Susana Alcala Wood, City Attorney Jorge Oseguera, City Auditor Mindy Cuppy, City Clerk Howard Chan, City Manager John Colville, City Treasurer City Council Report
915 I Street, 1st Floor
Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-00023 February 1, 2022 Consent Item 05
Title: Fiscal Year 2021 Risk Management Annual Report
Location: Citywide
Recommendation: Receive and file.
Contact: Patrick Flaherty, Risk Manager, (916) 808-8587, [email protected] ,
Department of Human Resources; Renita Nelson, Administrative Analyst, (916) 808-3543, [email protected], Department of Human Resources
Presenter: None.
Attachments:
1-Description/Analysis
2-FY2021 Risk Management Annual Report
File ID: 2022-00023 Consent Item 05
February 1, 2022
powered by Legistar™
City of Sacramento
Description/Analysis
Issue Detail: The Risk Management Division of the Human Resources Department (HR) is responsible for administering the City’s Risk Management Program, which includes the City’s self-insured general/auto liability and workers’ compensation and excess insurance programs.
The 2021 Risk Management Annual Report is designed to provide the City Council and City management with an overview of risk management programs for the fiscal year.
The intent of this report is to provide City leadership and managers with exposure and loss information so effective loss prevention activities can be implemented to eliminate or reduce these losses in the future. The report contains summaries of workers’ compensation, general liability, and automobile liability losses by fiscal year. Environmental Health and Safety activities and types of insurance purchased, including insurance limits and premiums, are also included. Significant risk management related activities are also summarized.
Policy Considerations: Annual reporting of the City’s Risk Management activities provides the City Council with performance data to evaluate the effectiveness of the City’s investment in Environmental Health and Safety activities.
Economic Impacts: None.
Environmental Considerations: Under the California Environmental Quality Act (CEQA) guidelines, continuing administrative activities do not constitute a project and are therefore exempt from review.
Sustainability: Not applicable.
Commission/Committee Action: None.
Rationale for Recommendation: The Department of Human Resources, Risk Management Division is responsible for administering and reporting risk management related activity.
Provision of this information is important in planning necessary mitigation programs to reduce risk and associated costs in the future.
Financial Considerations: None.
Local Business Enterprise (LBE): Not applicable.
Risk Management Annual Report FY2021
Page i
Division of Risk Management
Annual Report
Fiscal Year Ending June 30, 2021
Page ii
TABLE OF CONTENTS
Executive Summary ............................................................................................................. 1 Risk Management Mission Statement ................................................................................ 2 Risk Management Vision Statement ................................................................................... 3 Risk Management Division .................................................................................................. 3 Risk Management Organizational Chart .............................................................................. 3 Risk Management Budget ................................................................................................... 3 Insurance Premiums ........................................................................................................... 4 Liability ........................................................................................................................... 4 Workers’ Compensation ................................................................................................. 5 Property ......................................................................................................................... 5 Other Insurance .............................................................................................................. 6 Actuarial Report .................................................................................................................. 8 Fiscal Year 2020 Results ...................................................................................................... 9 Workers’ Compensation ................................................................................................. 9 Liability ........................................................................................................................... 14 Environmental Health and Safety (EH&S) ...................................................................... 21 Subrogation .................................................................................................................... 27 Fiscal Year 2021 Action Plan ................................................................................................ 28
Risk Management Annual Report FY2021
EXECUTIVE SUMMARY
The Risk Management Division of the Human Resources Department is pl eased to present this Risk Management Annual Report for Fiscal Year 2021
This report provides the City Council and management with an overview of Risk Management programs. This report is designed to provide City leadership and managers with informatio n regarding departmental exposure s and loss es with the intent of impl ementing effective loss prevention activities to eliminat e or reduc e future losses . The report contains summaries of workers’ compensation, general liability, and automobile liability losses by fiscal year, as well as insurance and excess insurance li mits a nd premiums . Signif icant Risk Management related activities are also summarized.
The Risk Management Internal Service Fund provides risk financing, risk transfer, environmental health, and s afety (EH&S ) s ervices, and a dministrative support services fo r workers’ compensation, general liability, and auto mobile liability programs . The fund charges all fund participants for program costs based on actuarial estimates of the amounts needed to pay the ultimate cost of claims and operational costs for the Ris k Management Di vision. The FY2021 budget is $45,558,000, an increase of 12 percent from the prior year’s budget of $40,711,000.
Total insurance premium costs inc reased 26 percent or $1,856,027 in FY2021, from $7,188,590 in FY2020 t o $ 9,044,617 in FY2021. The primary incre ase in ins urance premiums w ere the result of e xcess liability insurance premiums increasing 33 percent, or $ 1,533,690, from $4,598,900 in FY2020 to $ 6,132,590 in FY2021. The increase is driven by a hardening liability insurance m arket fo r p ublic entiti es resulting from a dramatic increase in plaintiff settlement demands, jury verdicts and high dollar liability claims , as well as adverse loss development in the City’s claims. According to information gath ered on behalf of AIG, a global insurer, major jury awards have doubled between 2014 and 2018, which has resulted in increased costs .
