HomeMy WebLinkAbout07.a.1)b) Receive Risk Management Division Annual Report for FY 2015-167.a.1)b)
Risk Management Division
Annual Report
Fiscal Year 2015-16
Protecting Public Health and the Fn vlronment
Central Contra Costa
Sanitary District
INTRODUCTION
I am pleased to present the Risk Management Division Fiscal Year (FY) 2015-16
Annual Report. The purpose of Risk Management is to protect the District from
unexpected Toss or damage and to minimize the impact of the adverse events that
occur. This requires Risk Management staff to be proactive while maintaining a
constant state of readiness. The following report details some of the ways we've
accomplished this dual role.
Risk Management also plays a role in helping the District to meet its strategic goals.
The District's FYs 2014-16 Strategic Plan outlined the overall goals. Each section of
this report references the Strategic Plan goals that it supports.
This was a busy and productive year. However, our success depends on an ongoing
partnership with other work groups and with management. These partnerships are
essential to help us identify new and emerging risks, to help us improve how the District
accepts and transfers risk, and to help us control and reduce risks to our employees
and the District's operations.
Thank you all for your continued support and commitment to these efforts.
Shari Deutsch
Risk Management Administrator
Risk Management Division Annual Report FY 2015-16 1
Table of Contents
Executive Summary 3
Insurance and Risk Financing 5
Workers' Compensation Claims 8
Liability Claims 17
Property Risks and Losses 23
Emergency Management 25
Security 28
Total Cost of Risk 29
Metrics and Other Accomplishments 31
Risk Management Division Annual Report FY 2015-16 2
Executive Summary
Workers' Compensation: The FY 2015-16 Workers Compensation Program incurred
16 Medical Only claims and four Indemnity claims this year as compared to 10 Medical
Only claims and one Indemnity claim in the preceding year. Other significant results
include the following:
- District supervisors and managers were able to provide temporary modified duty
to 100% of the employees who were injured on the job this year;
- The District's Experience Modifier, one factor used to calculate the Worker's
Compensation premium, remained well below the target of 1.00 but increased
from .61 last year to .64 in FY 2015-16;
- The District's Loss Ratio for FY 2015-16 remains below 1.00; and
Liability Claims: Losses for all lines of coverage were similar in frequency but less
severe when compared to prior years. There were 23 liability claims filed this year,
compared to 29 claims filed in FY 2014-15 and 36 claims filed in FY 2013-14.
Overflow Claims: The District has seen a reduction in overflow claims from a high of 27
in FY 2001-02. There were 10 overflow claims this year. Since FY 2007-08 the
District's cumulative average cost per overflow claims is $13,018. By comparison, the
average cost per overflow claim for the California Sanitation Risk Management Authority
liability pool exceeds $17,000. This year the District's average cost per overflow claim
was $16,651.
Overflow Claims FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16
Number
Cost
Average Cost
10
$48,190
$4,819
15
$54,148
$3,610
11
$103,948
$9,450
10
$166,514
$16,651
Property Losses: There were no property losses this year and only one Auto Physical
Damage loss for $1,953.
Emergency Management: Significant developments in the Emergency Management
Program this year included:
- Completion of phase 1 of the Continuity of Operations planning process wherein
Mission Essential Functions, Mission Supporting Functions and Recovery Time
Objectives were updated;
- Purchasing of interoperable radios to ensure communications with other local
governments and first responders within the District boundaries in case of
disaster;
Risk Management Division Annual Report FY 2015-16 3
- Submission of the District's Notice of Intent to Participate in the multi -
jurisdictional planning partnership to update the Local Hazard Mitigation Plan;
and
- Staff's appointment to the LHMP partnership's Steering Committee.
Security: Security improvements included the transition to a new security guard
company, completion of an initial physical security assessment of District facilities,
development of additional security -related procedures and the replacement of all
perimeter gate locks at the Martinez campus.
Total Cost of Risk: The Total Cost of Risk (TCOR) is a risk management industry
benchmark that allows an organization to evaluate the cost of its Risk Management
program over time. TCOR includes the cost of the District's Safety program as well as
Risk Management program administration, claims and insurance premiums. This total
is reduced by any revenue accrued by the Self -Insurance Fund.
The Total Cost of Risk for FY 2015-16 was $3,116,705, a decrease of over $625,000
from the previous year. This decrease resulted from a combination of a significant
reduction in claims costs from FY 2014-15 with an increase in both one-time expenses
and ongoing additional expenses from filling the vacant Safety Officer position.
Risk Management Division Annual Report FY 2015-16 4
Insurance and Risk Financing
Strategic Plan Goal 2: Ensure Financial Stability
Liability Insurance Coverage
The District purchases commercial liability insurance coverage including Workers'
Compensation and Employers' Liability, Excess Liability, Pollution Legal Liability,
Employment Practices Liability and Fiduciary Liability.
Workers' Compensation: The District participates in the California Sanitation Risk
Management Authority (CSRMA) Workers' Compensation insurance pool, a joint
powers authority comprised of over 50 sanitary districts within California.
Risk Management staff serves on the CSRMA Workers' Compensation Committee
which meets periodically to oversee the pooled program and to review and provide
direction on large or significant losses.
