AMO's comprehensive survey of municipal insurance costs across the province revealed that since 2007, liability premiums are among the fastest growing municipal costs.
Executive Summary

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.

Insurance costs exceed annual province-wide municipal spending in each of these respective areas: maintaining bridges and culverts, administering and providing Ontario Works employment assistance benefits, and funding Conservation Authorities.

These costs disproportionately affect small municipalities. The per capita insurance costs for communities with populations under 10,000 are $37.56. By comparison, per capita costs in large communities with populations over 75,000 are $7.71. Property taxpayers in one northern community are spending more on insurance than their library. In one southern county, for every $2 spent on snowplowing roads, another $1 is spent on insurance.

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 will rise to $214 million annually by 2020.

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 unequitable burden. AMO looks forward to discussing these pressing municipal issues with the next government.

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