Additionally, recent large catastrophic losses such as the PG&E fires and Mandalay Bay incident are contributing to ri sing p remiums. There have als o been numerous public entity claim outcomes that have exce eded $3 0 million dollars. Dangerous condition of public pr operty, police liability and sexual molestation claims remain a concern with liability underwriters nationwide. Excess workers’ compensation insurance premiums decreased eight percent, or $62,113, fro m $ 806,719 in FY2020 to $ 744,606 i n FY2021 . The decrease was driven by an expected lower City payroll, which is the prima ry factor in excess insurance premiums, due to COVID-19. Property insurance premiums increased 27 percent, or $415,311, from $1,555,186 in FY2020 to $ 1,970,479 in FY2021. T he increase in premiums was driven by industry wide property losses in calendar year 2017 (the worst in history) and 2018 (the 4 th largest in history).
Uncertainty over potential COVID-19 claims also resulted in increased premiums.
T
he number of Workers’ Compensation claims increased during FY 2021, due in part to an increase in COVID-19 related claims. However, strains remain the most common type of injuries that result in claims against the City. The City continues with its training program to reduce the number of these types of injuries.
Workers’ compensation be nchmarking information was provided by the fir m that provides actuarial services for the City’s Risk Management Division. In a comparison of nine similar sized California cities, the City’s severity rate for workers’ compensation claims was 16 percent below the average and the City’s frequency rate was 13 percent below the average.
The number of general liability claims has trended down the last four years with an increase in claims in FY2019. The ultimate cost of g eneral liability claims is pr ojected to in crease for the second year in a row as claim reserves continue to increase a t a level greater than expected.
Dangerous condition of public property and police liability claims have been the most expensive claims in recent years. Risk Management a nd the City’s t hird-party claims administrator, Sedgwick, continue to improve comm unication with City departments to pro actively m anage open and potential claims to help minimize these costs.
The number of automobile liability c laims has been steady in recent years but spiked in FY2019 to 145 and dropped to 109 claims in FY2020. The number of claims increased in FY2021 to 128, which is similar to the number of claims reported in recent years. Vehicle claims involving a building inspector and an ambulance resulted in the higher costs in FY2013, and c ollisions from Police and Solid Waste drove the costs in FY2014 . To continue to a ddress the risk of vehicle collisions, Risk Management will assis t in the devel opment of a long -term pl an for the Sacramento Regional Driver Training Facility (SRDTF). All City personnel, including polic e and fire, complete most of the ir dri ver training requirem ents at the Mather faci lity. Additionally , driver training is provided through Target Solutions on-line modules and the Smith S ystem defensive driver training program for non-safety personnel.
Liab
ility benchmarking information was provided by the firm that provides actuarial services for the City’s Risk Management Division. In a comparison of nine similar sized California cities, the City of Sacramento’s average cost per claim, or severity rate, for general and auto liability claims was 25 percent below the a verage and the City’s frequency r ate was 20 percent lower than the average.
The City’s EH&S activities are focused on preve nting accidents before they occur an d concentrate on the following are as: training, vehicle safety , co nsultation, environmental compliance, support services, employee recognition, and special projects.
RISK MANAGEMENT MISSION STATEMENT
Risk Management s taff protect City employees and assets by providing e xceptional custo mer service through effe ctive EH&S efforts , c laims a dministration, and risk financing . Our commitment enhances safet y and livability for t he citizens and employees of the City of Sacramento.
RISK MANAGEMENT VISION STATEMENT
The R isk M anagement Divisio n will be integrated into the C ity’s busines s practices and considered a valued and respected partner.
RISK MANAGEMENT DIVISION
The Risk Management Divisio n consists of thr ee operational units: EH&S, Workers’ Compensation, and Risk Admi nistration. Th e units are detailed in the organizational chart below. Responsibility for the Risk Manag ement Internal Service Fund (Risk Fund), which provides risk financin g and support services related to the workers’ c ompensation and general and automobile liability programs, is an important function of the Ri sk Management Division.
All City Departments are Risk Fund participants and are charg ed for program costs based on actuarial estimates of the amounts required to pay the ultimate cost of workers’ compensation and liability claims th at occ ur in that fisca l year as w ell as the operatio nal costs of the Ris k Management Division.
Figure 1: Risk Management Organizational Chart
RISK MANAGEMENT BUDGET
The Risk Management budget increased $4,847,000 or 12 percent, from $40,711,000 in FY2020 to $45,558,000 in FY2021. The primary reason for the increase is rising liability costs.
INSURANCE PREMIUMS
The City of Sacramento has an agre ement with Alliant I nsurance Services (A lliant) to provide insurance brokerage ser vices such as marketing , soliciting quotations, and pl acing insurance policies. Total insurance premium costs increased 26 percent in FY2021, from $ 7,188,590 in FY2020 to $9,044,617 in FY2021. The increase in premiums was driven largely by increases in excess liability, and property premiums, which are discussed in detail below.
Claim s ettlement amounts within retenti on levels are paid by the Ri sk Fund. S ettlement amounts for covered losses more than retention levels are paid b y the excess insurer(s) up to the coverage limits.
LIABILITY
The Ci ty of Sacram ento purcha ses excess liability insurance to p rotect the Ci ty from catastrophic incidents. Excess liability in surance in cludes c overage for the following risks:
bodily injury and property damage, personal injury, public offi cials’ errors and omissions, and employment practices liability . All coverag e is on an occurrence basis . Excess liability limits remain at $35,000,000. T he C ity’s se lf-insured retention remains at $ 2,000,000 with a n additional $2 ,000,000 co rridor retention aggr egate. The $ 2,000,000 corridor retention aggregate is in excess of the $2,000,000 self-insured retention.