Excess Liability: After a large loss in the previous fiscal year, the District reduced its
self-insured retention from $1,000,000 per occurrence down to $500,000 this fiscal year.
The Excess Liability insurance covers claims in excess of this retention. This policy
includes defense and indemnification for inverse condemnation.
Pollution Legal Liability: The District purchases this coverage for claims and losses
arising from the collection and disposal of household hazardous waste. This policy
applies only to the Household Hazardous Waste Collection Facility and the contracted
non -owned disposal sites. It does not cover claims alleging pollution conditions arising
from the operation of the District's collections system.
Employment Practices Liability: This is a gap policy that effectively reduces the
District's self-insured retention for employment related claims from $500,000 to $35,000
per occurrence. The policy is limited to $500,000 in coverage as the Excess Liability
policy will respond to claims that exceeds this amount.
Fiduciary Liability: This policy protects the District from claims filed by participants in
District maintained retirement and OPEB funds.
Property Insurance Coverage
The District's purchases property insurance and a crime policy.
Property Insurance: The District is self-insured for damage to its property and facilities
up to $250,000 per occurrence. Insurance coverage for losses in excess of this
Risk Management Division Annual Report FY 2015-16 5
retention is purchased through the Alliant Property Insurance Program (APIP), a group
purchasing program administered by Alliant Insurance Services. The APIP policy
includes Boiler & Machinery coverage.
Cyber Liability Coverage: The APIP property coverage was recently enhanced to
provide retroactive cyber liability coverage back to July 1, 2010. The program is
underwritten by Lloyd's of London with a $2,000,000 sublimit for each participating
agency with a $25,000,000 aggregate limit shared among the over 1,300 agencies in
the program. The District is subject to a $100,000 retention on this coverage.
Coverage parts are subject to certain other sublimits but include the following elements:
- Information Security and Privacy
- Privacy Notification Costs
- Penalties for Regulatory Defense
- Payment Card Industry (PCI) fines and penalties
- Website Media Content Liability
- Cyber Extortion Loss
- Data Protection Loss and Business Interruption Loss
Crime Insurance: The District's crime policy covers losses caused by employee theft,
forgery or alteration, funds transfer fraud and certain types of computer fraud. It does
not cover cyber -attacks or loss of data.
All District insurance policies renew on July 1st of each year.
Self Insurance Fund
The District has self-insured most of its liability and some of its property risks since
July 1, 1986, when the Board approved the establishment of the Self -Insurance Fund
(SIF).
In 1994, the Government Accounting Standards Board issued Statement No. 10
(GASB -10) which established requirements on how public agencies must fund their self-
insured risks. To comply with GASB -10, the District segregated reserves for certain
types of liability risks into a sub -fund that must be actuarially reviewed at least every two
years. An actuarial study of this fund is currently in progress using loss data through
June 30, 2016.
In 2014, the Board established a reserve policy to maintain reserves for losses covered
by Excess Liability insurance of at least three times the amount of the District's self
insured retention. With the current District retention of $500,000, this reserve is
Risk Management Division Annual Report FY 2015-16 6
$1.5 million. Retained losses are paid from this fund during the year and the fund is
replenished via a transfer from the Operations and Maintenance Fund at the start of
each fiscal year.
The Board also wanted to reserve funds for catastrophic losses or emergency response
and wanted to simplify reserving for all risks that do not require GASB 10 compliance by
consolidating other liability claim reserves and property loss reserves into a single fund.
In order to meet the District's joint goals of simplifying reserves and establishing a
catastrophic loss fund, the balance of the SIF has been consolidated into a single
sub -fund with a $5 million reserve.
Other claims and program expenses are paid from this fund during the year. The fund
is replenished annually via a transfer from the Operations and Maintenance Fund at the
start of each fiscal year.
Risk Management Division Annual Report FY 2015-16 7
Workers' Compensation Claims
Strategic Plan Goal 2: Ensure Financial Stability
Strategic Plan Goal 5: Provide Exceptional Customer Service
Claim Types
Workers' Compensation claims are classified as either Medical Only (MO) or Indemnity
(IND) claims. MO claims are those where injured employees only needed medical
treatment to cure or relieve their injuries. In these circumstances employees did not
lose any time from work and suffered no permanent effects from the injury.
IND claims are those where injured employees received ongoing medical treatment
and:
- were taken off work by their treating health care providers;
- were given permanent physical restrictions; and/or,
- suffered some permanent disability or physical limitation as a result of their
injuries.
Summary of Recent Claims
The following table shows the distribution of Workers' Compensation claims for the
FY 2015-16 year and the two prior years. The Claim # column indicates the number of
claims occurring during the year. The Claim $ column indicates the total cost of those
claims to date.
2013
Claim #
Medical Only 16
Indemnity
Total 18
2
Claim $
$21,875
$131,878
$153,753
2014-15
Claim #
Claim $
10 $20,171
$81,439
1
Y 2015-16
Claim #
Claim $
16 1 $38,376
4 $133,472
11 $101,610 20 $171,848
The following tables detail these totals by functional group.
Risk Management Division Annual Report FY 2015-16 8
ADM
CSO
ENG
POD
Total
ADM
CSO
ENG
POD
Total
Claims Frequency (#)
MO IND
MO
IND
IND
MO
FY 2013-14
IND
FY 2013-11111.
