Reform needed to stem skyrocketing insurance premieums, an AMO Backgrounder for the Ontario Provincial Election 2011.
Municipalities are facing exorbitant increases in insurance premiums; in part due to a legal rule that can hold them responsible for the entire cost of a civil lawsuit judgement regardless of their share of responsibility.

If other parties are unable to pay, “joint and several liability” means that damages can be recovered from any defendant even if they are deemed just 1% responsible.

As public organizations with taxation power and “deep pockets”, municipalities have become targets of litigation when other defendants do not have the means to pay.  At the same time, catastrophic claim awards in Ontario have increased considerably.

The heavy insurance burden and legal environment is unsustainable for Ontario’s communities. Despite enormous improvements to safety including new standards for roads, playgrounds, pool safety, and better risk management practices – municipal insurance premiums and liability claims continue to increase.

In 2010, Essex County’s insurance rates increased by 47.5% and in 2011 they were hit with a second staggering increase of 41%.  The 2011 increase alone is enough to trigger a 1% property tax increase in the county.

Various forms of proportionate liability have been enacted by all of Ontario’s competing Great Lakes states and in 38 other states south of the border.   Many other common law jurisdictions are also pursuing reform.  It is time for Ontario to do the same.

The issue has a long history – going back 25 years to AMO’s first written report on the subject. In the years since, numerous reports have been filed, and over the last several years, hundreds of municipal resolutions have been submitted seeking reform.

AMO has raised the issue with the Attorney General several times in the last year and presented a paper highlighting the need for joint and several liability reform in 2010.  Over 100 municipal resolutions from councils across the province were also been sent to the Attorney General in 2010, speaking to the level of municipal concern on this matter. 

A concurrent session at the 2011 AMO Conference highlighted the growing challenges of joint and several liability from an insurance and financial perspective.