Exc
ess liability insurance pr emiums increased 33 percen t, or $ 1,533,690, from $ 4,598,900 in FY2020 to $ 6,132,590 in FY2021. The incr ease is driven by a harden ing liability insurance market for public enti ties resulting from a dramatic increase in plaintiff settlement demands, jury verdicts and high dollar liability claims. According to information gathered on behalf of AIG, a g lobal insurer, major jur y award s doubled betwee n 2014 and 2018 . Additi onally, large catastrophic losses such as the PG&E fires and shootings at Mandalay Bay are resulting in large
settlements and premium in creases. There has also been nume rous public entity claim outcomes recen tly that have exce eded $3 0 millio n dolla rs. Dangerous condition of public property, police liability and sexual m olestation claims remain a concern wi th liability underwriters nati onwide. The City has also experien ced adverse loss deve lopment in our general liability claims and recently settled several large claims wh ich included payouts by the excess liability carriers. The City continues to obtain excess liability insurance for a reasonable premium through the California State Association of Counties Excess Insurance Authority (CSAC EIA) GL2 program. The CSAC EIA program is the largest pool in the nation, providing services to 95 percent of the c ounties and 70 percent of the cities in California. C SAC EIA member s take advantage of their l arge s ize to obtain high quali ty i nsurance pr oducts at a reasonable cost.
Municipalities throughout C alifornia and the nation experienced large in creases in excess liability premiums in FY2021.
WORKERS’ COMPENSATION
The City purch ases excess w orkers’ c ompensation insura nce to prote ct a gainst cata strophic injury t o City e mployees a nd accidents i nvolving mul tiple e mployees. Excess workers’ compensation limits remained at statutory coverage for FY2021 with a self-insured retention of $2,000,000. Statutory coverage provides payment of claims up to the amount required by law, without limits.
Exc
ess workers’ compensation insurance premiums dec reased eight percent, or $62,113, from $806,719 in FY 2020 to $ 744,606 in FY2 021. The premium decrease is primarily dri ven b y an expected lower City payroll due to COVID -19. Excess workers’ compensation insur ance is purchased through CSAC EIA, which uses pool purchasing power to achi eve broad coverage for the lo west rates a vailable. The program has a $ 5,000,000 pool ed limit and statutor y reinsurance coverage for each accident.
PROPERTY
Property insuranc e is p urchased to protect City buildings and ass ets from damage or loss caused by covered pe rils su ch as fire, theft, wind, and flood. Cyb er l iability co verage was recently added to our pro perty insurance program. Property ins urance is currently purchase d through the Alliant Property Insurance Program (A PIP). A PIP was formed in 1 993 to meet the property insurance needs faced by public enti ties and is currently one of the l argest property insurance placements in the world. APIP is a joint purchase progra m, and there is no risk of assessments. Because of A PIP’s large size, member s re ceive l ow premiums with the best possible coverage terms. The total insu rable property values for the City are $2,068,044,038.
Property insurance premiums increased 27 percent, or $415,311, from $1,555,186 in FY2020 to $1,970,497 in FY2021. The property policy deductible is $100,000 with co verage limit s of $1,000,000,000. Coverage limits are shared with other APIP members in different geographical areas to reduce the risk of one lar ge pr operty loss affecting a high percentag e of membe rs.
Earthquake insu rance is not purchased due to the high c ost and limited coverage. Property rates are increasing due to industry wide property losses in calendar year 2017 (the worst in
history) and 2018 (the 4 th largest in history) . Uncertainty over potential COVID -19 claims also resulted in increased premiums.
OTHER INSURANCE
The City purchased the following additional insurance in FY2021:
• Fine a rts insurance wi th limits of $ 150,000,000. Coverage is pr ovided fo r art throughout the Ci ty, including the Cro cker A rt Museum, Sacramento Hi story Museum, Golden One Center and The Center for Sacramento History. • Aircraft insuranc e w ith limits o f $20,000,000 and a irport liability insurance with limits o f $ 5,000,000. Coverage i s provided for the Cit y’s small plan e and three helicopters.
• Crime insurance with limits of $15,000,000. Coverage is provided for employee and third-party theft, forgery, and other crime-related losses. • Pollution legal liability insurance with limits of $10,000,000 and storage tank liability insurance with limits of $1,000,000.
• Special ev ents i nsurance for small e vents at community ce nters with l imits of $1,000,000.
Table 1, Schedule of Insurance summarizes coverage, self-insured retentions, limits, premiums, and insuranc e carriers for three years and provides a total cos t o f ins urance by year at the bottom of the table.
Table 1
Fiscal Year Self Insured Retention Policy Limits Premium Carrier Excess Liability
FY21 2,000,000* 35,000,000 6,132,590 PRISM
FY20 2,000,000* 35,000,000 4,598,900 PRISM
FY19 2,000,000* 35,000,000 3,443,359 PRISM
Total 14,174,849
Workers' Compensation
FY21 2,000,000 Statutory 744,606 PRISM
FY20 2,000,000 Statutory 806,719 PRISM
FY19 2,000,000 Statutory 734,553 PRISM
Total 2,285,878
Property
FY21 100,000 1,000,000,000 1,970,497 APIP
FY20 100,000 1,000,000,000 1,555,186 APIP
FY19 100,000 1,000,000,000 1,258,914 APIP
Total 4,784,597
Fine Arts
FY21 1,000 150,000,000 80,424 Ironshore Indemnity
FY20 1,000 150,000,000 80,726 Ironshore Indemnity
FY19 1,000 150,000,000 80,726 Ironshore Indemnity
Total 241,876
Aircraft
FY21 Vari es 20,000,000 58,037 Star Indemnity
FY20 Vari es 20,000,000 50,467 Star Indemnity
FY19 Vari es 20,000,000 58,196 Old Republic
Total 166,700
Other Insurance includes pollution, crime, special events, airport, and UST FY21 58,463
FY20 96,592
FY19 86,672
Total 241,727
Total Insurance
FY21 9,044,617
FY20 7,188,590
FY19 5,662,420
Total 21,895,627
*Corridor Retention: FY21 - 2 million; FY20 - 2 million; FY19 - 2 million
SCHEDULE OF INSURANCE
Figure 2 shows the cost breakdown by the various types of insurance purchased in FY2021 with a total cost of $9,044,617.