FY
Y 2015-16
15
-
$7,813
-
-
1
-
$17,613-
-
1
-
-
10-
$726-
4
1
0
12
1
1
2-
$4,071
3
-
1
2
1
-
4
1
3
-
1
1
3
16
2
10
1
1
16
1
4
Claims Severity ($)
MO IND
MO
IND
MO
IND
FY 2013-14
FY 2014-15
Y 2015-16
-
$7,813
-
-
$4,500
-
$17,613-
$5,135
-
$25,511
$6,246
$726-
$10,965
$81,439
$8,366
-
$3,536
$124,066
$4,071
-
-
$127,226
$21,875
$131,878
$20,171
$81,439
$38,376
$133,472
Trends and Analysis
Since the District has very few Workers' Compensation claims in any single year, it is
difficult to identify any trends within a single year's claims. As a result, the following
analysis uses Workers' Compensation claims data from the last five years.
Medical Only Claims: The chart below shows the total number and cost of MO claims
by functional group for the last five years. The following table shows the average cost
per MO claim for each group during that same period.
Risk Management Division Annual Report FY 2015-16 9
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$-
Medical Only Claims - Last 5 Years
42^
ADM
CSO
Cost
ENG
Number
ENG includes HHWCF and Source Control
MO 5 Yr Average
POD
45
- 40
- 35
- 30
25
— 20
- 15
- 10
- 5
0
ADM CSO ENG POD
$2,230 $1,424
$2,268 $3,127
CSO had the highest number of MO claims but also had the lowest average cost per
MO claim. The data alone suggests that this group has more frequent but less serious
injuries than other groups. However, CSO is also the most active participant in the
District's Return to Work Program, which is discussed in more detail later in this section.
Their active participation allows their employees to recover and return to work faster
than if they did not participate as fully, and also reduces the cost of these claims.
Indemnity Claims: The chart below shows the total number and cost of IND claims by
functional group for the last five years. The costs include medical expenses and other
payments made by the program (temporary disability paid to employee while off work).
The following table shows the average cost per IND claim for each group during that
same period.
Risk Management Division Annual Report FY 2015-16 10
$500,000
$400,000
$300,000
$200,000
$100,000
$-
Indemnity Claims - Last 5 Years
i
$7,813
ADM
IND 5 Yr Average
$412,504
$81,439/
$6,246
CSO ENG
Cost Number
POD
ADM CSO ENG POD
$7,813 $6,243 $81,439 $58,929
8
6
4
2
0
These results illustrate the limitations of a small data set when looking for trends. Both
the CSO and ADM claims were relatively minor when compared to the overall
population of IND claims. At the same time, a single severe claim within Engineering
pushed their five year average well above POD, which had seven IND claims over this
same time period.
Cost Drivers
Despite the limitations of a small data set, it is clear that IND claims are more expensive
than MO claims, as shown in the following chart.
5 Year Average Cost per Claim
Medical Only vs. Indemnity
•MO ■IND
$81,439
$7,813 $6,243
$2,230 r'
411111, $1,424 111.11 2,268
$3,127
4111110
ADM 111111.
CSO
$58,929
ENG
POD
Risk Management Division Annual Report FY 2015-16 11
Soft Costs: The above chart only shows the hard cost difference between MO and IND
claims. Since IND claims usually include time away from work, there are additional
costs associated with these claims not captured by claims payment data. These include
lost productivity, overtime for other staff needed to fill in while an injured employee is off
work, and supplemental benefit costs including salary continuation provided to augment
temporary disability payments.
Expert opinions vary on the scope of these additional costs but estimates range from
three to five times the claims cost. Considering indemnity claims costs for just the last
five years, this equates to between $300,000 to $500,000 in soft costs incurred by the
District per year.
Loss Control
Since IND claims constitute the most severe injuries and are the primary cost driver in
Workers' Compensation, Risk Management and Safety staff work closely together to
reduce both the risk and the frequency of injuries to employees, and to reduce the cost
of claims. Such loss control activities are addressed more fully in the Safety Annual
Report provided after the end of each calendar year. The following charts serve as a
snapshot of the District's IND claims by injury type, cause, and affected body parts.
Unlike the chart above, these charts include claims data for the last ten years, which
provides a larger data set to identify longer term trends. There were 44 IND claims in
the last ten years.
IND Claims by Injury Type - 10 Years
25 -/
20 -7
15 -7
10 -7
4
5 2
0
1
7;
.P c .. \,o sc -roc Qa>*.c ca'\c
��c,� eta .c.\''''`�.\C)
�e'a to
Strains and sprains continue to be the most common type of IND claim. Recovery often
requires time off to rest, physical therapy, and, depending on the severity of the injury,
might also require surgery.
Risk Management Division Annual Report FY 2015-16 12
1
14
12
10
8
6
4
2
0
IND Claims by Cause - 10 Years
11
13
‘a e\�' ,Q
Recovery from repetitive motion injuries also require rest, as injured employees need to
stop performing the repetitive activity that caused the initial injury. Follow up is essential
for these injured employees to prevent reoccurrence. Additional needs may include
ergonomic adjustments, customized ergonomic equipment, and implementation of
procedural changes or work modifications.
