AMO’s 2011 Municipal Insurance Survey
Results
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.
Click below to compare your municipality’s premiums by
population:
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Have questions about the premiums paid by your
municipality?
Five things your municipality can do:
1. See how your local premiums compare.
Contrast your municipal premiums to the averages listed in this
booklet. Keep in mind that this is only one point of reference.
Claims history also plays a significant role in determining the premiums
charged by insurers and were not part of this survey. Also, the types of
facilities and services your community offers will likely differ over
others and affect premiums.
2. Consider increasing deductibles. The survey
reveals municipal deductibles have remained generally unchanged in the
past five years. Consider increasing your municipality’s
deductible as a way to reduce premiums. This means your
municipality will be responsible for managing a greater degree of risk
before insurance coverage begins. Discuss this with your insurance
provider.
3. Review the dollar limits of your municipal liability
coverage. The survey reveals that over the past five
years, the dollar limits of coverage have remained unchanged sector
wide. With the increasing frequency and size of damage awards,
discuss with your insurance provider the continued appropriateness of
your municipality’s exposure limits.
4. Continue to manage risk. Help to reduce the
possibility of claims being made against your municipality by following
good risk management practices. More information is available on
the Local Authority Services Limited website: Risk Management.
5. Advocate for joint and several liability
reform. As “deep pocket” defendants with
seemingly limitless public resources at their disposal through the power
of taxation, municipalities have often become the targets of litigation
when other defendants do not have the means to pay high damage awards.
This reality is reflected in the insurance premiums paid by
municipalities. Many common law jurisdictions have adopted reforms
to restore the balance. Add your municipality’s voice to the
call for Ontario to do the same.
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For information please contact Matthew Wilson, Senior Policy Advisor
at mwilson@amo.on.ca or call
416-971-9856 extension 323.
August 23, 2011
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