Figure 2
ACTUARIAL REPORT
An actuarial re port is prep ared each fis cal year for the C ity of Sacramento’s sel f-insured workers’ compensation and general and automobile liability pro grams by a professional actuarial firm experienced in s elf-insured public entity program analysis. The actuarial repor t provides two key pieces of information: the amount to budg et fo r claim co sts and exp enses that will o ccur in the coming fiscal year, and the program’s liability for outstand ing claims.
Outstanding claims represent the ultimate value of losses less any amounts already paid. The City utilizes an 80 percent confidence level (an estimate for which there is an 80 percent chance that the budgeted amount will be sufficient to pay loss costs). The actuarial results for the last three years are provided i n Table 2. The budg eted amount for workers’ compens ation claims decreased $122,000 in FY2021 and the amount budgeted for ge neral and autom obile liability claims increased $479.000, resulting in a net i ncrease of $357,000 – substantially less than the $2,012,000 increase the prior year. The estimated outstanding liability for all claims increased 11 percent o r $ 10,074,000 in FY2021 to $ 97,959,000. The increase was primari ly driven by rising general liability costs.
Table 2
COMPARISON AT 80% CONFIDENCE LEVEL OF OUTSTANDING LOSSES As of June 30, 2019 As of June 30, 2020
Difference
Between FY
2019-20 As of June 30, 2021
Difference
Between FY
2020-21
WORKERS’ COMPENSATION
Estimated Liability
for Outstanding
Claims $50,694,000
Estimated Liability
for Outstanding
Claims $51,642,000 $948,000
Estimated Liability
for Outstanding
Claims $52,791,000 $1,149,000
Estimated Ultimate
Cost of Claims $10,937,000
Estimated Ultimate
Cost of Claims $11,465,000 $528,000
Estimated Ultimate
Cost of Claims $11,343,000 $-122,000
GENERAL AND AUTO LIABILITY
Estimated Liability
for Outstanding
Claims $34,797,000
Estimated Liability
for Outstanding
Claims $36,243,000 $1,446,000
Estimated Liability
for Outstanding
Claims $45,168,000 $8,925,000
Estimated Ultimate
Cost of Claims $13,058,000
Estimated Ultimate
Cost of Claims $14,542,000 $1,484,000
Estimated Ultimate
Cost of Claims $15,021,000 $479,000
TOTALS
Total Estimated
Liability for
Outstanding Claims $85,491,000
Total Estimated
Liability for
Outstanding Claims $87,885,000 $2,394,000
Total Estimated
Liability for
Outstanding Claims $97,959,000 $10,074,000
Total Estimated
Ultimate Cost of
Claims
$23,995,000
Total Estimated
Ultimate Cost of
Claims $26,007,000
$2,012,000
Total Estimated
Ultimate Cost of
Claims $26,364,000
$357,000
FISCAL YEAR 2021 RESULTS
Workers’ Compensation
The City of Sacramento has been self-insured for workers' compensation claims for City employees and volunteers injured on the job, since 1981. The City also self-administers our workers' compensation claims which means that Workers' Compensation staff manages our claims internally and thus provides a higher level of service than would be achieved by hiring an outside contractor to handle our claims. There is more streamed-lined communication between various departments, creating a more interactive process to get injured employees back to work as quickly as possible and reducing the cost of claims.
Accomplishments
• A total of 692 new workers’ compensation claims were opened during FY 2021.
This is an increase from the 557 new claims in the prior year. • The City heavily utilizes medical bill review with customized, leading-edge software coupled with a comprehensive approach t o yield a high percentage of medical savings. In FY2021, the City saw 6 8.39 percent in savi ngs. Total net savings were $7,969,533.
• The City’s wo rkers’ compensation program continu es to experience success with the Pharmacy Benefit Management Program (PBM P) through the vendor, Healthesystems. This program manages drug formularies and achieves savings on pharmacy c osts by providing oversight on the types of drugs and frequency of prescriptions to injured workers to assure that they are appropriate to the industrial injury. California instituted a workers’ compensation drug formulary that is also helping to contro l costs. Doctors are notified when pre scribing patterns meet criteria tha t indicate exces sive use of prescription drugs and/or duplicative therapies.
• Utilization review continues to be applied to evaluate the appropriateness and medical necess ities of medic al serv ices, procedures, and facilities according to evidence-based cri teria and guidelines ensuring treatment recommendations under the Californ ia Medical Treatment Utilization Schedule (MTUS) . The application of utilization review has resulted in savings of $297,820. • Case management co ntinues to deploy Nurse Case Managers on catastrophic, complex medical cases to create seamless , efficient communication for the provider, the injured employee, and the claims adjuster. This added service provides triage immediately af ter an injury , expedites medical treatment, and manages medical costs.