As Safety staff has implemented these practices, the number of repetive motion injuries,
and the frequency and severity of repetitive motion claims have decreased. In FY 2015-
16 the District only had two claims for repetitive motion injuries, both of which were MO
claims.
10
9
8
7
6
5
4
3
2
1
0
J
J
L
IND Claims by Body Part - 10 Years
10
1 1
���\� PSS
P
1 1
1
<,' o� <ae ���� �° ���t�aa ,off �, •�e, ,so
�t��\y�
tee$ eco
a
1
Risk Management Division Annual Report FY 2015-16 13
Most of the District's IND claims resulted from injuries to employees' backs, knees and
shoulders. Not surprisingly, injuries to these part of the body most often impact an
employee's ability to return to either regular or modified work. Safety staff has been
working throughout the District to expand modified duty opportunities for employees
with these more severe injuries.
Experience Modification Factor (ExMod)
One of several factors used to calculate the District's annual Workers' Compensation
premium is the Experience Modification factor (ExMod). CSRMA calculates each pool
member's ExMod by using their loss data from the three prior years. This loss data is
compared to all members' combined loss data for that same period. Each member's
premium rate is adjusted up or down to reflect its performance compared to the pool as
a whole. This calculation is adjusted each policy year.
Because the pool determines its members' ExMod using a rolling three year period of
loss data, no member is penalized for poor performance (higher than average claims
frequency or severity) in a single year indefinitely.
The District's ExMod has been reduced from a high of .97 in FY 2011-12 to a low of .56
in FY 2013-14. The following table shows this trend. ExMods in the two most recent
years have increased slightly, reflecting the inclusion of more recent IND claims in the
policy years used in the calculation.
1.20
1.00
0.80
0.60
0.40
0.20
0.00
Workers' Comp ExMod
`90
3.75
0.73
0.74
0.56
u.ni
0$09 .10 , 11 12 13 .1N 15 .16
10)1- 1_06`b 1L009 L010 L011' L012' L013 L014 L015
0.64
Risk Management Division Annual Report FY 2015-16 14
Return to Work
In 2007, Risk Management implemented a Return to Work Program to facilitate
employees' recovery from work-related injuries and to help reduce the number and cost
of IND claims. In many cases, the District's ability to provide temporary modified duty
(TMD) can prevent a MO claim from becoming an IND claim. This makes Return to
Work an essential component of both employees' recovery and cost control.
The program has since been expanded to include non -occupational injuries or other
medical conditions where a temporary modification to an employee's duties would be
beneficial to both the District and the employee. As a result, this program is now
administered by Human Resources.
The program incorporates use of the interactive process which is required for
compliance with the Fair Employment and Housing Act (FEHA) and the Americans with
Disabilities Act Amendments Act (ADAAA). Metrics are not easy to compare from year
to year as each potential TMD assignment is considered individually and depends on
the nature of each employee's physical restrictions, and the District's ability to offer
TMD within those restrictions. In FY 2015-16 the District provided TMD assignments to
14 employees with work-related injuries or illnesses.
Workers' Compensation Net Loss Ratio
The District's Workers' Compensation Net Loss Ratio is determined by dividing the total
cost of claims occurring within a policy year (incurred costs) by the net premium the
District paid to insure against those claims. Incurred costs include all payments made
on claims as well as reserves for ongoing and future medical treatment, temporary and
permanent disability payments and the projected costs of other Workers' Compensation
benefits to which injured employees might be entitled. The net premium includes
adjustments for any retrospective rating changes and any dividends issued by CSRMA.
Since MO claims tend to be short-lived, loss costs from these claims are reasonably
well known by the time medical treatment ends. As a result, these claims do not
develop significantly over time.
IND claims are much more volatile. These claims usually involve more serious injuries
which may require longer recovery periods, more frequent and expensive medical
treatment and temporary or permanent disability payments. Injured employees may
suffer flare-ups or aggravation of injuries over several years. Also, recommended future
medical treatment may expand over time. Reserves for these claims include estimates
of these costs as well as any projected legal expenses for litigated cases.
Risk Management Division Annual Report FY 2015-16 15
2.00
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
WC Net Loss Ratio
Total Incurred / Net Premium
As of June 30, 2016 the District's loss ratio for policy years FY 2007-08 and FY 2008-09
exceeded 1.00. This means that CSRMA has paid and reserved more money to cover
the cost of these claims than the District paid in premium. The loss ratio for the more
recent years remain under 1.00.
Claims occurring in FY 2009-10, through FY 2012-13 have not developed as
significantly as those from earlier years. This improved performance is one factor in the
District's reduced ExMod factor.
There are a number of open claims in the FYs 2013-14, 2014-15 and 2015-16 policy
years. Since these claims will mature, payments will continue and reserves will be
adjusted, staff anticipates future increases in these loss ratios.
Overall Performance
The District's Workers' Compensation experience is generally better than its peers
within the CSRMA pool of similar agencies. As noted above the District's ExMod factor
has decreased over time and both the District's Net Loss Ratio and Rate per $100 of
Payroll have steadily declined.
