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    Finding Balance: Advocating for Liability Reform
    Liability reform has long been an objective of municipal governments. The legal regime of joint and several liability makes municipalities and property taxpayers an easy target for litigation.
    10/08/2012
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    Finding Balance: Advocating for Liability Reform

    Liability reform has long been an objective of municipal governments. The legal regime of joint and several liability makes municipalities and property taxpayers an easy target for litigation. Just a fraction of fault can push municipalities to pay huge damage awards, often targeted deliberately as insurers of last resort. 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 one per cent responsible. 

    For municipalities, as public organizations with “deep pockets,” this often means that a finding of slight or minimal liability can result in responsibility for millions of dollars in damage awards in cases where other liable parties do not have sufficient assets. Municipal insurance rates have risen substantially due in part to growing claims and the regime of joint and several liability. For example, in 2010, Essex County’s insurance rates increased by 47.5 per cent.

    In 2009, the Association renewed its efforts on this issue. In 2010, AMO released a detailed paper regarding joint and several liability. 

    AMO’s Work

    In the spring of 2010, the Ontario Government proposed amendments to the Insurance Act which would permit the transfer of OHIP costs to municipal governments, as road authorities, if they were found to be liable for an auto accident injury. Known as subrogation, the proposal came as a surprise to the Association.

    Having already done extensive research on the issue of liability, AMO was able to demonstrate that the proposal would put added pressure on insurance rates and would leave municipalities at substantial risk for higher costs. 

    AMO disputed out-of-date provincial data that had been used by the Government to estimate municipal risk. It also effectively refuted claims that municipalities could reduce their risks, given the municipal risk management measures already taken. 

    As a result of AMO’s advocacy, the proposed amendment was withdrawn and municipal governments were spared further pressure on liability premiums.

    Outcome and Long-term Benefits 

    Advocacy for joint and several liability continues. The Insurance Bureau of Canada, Ontario’s municipal insurers and Chartered Accountants of Ontario support the push for legislative change. 

    In 2011, AMO conducted a comprehensive survey of municipal insurance costs and found that liability premiums had increased 22 per cent over five years. In response, the Premier made a commitment to further discuss options for reform and those discussions are ongoing. 

    Paying insurance premiums should not undermine a municipality’s ability to deliver services to residents. Within that context, AMO will continue to advocate for liability reform. 

    Liability Reform: A New Direction Needed for Ontario Municipalities
    Municipal governments have long advocated for liability reform because the legal regime of joint and several liability makes municipalities and property taxpayers an easy target for litigation. August 2012 Backgrounder.
    09/08/2012
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    Under the regime of joint and several liability, if other parties are unable to pay, damages can be recovered from any defendant even if they are deemed just one per cent responsible. Just a fraction of fault can push municipalities to pay huge damage awards, often targeted deliberately as insurers of last resort.

    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. In part, “joint and several liability” is fueling exorbitant increases in municipal insurance premiums. 

    Also of concern are three recent court rulings in which municipalities were found liable despite adhering to minimum maintenance standards for roads. The cases, Deering (Oshawa, Scugog), Silveria (York Region), and Guiliani (Halton), weakened municipalities’ ability to defend themselves in these types of cases.

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

    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 awaits a thorough discussion of liability issues with the government in keeping with the Premier’s commitment at the 2011 AMO Conference.


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    Contact

    Matthew Wilson
    Senior Advisor
    mwilson@amo.on.ca
    T 416.971.9856 ext. 323
    TF 1.877.426.6527
    F 416.971.6191

    Links

    Managing the Cost of Risk Report August 2011
    Case for Joint and Several Liability Reform Report 2010
    Results of 2011 Municipal Insurance Survey
    Municipal Insurance Survey Results August 2011
    AMO completed the first comprehensive survey of municipal insurance costs across Ontario which revealed that liability premiums are among the fastest growing municipal costs.
    26/08/2011
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    AMO BREAKING NEWS
    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 
    For more information, please contact Matthew Wilson, Senior Policy Advisor at MWilson@amo.on.ca or by phone at 416-971-9856 extension 323.

    (Adobe PDF File)
    Managing the Cost of Risk Report August 2011

    (Adobe PDF File)
    Case for Joint and Several Liability Reform Report 2010

    (Adobe PDF File)
    Results of 2011 Municipal Insurance Survey
    2011 Municipal Insurance Survey Results
    AMO's comprehensive survey of municipal insurance costs across the province revealed that since 2007, liability premiums are among the fastest growing municipal costs.
    26/08/2011
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    AMO’s 2011 Municipal Insurance Survey Results: Managing the Cost of Risk

    August 23, 2011

    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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    Contact

    Matthew Wilson
    Senior Policy Advisor
    mwilson@amo.on.ca 
    F 416.971.9856 ext. 323
    TF 1.877.426.6527
    F 416.971.6191

    (Adobe PDF File)
    Results of 2011 Municipal Insurance Survey
    Managing the Cost of Risk August 2011
    Results of the AMO's 2011 Municipal Insurance Survey which sought to quantify some of the costs associated with joint and several liability in the Negligence Act.
    23/08/2011
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    (Adobe PDF File)
    Managing the Cost of Risk Report August 2011
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