• Claim staff and department supervisors attended regularly scheduled meetings to review open and potential workers’ compensation claims. The numb er of
meetings were determined by the fre quency an d severity of the department’s claims.
• A total of 119 indemnity claims were settled, which is a large increas e from the prior year.
• The City recovered $ 124,967 from subrogation efforts when responsible third parties were identified.
• Workers' C ompensation Unit launched a new paperless initiative to impro ve efficiencies, cut down on the cost of postage and paper and strive for improved environmental sustainability. The initiative consists of three main components: 1) The Work ers' Com pensation Unit is no w registered and trained on e- Filing with the Department of Industrial Relations Electronic Adjudication Manag ement System (EAMS) to submit court documents electronically; 2) The City is now setup with California's Division o f Workers' Compensation Independent Medica l Review Document Exchange Portal (MAXIMUS) for electronic submission of records; 3) We are working with our paneled defense attorney firms and other vendors to setup secure, electronic file exchanges.
Workers’ Compensation Results
The fol lowing data is derived from the most recent actuarial re port which was compl eted in September of 2021. This information is based on data valued as of June 30, 2021.
The data in Fig ure 3 show s the total es timated cost of wo rkers’ compensation claims, not including injury on duty time, for the past ten years.
Figure 3
The loss rate per $100 of pay roll (losses/(payroll/$100)) for the last ten year s is illustrated in Figure 4. The data in Figure 4 limits claim values to $100,000 per occurrence to provide more stable trendi ng informati on and avo id skewing of the data due to a lar ge loss. Th e loss r ate decreased in FY2020 and increased slightly in FY2021.
Figure 4
Figure 5 shows the estimated ultimate number of workers’ compensation claims for the last ten years. The number of claims increased in FY2021, partially due to COVID-19.
Figure 5
The number of claims reported per $1 m illion of payroll (# of claims/(payroll/$1,000,000)) for the last ten years is illustrated in Figure 6. The rate remains favorable and has been decreasing the last 10 years.
Figure 6
The causes of loss for workers’ compensation claims are depicted in Figure 7. Strain and sprain injuries con tinue to be the most comm on typ e of injur y. EH&S staff have i mplemented the Savvy F .I.T. 4 W ork pr ogram to provide train ing specifi c to job func tions designe d to reduce these types of injuries.
Figure 7
Injury on duty (I OD) hours are illustrated in Figure 8.
IOD hours are work hours recorded for
injured emp loyees who are u nable to work because o f an industri al injury . The number of hours increased the last three years due to a few large workers’ compensation claims requiring significant time off work.
Figure 8
Figure 9 shows t he percentage o f workers’ co mpensation cl aims filed in the last ten y ears broken down by Police, Fire, and all other City Departments.
Figure 9
Figure 10 shows the percentage of costs paid for workers’ compensation claims in the last ten years broken down by Police, Fire, and all other City Departments. Fire and Police have higher cost per claim than the other City departments.
Figure 10
Benchmarking
Benchmarking information provided by the firm that prov ides actuarial services for the City’s Risk Management Divi sion. I n a compariso n of nine similar sized California cities the C ity o f Sacramento’s average cost per claim, or severity rate, for workers’ compensation claims was 16 percent below the average . The C ity’s frequency rate was 13 percent below the average. This shows the City has fewer worker s’ compensation claims on average and pays less on the claims that do occur.
LIABILITY
The City of Sacramento utilizes Sedgwick, a third-party claim s administrator, to handle liability claims f iled against the C ity. Litig ation i s handled primarily in -house by t he Sac ramento City Attorney’s Office, which in F Y2021 resolved 132 cases. C laims are broken down into tw o categories: automobile and general liability.
Accomplishments
• Sedgwick, the City’s third-party liability claims administrator, opened 529 claims and closed 576 claims, a closing ratio of 109 percent.
• Sedgwick represented the City of Sacramento at Small Claims Court seven times with only one adverse verdict.
• M onthly meetings were co nducted with the City Attorney’s Off ice, Risk Management, and Sedgwick to review existing and potential litigation. • Meetings bet ween Departmen t sta ff and Risk Mana gement were conducted to review open and potential liability claims.
General Liability Results
The following data is presented from the most recent actuarial report which was completed in September of 2021.
The ultimate cost of general liability c laims fo r the last ten years i s estimated in Figure 11.
General liability claims include all claims except automobile accidents, which are summarized later in this report. Gen eral liability claims costs vary dram atically from year to year as one or two large claims can skew the results. The spike in costs in FY2018 were driven primarily by a large settlement for a dangerous condition of public property cl aim and a police liability cl aim.
Costs are projected to increase in FY2020 and FY2021 as claim reserves in these years increase more than expected.
Figure 11
The g eneral l iability loss rate (u ltimate lo sses/(composite expo sure which con sists o f population, budget, payroll, police payroll, and FTEs/$100)) is depicted in Figure 12. Losses are capped at $100,000 to avoi d the ske wing of re sults fr om a few la rge claims. The general liability loss rate decreased slightly in FY2021.
Figure 12
Figure 13 shows the number of liability claims reported for the last ten years. The number of claims reported decreased significantly in FY2020, and decreased slightly in FY2021
Figure 13
The claims frequency (# of claims/composite exposure which consists of populatio n, budget, payroll, police payroll, and FTEs/$1,000,000) is illustrated in Figu re 14. The rate decreased in FY2020 and in FY2021.
Figure 14
Figure 15 shows the percentage of general liability claims filed against the City during the last ten years, broken down by Police, Fire, and all other City Departments.