This steady improvement is the result of the District's proactive approach to safety, Risk
Management staff's focus on active case management, and the commitment of District
staff, supervisors and managers to actively participate in the Return To Work Program.
Risk Management Division Annual Report FY 2015-16 16
Liability Claims
Strategic Plan Goal 2: Ensure Financial Stability
Strategic Plan Goal 5: Provide Exceptional Customer Service
Claims Philosophy
The District's focus on customer service informs the claims management process.
Claimants are contacted immediately, their claims are investigated thoroughly, and
when damages are found to be the District's responsibility, claims are settled promptly
and fairly. This approach has resulted in satisfied claimants and in reduced cost to the
District.
Liability Claim Types
Self-insured liability claims are classified into four types; auto liability (AL), plumbing
reimbursements (PL), overflow claims (SSO) and other liability claims (GL). These
claims are all paid from the Self Insurance Fund and would be covered by the District's
excess liability insurance if the losses exceeded the District's self-insured retention.
Claim costs include emergency response expenses, settlements, legal expenses and
reserves for open claims.
Auto Liability Claims
Auto Liability claims are those filed by third parties for damages caused by District
personnel while operating District vehicles. This includes claims for injuries to persons
or damage to others' property.
These claims do not include costs to repair or replace damaged District vehicles from
such events. Repairs to District vehicles are paid from the District's Self -Insured
Property Program.
The chart below shows the total number and cost of Auto Liability claims since 2007.
The following table shows the average cost per Auto Liability claim for each of the last
five years.
Risk Management Division Annual Report FY 2015-16 17
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$-
2061-Q12)
Auto Liability Claims
200$. 10009
09 10
Avg per
AL Claim
$79,756
20 0.11 20,,12 20,12.13 2013.'LP` 20,0.15 20 5.16
Cost Number
2011-12 2012-13 2013-14 2014-15 2015-16
$3,545 $4,226 $2,157 $1,546 $5,000
5
4
3
2
1
0
Auto Liability claims occur infrequently and mostly involve reimbursement for property
damage. The one exception since 2007 is a FY 2010-11 accident where the claimant
was represented by counsel and alleged both bodily injury and property damage. The
total cost of this claim, including defense costs, was $64,274.
Plumbing Reimbursement Claims
Plumbing reimbursements are small claims usually made by homeowners after they
called a plumber for service only to learn that the problem was in the District's main line.
In most cases, collection system staff provide the homeowner with the claim form while
they are on scene. This facilitates a simple reimbursement process where Risk
Management receives the claim, confirms the call out and the findings, then processes
reasonable reimbursements.
Plumbing reimbursements do not include reimbursement requests arising out of an
overflow or any event where sewage escaped from the collection system. These
circumstances involve additional expenses and often include other property damage.
Claims arising from these situations are considered overflow claims, which are
discussed in the following section.
Risk Management Division Annual Report FY 2015-16 18
The chart below shows the total number and cost of plumbing reimbursement claims
since 2007. The following table shows the average cost per plumbing reimbursement
claim for each of the last five years.
$5,000
$4,500
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$-
2001.0S
Year
Avg $ per
PL Claim
Overflow Claims
Plumbing Reimbursements
s
V
$425
■
$4,471
••••••
O9 10 11 12 13 .1� .15 .16
200S' 2009-L�10 L�11' 212' LQ13 2�1� L�15
Cost Number
12
I- 10
- 8
6
4
2
0
FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16
$287 $201 $406 $330 $407
Overflow claims are filed by customers whose homes or businesses are damaged by a
sewer overflow. Collections system staff responds to the overflow and contacts Risk
Management as soon as they become aware of an overflow affecting a home or
business. This allows Risk Management staff to:
- immediately respond and begin coordination of emergency clean up and
remediation as needed;
- provide for the affected customers' immediate needs;
- work with the customers to define damages;
- help customers prepare their claims; and
- settle the claims in a timely and reasonable manner.
This process has evolved into a partnership between CSO and Risk Management staff
that benefits both the District and the customer. Evidence of this can be seen in the
Risk Management Division Annual Report FY 2015-16 19
following excerpts of emails Risk Management staff received from homeowners after
overflows:
Just wanted to let you know how impressed we were with the speed of the
response and the professionalism displayed throughout this unpleasant situation.
We really appreciate everyone's help and have been telling friends and
neighbors all about our wonderful experience with CCCSD.
1 won't go so far as to say this was a fun experience but your crew and the two of
you went to great lengths to make it as painless as possible for my family. For
that we are greatly appreciative.
The chart below shows the total number and cost of overflow claims since 2007. The
following table shows the average cost per overflow claim for each of the last five years.
$450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$-
23
,L00� .0
$412,973
Avg $ per
SSO Claim
Overflow Claims
$348,392
16
14
12
/ 10
/ $166,514 8
6
4
i 2
0
0$.09 09.10 10.11 11.12 12.13 ,1 1.15 13.16
20 20 20 20 20 2013 20 20
Cost - Number
FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16
$1,630 $4,819 $3,610 $9,450 $16,651
Costs in FY 2007-08 and FY 2010-11 each include one large overflow claim. The claim
in FY 2007-08 cost $322,315 and the claim in FY 2010-11 cost $220,741.
