San Francisco, which pays out millions of dollars annually to settle claims against The City, has questionable risk-management practices, according to a new civil grand jury report obtained by The Examiner.
The 19-member panel found that although The City has an Office of Risk Management, the department is understaffed, with fewer than five employees who have limited duties that do not include consulting with city departments regarding risks and ways in which risks might be reduced.
The report, titled “Risk Management: Are the Managers Managing the Risks of The City?” notes that some departments, including the port and the airport, have insurance coverage.
Others, including high-risk departments such as Muni, the Police Department and the Department of Public Works, are self-insured, meaning The City pays out funds needed for claim settlements and unfavorable judgments through the general fund.
“The civil grand jury is unaware of any studies or analysis that supports the economic benefit of The City’s policy of self-insurance,” notes the report.
City Controller Ed Harrington said that “it’s always worth taking another look” to see if self-insurance is the best practice for The City, but added that when he worked within the offices of Muni, he did compare the costs of obtaining insurance to paying directly for claims — “and at that time it was not cost-beneficial to do it.”
Harrington said that most affordable insurance policies available to municipalities had high deductibles and liability caps.
Matt Dorsey, spokesman for the city attorney, said that because the civil grand jury report had not been officially released, he could not offer a detailed response on Thursday. The report is pre-dated for release Monday.
The report also references a 2001 report prepared by the Board of Supervisors budget analyst, reviewing claims, settlements and litigation data for The City.
The report focuses on the four city departments with the most frequent claims, litigation cases and settlement costs: Muni, the Department of Parking and Traffic, the Department of Public Works and the Police Department.
Muni, which had the highest costs, paid out more than $24 million during a period of three years, from 1996 to 1999, for claims and litigation cases.
Muni spokeswoman Maggie Lynch said that officials for The City’s public transportation agency were still reviewing the civil grand jury report and thus would not be able to respond to its findings or recommendations.