Figure 15
Figure 16 shows the percentage of costs paid for general liability claims in the last ten years, broken down by Police, Fire, and all other City Departments.
Figure 16
Automobile Liability Results
The ultimate cost of automobile liability claims for the last ten years is estimated in Figure 17.
The high in costs in FY2013 resulted from large settlements resulting from accidents involving a building inspector and an ambulance. High costs in FY2014 were from accidents involving Police and Solid Waste. Costs in FY2021 are projected to increase but are still well below FY2013 and FY2014 costs.
Figure 17
The loss rate (ultimate limited losses (composite exposure consisting of the number of police vehicles, which have a higher loss r ate, and number of other vehicles/$100)) is depicted in
Figure 18. Claims are capp ed at $100,0 00 to avoid the skewing of l osses from a few large claims. The rate decreased significantly in FY2020 and increased slightly in FY2021.
Figure 18
Figure 19 shows the number of auto l iability claims fil ed against the City during the last ten years. The number of claims has been steady in recent years but showed a significant increase in FY2019 and a decrease i n FY2020. The number increased in FY2021 to 128, whi ch is similar to the number of claims in the years before FY2019.
Figure 19
The claims frequency rate (# of claims/(composite exposure consisting of the number of police vehicles, which have a higher loss rate, and number of other vehicles/1,000,000) is illustrated in Figure 20. The claims frequency rate is similar to the chart above.
Figure 20
Figure 21 shows the percentage of auto liability claims filed against the City during the last ten years, broken down by Police, Fire, and all other City Departments.
Figure 21
Figure 22 shows the pe rcentage o f costs pai d for auto l iability cla ims i n the last ten years, broken down by Police, Fire, and all other City Departments.
Figure 22
Benchmarking
Benchmarking inform ation was provide d by the firm that pro vides actuaria l s ervices for the City’s Risk Ma nagement Division . In a co mparison o f nine similar sized ci ties the City of Sacramento’s average cost per claim or severity rate for general and automobile liability claims was 25 percent be low the average. T he C ity’s frequency r ate was 20 perc ent lower than the average. The Ci ty’s c ommitment to qui ckly handle and addre ss liabilit y issu es along w ith the success of th e City Attorney’s Office in def ending the City in litigation has helped drive these positive results. Additional cost savings are achieved by handling most of the City’s litigation in- house.
ENVIRONMENTAL HEALTH AND SAFETY (EH&S)
The primary goals for EH&S are to reduce the number and severity of injuries and illnesses to assure employee s afety and mini mize claim costs. Ea ch City of Sac ramento de partment has assigned Envi ronmental Health and Safety Spe cialists to consult with on workplace health , safety, and environmental issues and to assist with monitoring regulatory compliance. FY2021 EH&S activities included the following:
Training
Effective training pr ograms are an impo rtant component in reducing lo sses. EH&S staff conducted the following training in FY2021:
• Certified 19 City employees in CPR/First Aid;
• Certified 31 employees as forklift operators;
• Certified 28 employees on aerial devices;
• Introduced a hybrid training model with an online pre-requisite before attending the in- person portion of confined space entry and rescue training for Department of Utilities employees;
• Coor dina ted 24-hour Hazmat Tech and five 8-hour refresher classes for 144 Department of Utilities employees;
• Developed and provided Introduction to hazardous waste training classes for the Department of Utilities O&M Division;
• Utilized the Learning Management System to coordinate training for Department of Utilities employees in trenching and shoring;
• Coordinated classes with a physical fitness consultant to prevent strains and sprains for employees citywide;
• Conducted over 268 monthly safety trainings for CCS, CDD, DOU, PW, and YPCE; • Provided illness and injur y prevention, incident investigation, drug and a lcohol, and safety gear on scene training for fire recruit academies; • Delivered Safety 101 classes for both administrative and field employees; • Sponsored and coordinated virtual workplace violence prevention tra ining for employees citywide;
• Jointly sponsored and coordinated e lectrical safet y N PPA 70E training for mu ltiple departments with electrical workers;
• Enhanced Smith Defensive Driving program by adding two internal trainers.
Vehicle
Safety
City employees drove approximately 15.3 million miles in FY2021. EH&S staff tracks City vehicle collision statistics and provides administrative sup port for depa rtmental collision r eview committees and the Citywide Vehicle Rev iew Committee. The City’s commitment to hi gh
quality driver training and accountability due to the creation of the Vehicle Review Committee continues to help contain the costs of collisions.
EH&S staff virtually shared and presented pol icy briefings t o the Vehicle Review Committee.
The presentation focused on employee accountability for charg eable c ollisions, hands free driving require ments a nd use o f GPS technol ogy to monitor o peration of City vehicles and evaluating accident types to identify potential contributing factors.
The Citywide Driver Training Plan was updated and approved by the Vehicle Review Committee.
The plan identifies driver classifications for both sworn and non- sworn city personnel. Training requirements are outlined by e ach classification to ensure appropriate levels of driver training are as signed to m inimize risk associated with ve hicle exposures. The plan now include s references to the updated learning management system a nd the abil ity to utilize effe ctive alternative driver training solutions, such as Smith System.
EH&
S staff provides support for busine ss operatio ns and program cost recovery at the Sacramento Re gional D river Training Facility (SRDTF). Classes includ e initial, r efresher, and remedial driver training for City employees, law enforcement academy recruits, external agency employees and m embers of the public . Driver training is required fo r compliance with California Police O fficers Standa rds for T raining and is cr itical to the safety of eme rgency operations for the Police and Fire Departments as we ll as daily operations by commercial and frequent non-commercial drivers citywide.
