part of their daily operation. They were able to decrease their routes from 120 to 90. Imagine the savings they realized on gas, salt/sand and overtime costs. Another municipality received a resident complaint that a plow damaged their mailbox. The municipality was able to instantly prove that the plow was not on that road at the time.

Remember, while the plows are on the road, the app is recording where they are working, what they are doing and the speed they are travelling. It eliminates the guesswork and gives you information to make insightful decisions about what next steps you need to take.

Such a program can be used for more than just road management. The technology can be applied to sidewalk maintenance, parks and recreation inspections including trails, trees and playing fields. It can create work orders directly from the field and send them to the appropriate party. It allows you to manage employee schedules, vehicle usage and maintenance, municipal asset inspections and can be linked to your asset management plan. It allows your supervisors to observe the maintenance being performed in real time. Now your staff can make better and quicker decisions and take corrective actions immediately, if required.

Frank Cowan Company has been partnering with municipalities for over 90 years offering comprehensive insurance programs and unique value-added services. We understand that your risk environment is constantly changing and expanding while your budgets, government subsidies, and property tax increases are not keeping pace. The vast majority of Canadian municipalities cannot afford to employ a full-time dedicated risk manager. We often see these responsibilities downloaded to employees who already have a full plate or lack the technical skills to proactively oversee the complex risks associated with municipal operations. While technology is not a replacement for a professional risk manager, it has the potential to help those municipalities – often townships - who have a lot of roads to manage. We also understand that technological solutions can be above a municipality’s operating budget. Therefore, Frank Cowan Company is offering this app as part of the Company’s suite of complimentary value added services.

Let us help you become a “smart city” by providing you with an app that reduces your expenses while increasing operational efficiency. With smart technology you can share your road maintenance in real time with your residents. Let them know where the plows are and where they’ve been, so they can plan the best and safest route to their destination. As your trusted business partner, we continue to provide you with the tools you require to optimize operational efficiencies, decrease costs, streamline employee responsibilities and make your communities and roads safer.

Insurance is complicated. Eliminating claims exposure and frequency is the best way to reduce costs. Simply saving a few dollars on premiums doesn’t address municipal claims challenges. Real change can only be realized when your insurer becomes your trusted business partner and provides you with the tools and strategies you require to address your risk management needs and challenges. A trusted business partner can support your operational, financial, and strategic goals. They can help you uncover overlooked opportunities and operational cost savings. Trusted business partners will help you work through complex and ever-changing legislation and help you understand and minimize your increased liability as your environment changes. They will engage you in collaboration with other Canadian municipalities as they move to effect legislative change. This business partner should be reviewed and chosen in an objective and comprehensive manner because they are a vital part of your strategic growth plan.

If you have any questions about our new app, please contact John Wexler at Frank Cowan Company by calling 1-800-265-4000 or by email at john [dot] wexler [at] frankcowan [dot] com

 

LARRY RYAN, CPA, CA is the President of Frank Cowan Company and possesses a unique perspective on the municipal insurance environment. Larry has worked in the municipal sector for 25 years, previously as the CFO for a large Ontario municipality. He understands the unique challenges municipalities are facing today. He joined Frank Cowan Company in 2011.