Staff benchmarks overflow claims costs against the average cost per overflow claim
incurred by the CSRMA general liability pool. Although the District does not participate
in this pool, their loss data presents a relevant benchmark for comparison. As of the
last available data, CSRMA's average cost exceeded $17,000 per overflow claim.
Risk Management Division Annual Report FY 2015-16 20
Since 2007 the District has met this benchmark in all but the two years mentioned
above.
Thanks to the partnership with CSO and the ongoing support of management and the
Board, Risk Management staff are often able to resolve overflow claims for much lower
cost than that of the District's peers.
However, as the chart above suggests, large overflow claims occur infrequently but are
not unlikely. Any overflow claim can develop into a significant loss, even if addressed in
a timely, thoughtful and professional manner.
Other Liability Claims
Other liability claims include losses arising from the District's operations that don't
readily fit in the categories above. Examples of these claims include damage to
homeowners' property caused by sewer cleaning activities, damages alleged to arise
from offset manholes, damage to other utilities' infrastructure from maintenance or
construction activities and other claims where the affected party believes the District
caused their loss.
All such claims are investigated and, if found to be the District's responsibility, promptly
settled for reasonable amounts. Claims found not to be the District's responsibility are
either denied or tendered to the at -fault party.
The chart below shows the total number and cost of other liability claims since 2007.
The following table shows the average cost per claim for each of the last five years.
Other Liability Claims
$1,200,000
$1,063,620
$1,000,000
$800,000
$600,000
$400,000
$200,000
$
2001' 200$.09 2009.102010.11 2011.12 20 2.13 2013,18 201 At) ,),(SP
05
Cost Number
14
12
10
8
6
4
2
0
Risk Management Division Annual Report FY 2015-16 21
Year
Avg $ per
GL Claim
FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16
$2,582 $19,175 $18,431 $88,635 $943
The average cost per claim for FY 2014-15 is skewed by the inclusion of the District's
$1 million contribution toward a flood loss arising from construction activities. Absent
that single event, the average cost of these claims for FY 2014-15 would only be
$5,302.
FY 2012-13 included one litigated bodily injury claim that cost almost $70,000, most of
which was spent on legal defense. As noted above, the District will vigourously defend
claims for damages where it believes it has no responsibility. This was one such
example.
FY 2013-14 included two litigated claims for bodily injury from bicyclists and a claim
from Riverwatch related to operation of the collection system.
Pollution Risks
The District purchases a separate Pollution Legal Liability insurance policy to cover
losses arising out of the collection and disposal of household hazardous waste. No
claims have been filed since the Household Hazardous Waste Collection Facility
opened in 1997.
The District has chosen to self -insure its other pollution risks because commercial
insurance coverage is either not available or extremely expensive. The SIF includes a
separate reserve to finance these risks.
Risk Management Division Annual Report FY 2015-16 22
Property Risks and Losses
Strategic Plan Goal 2: Ensure Financial Stability
As noted earlier, the District is self-insured for damage to its property and facilities up to
$250,000 per occurrence. Insurance coverage for losses in excess of this retention is
purchased through the Alliant Property Insurance Program (APIP), a group purchasing
program administered by Alliant Insurance Services. The APIP policy includes Boiler &
Machinery coverage.
Flood and Earthquake Risks
The APIP policy does not include coverage for damages arising out of flood or
earthquake. Risk Management staff periodically evaluates the cost of insuring these
risks through the commercial insurance market. The evaluation considers the
implementation of District projects and modifications that have reduced the potential
impact of damage from floods and earthquakes against available insurance coverage
and pricing.
Staff is currently awaiting an updated quote to cover essential District facilities for both
flood and earthquake damage. However, initial indications suggest that prices are still
unreasonably high for the scope of coverage offered. Should quotes come in better
than expected or options available on the commercial insurance market expand, the
District may consider insuring these risks.
At this time the District is essentially self-insured for flood and earthquake risks. To
finance this risk, the Board approved and funded a $5 million emergency reserve within
the SIF to pay for emergency repairs after a natural disaster.
Auto Physical Damage
The District is self-insured for Auto Physical Damage. Auto Liability is covered under
the Excess Liability policy but the cost to repair or replace damaged District vehicles is
not. When a District vehicle is damaged by a third party, the Self -Insurance Fund pays
for repairs and Risk Management files a claim to recover those costs from the at -fault
party.
The following table shows the number (#) and cost ($) of Auto Physical Damage losses
for the last several years.
Risk Management Division Annual Report FY 2015-16 23
Auto Physical Damage Claims
FY FY FY FY FY FY FY FY FY
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
$ $3,878 $2,152 $5,318 $31,096
$3,508 $3,965 $5,189 $1,953
# 4 3 4 6 0 2 2 3 1
Property Claims
There were no other property losses in FY 2015-16.
Risk Management Division Annual Report FY 2015-16 24
Emergency Management
Strategic Plan Goal 5, Strategy 4: Continue Emergency Management Program
Development and Improvement
Strategic Plan Goal 5, Strategy 2: Increase District interaction with local, state
and federal officials
Risk Management is responsible for developing, implementing, evaluating and
improving the District's Emergency Management Program. The program includes the
four components discussed below.