In F Y2021, SRDTF personne l provided driver training for: 417 City po lice officers; 4 85 City firefighters; 248 non- sworn City emp loyees; 317 students fro m e xternal ag encies; 51 fire academy candidates; and 2 04 law e nforcement a cademy ca ndidates. The SRDTF program is highly regarded by Ci ty e mployees, external agency participants and staff at the C alifornia Commission on Police Officer Training.
Co
nsultation
Collaboration wit h City de partments is essential to maintaining a s afe a nd hea lthy wo rk environment. Consulting activities included:
• Delivering 24 ergonomic evaluations;
• Coordinating 1,471 hearing tests;
• Conducting 622 respirator fit tests for employees i n compliance with C al/OSHA requirements;
• Assisting with the development o f the energy control program for the C onvention Center Complex;
• Funding extractor unit for the Fi re Department to e ffectively clean firefighting protective gear;
• Conducting personal p rotective equipm ent a ssessments citywid e t o as sure employees are protected from hazards;
• Conducting 185 facility inspections;
• Issuing a s easonal new sletter that s hares information on health and sa fety topic s that are current and relevant to employees;
• Supporting vehicle collision review committees for all operational departments; • Providing training for pe er support pro grams and st affing o f ci tywide threat assessment team;
• Providing staffing for departmental labor/management safety committees; • Responding to inquiries from Cal/OSHA;
• Coordinating and participating in the City’s Threat Assessment Team for workplace violence;
• Providing sup port to the cit ywide L earning Managemen t Sy stem (LMS) implementation team;
• Providing AEDs to the City of Sacramento Police training academy; • Supporting emergency preparedness for emergency operations center staff; • Continuing promotion of Back Defense duty belt sus pender systems to re duce back injuries for police officers;
• Revi ewing and updatin g Illness and Injury Prevention Program (IIPP) to align with all Cal/OSHA regulations;
• Further implementing comprehensive review of Lockout/Tagout program; • Reviewing an d providin g r ecommendations for t he update of the C onfined Spa ce Regulatory Compliance Program;
• Ensuring compliance with the Federal Motor Carrier Safety Admin istration (FMCSA) requirements on Clearinghouse that applies to all commercial drivers; • Performing annual harne ss and lan yard inspections for over 99 ha rnesses a nd lanyards;
• Identifying and applying an effec tive solution to remove pigeons from Fle et shops that present biological hazards;
• Finalizing the department safety training plan for the Department of Utilities; • Supporting lift gate installation on park maintenance vehicle to lower injuries caused by lifting heavy items;
• Funding ice machine installation at P olice equestrian facility to provide co ol, clean, drinking water to prevent heat illness;
• Coordinating and funding the replacement of a modular office building at SRDTF; • Funding the replacement of training vehicles at SRDTF; • Developing and equi pping supervi sors in Recycl ing & S olid Wa ste with COVID -19 Quick Response Chart to know how to proper ly address poten tial cases in the workplace;
• Pro vid ing internship opportunities to Sacramento State University students aspiring to be EH&S professionals;
COVID-19 Consultation and Support
Collaborating with City Departments on developing and implementing a COVID-19 safety plan was an important endeavor for the EH&S team.
• Coordinating citywide effort to provide training to all employees o n the CO VID-19 Prevention Program through virtual and in-person methods. • Developing a COVID-19 Prevention Program per Cal/OSHA requirements • Conducting over 200 COVID-19 facility assessm ents to identify opportunities for providing signage, allowin g for physical distancing, enhancing cleaning measures, and encouraging the use of face coverings;
• Conducting num erous COVID-19 Job H azard Analysis ’ (JHA) to pro tect empl oyees from potential work-related exposures;
• Performing over 220 COVID-19 case investigations for City employees that may have had an exposure to a COVID-19 case;
• Coordinating 246 COVID-19 case investigations with the Police and Fire Department; • Implementing an injury investigation process with Recycling & Solid Waste division to perform root cause analysis;
• Supporting purchase of fogging machines to effectively disinfect common spaces; • Assisting departments develop specific procedures related to COVID-19 temperature screening, physical distancing, PPE, disinfection, and face coverings; • E stablishin g contracts with vendors that can provide onsite and/or self-administered COVID-19 testing solutions; and
• Providing the Facilities Management division with nine portable air filtration units to be deployed during COVID-19 and wildfire smoke protection efforts.
Environmental
Environmental regulatory compliance activities included:
• Administering citywi de co ntracts for ha zardous an d bi o-hazardous waste c lean-up and disposal;
• Participating i n hazar dous materials response operations for incidents occurring in the public right of wa y and m inimization of the co st to the City by util izing t he Department of Toxic Substances Control’s (DTSC) abandoned waste program; • Coordinating proper disposal of 115,178 pounds of abandoned hazardous waste; • Conducting hazardous wast e g enerator an d spill res ponse t raining for applicable personnel;
• Coordinating pick-up and disposal of e-waste and hazardous materials waste; • Mai ntain ing asbestos and lead sampling records citywide; • Updating hazardous materials business plans fo r all applicable City fa cilities in the California Environmental Reporting System (CERS);
• Developing a hazardous materials business plan for newly developed shelter;
• Participating in Sacramento County Environmental Management Division inspections at City facilities;
• Reviewing and updating Spill Prevention, Control, and Countermeasure (SPCC) plans for facilities with large containers storing oil products; • Conducting indoor air quality investigations at facilities with issues; • Maintaining consolidation points f or sharps waste co llected from throughout the city;
• Managing a tire recycling program that complies with Ca lRecycle requirements for collection, storage, and documentation;
• Calculating a nnual h azardous wast e generator fee s for the disposal of ha zardous waste and issuing payment in a timely manner;
• Developing a program to manage treated wood waste per new DTSC requirements; • Maintaining Hazardous Waste Transporter Registration with the DTSC for emergency response incident operations and small load operations; and • Completing and submitting annual EPA I D v erification to va lidate all 69 EPA I D numbers.
