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Administration Committee

The main advantages to having this scheme are:

1) Reduced costs, assuming accurage estimates (no built in profit).
2) Increased coverage, for us the maximum coverage would increase from the
5 present $2 million to $5 million.

The main disadvantages are:

“ 1) Definitive costs are not known prior te signing up. I am very concerned
and hesitant on recommending based on this fact alone. The difference
between this and taking out normal insurance is that with normal insurace
you know before you take out the policy what the costs are and you make your
wf decision based on this information. With the proposed plan we have an estimate
that if accurate would result in considerable savings BUT no guarantees. It is
ee not insurance we are buying, it is a three year membership in an association
(co-op) whereby we promise to pay costs as levied against us.

ei The size and number of municipalities signing up has a definite effect on our

i: exposure. On talking with UBCM I have been told that some large muncipalities
(Vancouver and Surrey) will quite probably not be participating, this may have

an effect on ug if there are any shortfalls in levies. If as expected (page 18)
there is a 60% participation then the City would be responsible for roughly 2.254
(30,000/1,339,000) of any shortage in levies. This means that if they are short
$1,000,000 on the estimated costs then we woulc have to ante up an additional
$22,500 as our share of the costs. However, if municipalities with combined
population of 1,000,000 sign up then our share of any shortage increases to 3h

nN
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3) The association will be rum by an elected board of 15 members which is outlined
on page 37 of the report (article 3.05), my concern is that the poard will be
dominated by members representing smaller municipalities and that aventually

‘t rates will be amended to the benefit of smaller municipalities. (eg our
percapita costs is estimated at $2.19, a municipality of 5,000 population is
locking at $3.35 per capita and 1,000 population is looking at $5.00 per capita).

QZ ba

J. Maitland

JM/ms /