AMO completed the first comprehensive survey of municipal insurance costs across Ontario which revealed that liability premiums are among the fastest growing municipal costs.
August 26, 2011

The Association of Municipalities of Ontario has completed the first ever comprehensive  survey of municipal insurance costs across the province.  The survey reveals that since 2007, liability premiums have increased by 22.2% and are among the fastest growing municipal costs.  Total 2011 Ontario municipal insurance costs are $155.2 million. Liability premiums make up the majority of these expenses at $85.5 million.  Property taxpayers are paying this price.

The survey was prompted by anecdotal reports of rising insurance costs.  It sought to quantify, in part, some of the costs associated with joint and several liability in the provincial Negligence Act.  It does not include legal fees, self-insurance costs, settlements, risk management expenses or court mandated awards.  Based on current trends, insurance costs alone will rise to $180 million annually by 2015.  The survey results highlight many other findings including:

  • Per capital cost differential:  $37.56 per capita for communities under 10,000 population; $7.71 per capita in communities with over 75,000 population; 
  • An average family of five, living in a modest home, in a small community pays an annual tax bill is $3,010.  Fully $200 of their tax dollars are being used  for municipal insurance coverage.  
  • In one southern county, for every $2 spent on snow plowing roads, another $1 is spent on insurance.
The insurance premiums paid by municipalities reflect the legal reality that municipalities are “deep pocket” defendants, often targeted for litigation because the law has established such a low threshold of responsibility.  Just a fraction of fault can cost a municipality millions of dollars.  The premiums charged by insurance companies, non-profit insurance reciprocals and pools reflect, in part, this legal risk.

Continued advocacy by municipalities is needed to help change this legal environment and explore alternatives such as proportionate liability. Many common law jurisdictions have pursued proportionate liability in the face of rising costs and this inequitable burden. It is time for Ontario to do the same.  Watch for how the provincial political parties respond to our call for legislative change on our provincial election website and the materials we will push out to you on any election related developments. 

Downloads available (see right):
  • The Cost of Risk and the Risk of Cost presentation adapted from the 2011 AMO Conference concurrent session
  • Municipal Insurance Survey Results: Managing the Cost of Risks report
  • AMO’s Joint and Several Liability Reform paper 
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