Suppo
rt Services
Pre-employment and preventative medi cal programs an d contra ctual risk tran sfer ar e also administered by the EH&S and risk administration staff. Activities included:
• Monitoring compliance with City contract insurance requireme nts for 1,478 active contractors and vendors;
• Providing departmenta l t raining sessions on i nsurance requir ements for contracts;
• Providing support for the special events insurance program, insurance ren ewals, and liability claims administration;
• Participation in the C SAC Claims Committee which meets per iodically to approve large workers’ compensation and liability claims settlements for many California public entities;
• Participation in the CSAC GL2 Committ ee whic h review s fu nding, coverage, claims, program services and new member applications;
• Tracking 64 restitution cases for reimbursement due to damaged City property by responsible third parties;
• Sch eduling/monitoring 9 98 pre-emplo yment, non-industr ial return-to-work, a nd specialty physical exams in accordance with City policy; • Coordinating pre- employment examinati ons requiring tube rculosis screening s that were impacted by recent COVID-19 vaccinations;
• Monitoring validity of 1,050 commercial/non-commercial drivers’ licenses; • Coordinating 396 random drug t ests an d 168 random alcohol t ests for commercial drivers;
• Coordinating 134 drug and alcohol tests for pre-employment, return to duty, last chance agreements, and reasonable suspicion; and
• Coordinating annua l flu vac cines a nd tube rculosis test ing f or pub lic s afety emergency responders.
Special Projects
Risk Management staff meets with leadership teams from the operating departments annually to id entify p riority initia tives. Many o f the se r isk initia tives are accomplished through the collaborative efforts of EH&S and departmental staff. C itywide risk initiatives included safety training gap analysis and regulatory compliance for occupational safety in all departments.
EH&S completed 37 initiatives in FY2021 in the following areas:
Training 14
Policy or Procedure Development 3
Equipment or Process Improvement 5
Occupational Health 5
Risk Analysis and Program Support 10
SUBROGATION AND RESTITUTION
Subrogation is the recovery of funds spent to repair or replace City assets damaged by negligent third parti es. Examples are automobile co llisions where thi rd parties cause d amage to City vehicles, traffic signals, or street signs. Figure 23 illustrates the amount collected during the last three years by City staff. Recovery amounts vary by year based on the amount of City property that is dam aged by responsible parties. Subrogation efforts ha ve now been transitioned from our third -party claim’s adm inistrator to the Revenue Di vision. S upport is provided by Ris k Management and City Depa rtments tha t pr ovide damage cost documentation. Subr ogation recoveries were negatively impacted by the COVID Pandemic in FY2021. An additional $12,863
was co llected by Risk Management from Res titution o rders f rom th e Cou nty for situations where City property was damaged in the commission of a crime.
Figure 23
Money recovered from third parties for City vehicle and property damage is deposited directly into the appropriate fund per City policy.
FISCAL YEAR 2022 ACTION PLAN
• Continue working on safety training verification and delive r training targeted to fill gaps;
• Provide first aid and CPR training to groups requiring such certifications; • Provide Smith System Defensiv e Dri ving train ing t o help reduce a uto l iability claims;
• Continue th e Alvarez Ass ociates Active Violen ce t raining to help mitigate potential violent situations;
• Continue the Savvy F.I.T. for Work training program for prevention of strains and sprains injuries;
• Evaluate the ha zardous materials management prog ram to identify potential efficiencies;
• Continue to alert departments of claim activity to address liability issues; • Update Emergency Action Plans (EAP) citywide and provide necessary trainings; • Continue and expand worksite evaluations to identify and control hazards; • S upport F ire and Police in their wellness, fitness and pe er support programs and expand peer support to include other departments;
• Complete Risk Manag ement I nitiatives developed at annual r isk man agement meetings with departments;
• Oversee implementation of the updated citywide Driver Training Plan;
• Perform hearing surv eys to va lidate res ults of H earing Conservation Program audit to identify employe es who may need to be incl uded in the pr ogram and others who can be removed;
• Update COVID-19 Prevention Program to reflect changes to Cal/OSHA COVID-19 standards and California Department of Public Health (CDPH) guidance; • Monitor possible changes to the A erosol Transm issible Disease sta ndard and assist in adopting changes, as necessary;
• Support aff ected departments to d evelop DOT program for commer cial drive r timekeeping and driver proficiency verification;
• Continue i mplementation of workers’ compensation claims adjuster s oftware upgrade;
• Develop and enhance workers’ compensation reports to provide EH&S Specialists workers’ compensation injury data to identify safety is sues to help reduce injuries;
• Achieve a 100% or greater closing ratio for workers’ compensation claims; • Begin updating workers’ compensation policies and procedures.
In closing, t he Risk Manag ement Di vision would like to thank City departments for the ir continued support in risk management activities to protect the citizens and e mployees of the City of Sacramento.