New London - With a dedicated risk manager in place for the first time in more than a year, the city is working to rein in its insurance costs, which skyrocketed earlier this year, and cultivate safer working environments.

Paul Gills, a safety engineer who has worked for insurance companies and consulting firms for 36 years, started as the city's risk manager in late July. Last week, Gills provided his first report to the mayor, City Council, interim superintendent and Board of Education.

"We do not have an effective risk management culture. We do not have a culture, in talking with employees, where they feel comfortable coming forward," Gills told the City Council. "We need to build a culture and a strategy, we all need to have a commonality of purpose to solve this risk management problem. We will get there; we will impart a drastic cultural change in the way department heads, supervisors, employees and every elected official thinks about how we will manage risk."

To that end, Gills has met with every city department head and is beginning to conduct formal risk assessments for each department. He also attends monthly meetings of the city's newly formed risk management steering committee, which brings department heads, supervisors, the mayor and others together to guide the city's efforts.

"We need to work on our safety management initiatives, corrective actions and most importantly, safe work practices," Gills said. "We have a culture here of verbalizing how the job is done, 'This is the way we've always done it,' but I'm not finding a lot of standard operating procedures, and getting those formalized is going to be at the top of my list."

Though he lives in Essex, Gills said he is familiar with New London from his years handling the city for the Connecticut Interlocal Risk Management Agency (CIRMA), the city's insurance provider. He said the relationships he formed with department heads and frontline employees factored into his decision to take the city's risk manager job.

"I'm taking this on as probably the most significant professional challenge I've ever had. I wouldn't have taken the job if I thought the employees weren't serious about addressing the issue," Gills said. "It's a shame to see all these dollars go to waste, dollars that detract from operating budgets that could benefit the city and Board of Education. This is a city that can least afford the high cost of risk."

Earlier this year, CIRMA increased the city's liability and auto insurance policy deductible from $50,000 to $500,000. The 900 percent increase, which Finance Director Jeff Smith said "effectively (left) the city uninsured except for catastrophic losses," was likely spurred by a high number of claims with potential losses over the last three years.

The premiums for the city's insurance policies also rose - by about 10.5 percent, according to Gills.

"Things were basically just out of control," he said. "There was no demonstration of an effective risk management policy or strategy in CIRMA's opinion."

Upon the hiring of Gills, CIRMA agreed to lower the city's deductible from $500,000 to $250,000 with the expectation that the city is working on instituting an effective risk management strategy and working toward reducing loses.

Still, about 10.3 percent of the combined city budget is devoted to total cost of risk - a combination of premiums, expected deductible payments, claim payments and other indirect costs associated with insurance claims.

"One of my goals is that I would like to get that down to 3 percent," Gills said.

Cities and towns with robust risk management strategies, Gills said, typically have a total cost of risk in the 2 to 3 percent range.

"I think that's achievable, but it is going to take a while, and we need a solid cultural change here," he said. "If we continue to do what we've always done, we'll get what we've always got."

c.young@theday.com

Twitter: @ColinAYoung