Plan Development and Maintenance
Risk Management is responsible for developing and maintaining the District's
Emergency Operations Plan, Local Hazard Mitigation Plan, and the Continuity of
Operations Plan.
Emergency Operations Plan: The California Emergency Services Act requires all public
entities to prepare and maintain an Emergency Operations Plan (EOP) that complies
with the Standardized Emergency Management System (SEMS). Risk Management
released and the Board adopted a major EOP update in 2010 to reflect changes in the
EOC staffing structure and to comply with the federal National Incident Management
System (NIMS).
The EOP is reviewed at least annually with updates posted to the District's intranet. A
minor update was released and posted in January 2014 to further clarify duties and to
reflect changes in EOC staffing. Hard copies of the EOP are kept in the District's
primary and backup Emergency Operations Centers (EOCs). Additional hard copies of
the plan are kept in the emergency supplies cache. A 2016 update was released
electronically to update the EOC organization chart. A major EOP update is planned for
2017 that will be more aligned with the 2016 changes in the Contra Costa County EOP.
Local Hazard Mitigation Plan: The District has a FEMA -approved Local Hazard
Mitigation Plan (LHMP). FEMA requires local governments to have approved plans as
a prerequisite to seek grants under the Hazard Mitigation Grant Program and the Pre -
Disaster Mitigation Program.
In keeping with the District's commitment to coordinate its emergency planning and
responses with other agencies, Risk Management staff continued its participation in the
multi -jurisdictional planning group with Contra Costa County and over 30 other local
agencies. The plan was approved in 2012 and is effective through 2017.
In early 2016, the District submitted a Notice of Intent to Participate with Contra Costa
County and other planning partners in the 2017 update to this plan. Risk Management
staff has already been assigned to the LHMP Update Steering Committee.
Risk Management Division Annual Report FY 2015-16 25
Continuity of Operations Plan: The Continuity of Operations Plan (COOP) is designed
to work in concert with the EOP. While the EOP defines roles, responsibilities and
procedures for the District's emergency response and coordination with other agencies
during a disaster, the COOP specifies how the District will maintain its own operations
during a large emergency or disaster. Phase 1 of the COOP has been completed
including the establishment of Mission Essential Functions, Mission Supporting
Functions and Recovery Time Objectives. Work on phase 2 of the COOP will begin in
Fall of 2016.
Emergency Action Plan: The Emergency Action Plan (EAP) is required by CaIOSHA
and details the specific responsibilities and procedures to follow if District staff need to
evacuate or shelter in place. Since the District's EAP is part of the Safety Directive
catalog, responsibility for EAP maintenance, testing and exercises was transferred to
the Safety Unit when it was moved to the Operations Department in April 2012.
Training and Exercises
During the year Risk Management offered the following classes and exercises to
emergency response staff. Items marked with an asterisk (*) were funded through a
Bay Area Urban Area Security Initiative grant from Homeland Security.
EOC Finance and Disaster Recovery * 9/21-22/15
CSTI 4 -day Earthquake Class * 10/5-8/15
Social Media for Natural Disaster Response & Recovery * 3/16/16
EOC Action Planning * 5/24-26/16
Certifications and Licensing
Ham Radio Licensing.: CSO and Risk Management co-sponsored a local area Ham
Radio training class earlier in 2015. Two District employees attended and passed the
exam, thus adding two more licensed ham radio operators to the District's emergency
communications team.
Emergency Management Specialist: During the year Risk Management staff completed
the required coursework and received certification from the Governor's Office of
Emergency Services as an Emergency Management Specialist.
Supplies & Equipment
Primary and Backup EOC: The Multi -Purpose Room is the District's primary
Emergency Operations Center (EOC). The Crew Room at the CSO facility in Walnut
Creek serves as the District's backup EOC. Both locations are designed as `warm'
Risk Management Division Annual Report FY 2015-16 26
sites, meaning that all needed supplies and equipment are stored on site but must be
set up before the EOC becomes operational.
These facilities must be continuously stocked with the necessary supplies and
equipment to enable immediate set up and operation of the EOC. During FY 2015-16,
Risk Management staff conducted two inventory audits of each location to ensure that
the necessary items were available on site, secured as needed and maintained in an
operable condition. At the same time, staff also tested the analog phones and satellite
internet to ensure continued operability.
Communications: Several years ago Contra Costa and Alameda Counties created a
JPA to develop and maintain an interoperable radio communications infrastructure, the
East Bay Regional Communications System Authority (EBRCSA). The District joined
this group in 2014. This year staff purchased the radios that work on the interoperable
system (P25 standard).
The Radio Unit of the County's Department of Information Technology is the designated
programmer for all radios intended for use on the Contra Costa County portion of the
EBRCSA infrastructure. This group has begun programming the District's radios. Once
programming is completed, the new radios will be deployed and users will be trained to
use them.
Coordination with Other Agencies
As a single -service agency, the District must coordinate its emergency response with
first responders in other local governments within its service area. All local
governments in the County report incidents, damage and resource requests to the
Operational Area EOC. The Operational Area EOC is housed at the Contra Costa
County Sheriff's Office of Emergency Services (OES). The County EOC analyzes and
forwards local status reports and unfilled resource requests to the regional, state and
federal emergency management coordinators.
Risk Management staff continued to serve on the Operational Area Council, a group of
emergency managers from within the County who meet quarterly to share information
and best practices, to coordinate multi -agency drills and training opportunities and to
facilitate coordinated area emergency planning. The Council is sponsored by the
Contra Costa County Sheriff's OES.
As the Operational Area point of contact, County OES also works with state and federal
agencies to collaborate on projects of regional or national concern. Operational Area
Council members are encouraged to participate in these larger group meetings.
During FY 2015-16, Risk Management staff served on the planning team for the Contra
Costa County 2016 Yellow Command EOC exercise and the District hosted a three day
EOC Action Planning Class sponsored by the Bay Area Urban Area Security Initiative
and taught by the California Specialized Training Institute (CSTI).
Risk Management Division Annual Report FY 2015-16 27
Security
Strategic Plan Goal 6: Maintain a Reliable Wastewater Infrastructure
Risk Management is responsible for the security of District facilities. Day-to-day
security operations includes oversight of, and coordination with, the contracted security
guard company, issuance of badges and keys to District personnel and the
maintenance and support of the electronic security systems including security cameras,
panic buttons, burglar alarms and related software.
Risk Management staff partners with other District work groups to accomplish a variety
of tasks and projects in order to secure District property and protect District employees
and the public from security breaches.
Major security initiatives this year included Risk Management staff working with:
- Purchasing to transition to a new security guard contractor;
- Capital Projects to conduct an initial physical security assessment of
District facilities;
- Information Technology to develop an Information Security Procedure;
- Human Resources to develop a District Property issuance and tracking
procedure; and
- Building and Grounds to deploy new padlocks on all Martinez campus
perimeter gates.
Staff is also working on longer term projects including development of a Security Master
Plan and the implementation of additional procedures and facility hardening measures
to protect employees and further restrict access to District facilities from unauthorized
parties.
Risk Management Division Annual Report FY 2015-16 28
1
1
1
1
1
1
1
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
X1,881,157
TCOR by Fiscal Year
$3,745,138
This chart shows the TCOR for each Fiscal Year by its component parts.
$3,800,000
$3,300,000
$2,800,000
$2,300,000
$1,800,000
$1,300,000
$800,000
$300,000
-$200,000
PI
■
TCOR Components by Fiscal Year
1
1
1
O'u by tiv ti� ya y�
'V R °I' O , '1' '� 0
LOO 'LOO '1. 00 ,LOQ ,LOQ '10� ,LOQ ,LOQ•
ti
Risk Management Division Annual Report FY 2015-16
N.
• Losses Incurred
Insurance
• SIF Revenue
Safety Expenses
RM Div Expenses
• Personnel
30
Metrics and Other Accomplishments
The District's Strategic Plan includes six goals with associated strategies, initiatives and
metrics to track performance toward achieving these goals. Risk Management is
responsible for metrics under two of the goals. The tables below summarize Risk
Management's FY 2015-16 performance for the metrics associated with these goals.
Goal 2: Ensure Financial Stability
Strategy: Implement prudent risk management procedures to minimize exposure
to risk
Metric
Workers' Comp Experience
Modifier (ExMod)
Return to Work / Modified Duty
Average Cost per Overflow Claim
Evaluate and Implement
Additional Cost -Effective Risk
Control and Self -Insurance
Opportunities
Target
Year End Result
Maintain ExMod at 1.0 or
lower
Provide Temporary Modified
Duty to at least 75% of
employees injured on the job
Maintain cost at $25,000 or
lower
Perform Annual Review by
Fourth Quarter
Goal 5: Maintain a Reliable Wastewater Infrastructure
.64
100%
$16,651
Complete
Strategy: Continue Emergency Management Program Development and
Improvement
Metric Target
Year End Result
Emergency Operations Center
Activation Exercise
Maintain Continuity of
Operations Plan
Submit LHMP Annual Report
Maintain Emergency Operations
Plan
Maintain adequate supplies and
equipment in primary and backup
EOCs
Conduct one exercise per
year by the third quarter
Update plan as needed
Prepare and submit report in
accordance with County
OED schedule.
Update plan by third quarter
Conduct annual EOC
inventory and supply audits
and restock as needed
Moved to Sept 2016
Phase 1 update
completed
Completed
Minor Update
Completed
Audits and applicable
restocking completed
Risk Management Division Annual Report FY 2015-16 31
Other Risk Management Accomplishments
In addition to the activities and results discussed in this report, Risk Management staff
undertook several smaller projects and continued to provide services and support to
work groups throughout the District. Some of these accomplishments included:
- Updating the Workers' Compensation procedure for employees and the
Supervisor's Workers' Compensation Information Package;
- Providing training to supervisors on their role in the Workers' Compensation
claims process;
- Recommending the provision of Workers' Compensation coverage to District
volunteers;
- Working with Safety to develop and recommend new language to limit multi-
employer worksite liability in District specifications;
- Implementing the District's Access Control Procedure;
- Working with senior management to implement a consistent response toward
allegations of structure hazards on private roads; and
- Reviewing submittals and contractors' requests to modify indemnity and
insurance requirements for Capital Projects and Purchasing contracts.
Risk Management Division Annual Report FY 2015-16 32