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Rising municipal insurance costs a concern
30 August 2011
AMO - the Association of Municipalities of Ontario - just released the results of a comprehensive survey of municipal insurance costs across Ontario. Just like your personal insurance, the costs keep escalating, and it's you, the taxpayers, who pay these spiralling premiums. You're getting hit by a double whammy: home and town insurance.
Since 2007, AMO discovered, "liability premiums have increased by 22.2% and are among the fastest growing municipal costs. The 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."
Collingwood taxpayers paid $518,000 plus HST for the town's insurance in 2011, or about or about $25 per capita. We pay FIVE times the amount in insurance that we give to community groups, charities and service clubs.
Ouch! More than 22 per cent in four years! And this total doesn't include "legal fees, self-insurance costs, settlements, risk management expenses or court mandated awards." You can read the full survey here.
AMO predicts that municipal insurance costs alone will rise to $180 million annually by 2015. That's a 16% increase in just four more years. Ontario municipalities already pay more for insurance annually than they collectively pay for bridge and culvert maintenance ($125 million), street lighting ($145 million) and conservation authorities ($109 million).
What's interesting is how the survey broke down the per capita costs. On average, taxpayers in communities under 10,000 paid $37.56 per capita insurance costs. That's about $12 more than what we pay here with a population of twice that number. Odd.
Taxpayers in communities with over 75,000 people paid only $7.71 per capita. An inequitable discrepancy, that strikes me.
Judging by this comparison, we are overpaying for insurance, but our premiums may also take into account special event coverage and some other special factors. I will have to investigate that further.
The study found that a family of five, living in a modest home in a small community, pays an annual tax bill of $3,010 (I believe our average here is around $3,500). The report said, "Fully $200 of their tax dollars are being used for municipal insurance coverage." In Collingwood, that same family would be paying about $130 for the town's insurance.
AMO blames the high premiums on "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."
In its presentation, AMO noted, "Municipalities are the targets of litigation when other defendants cannot pay high damage awards. As stipulated in law, a fraction of fault can cost a municipality millions. This is known as joint and several liability."
In other words, municipalities are easy targets for legal and liability claims.
Collingwood also puts aside an additional $35,000 to cover low-level claims under the town's $5,000 deductible. So add that to the $518,000 we pay (in reality: $555,000 thanks to Dalton McGuinty's HST).
AMO's solution is "continued advocacy... to help change this legal environment and explore alternatives such as proportionate liability. I think we should push this as an election issue and get the party leaders to commit to an overhaul of the province's insurance system that has allowed this to happen. Plus get a promise to bring in proportional payment so smaller communities don't carry an inequitable per-capita burden.
Since 2007, AMO discovered, "liability premiums have increased by 22.2% and are among the fastest growing municipal costs. The 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."
Collingwood taxpayers paid $518,000 plus HST for the town's insurance in 2011, or about or about $25 per capita. We pay FIVE times the amount in insurance that we give to community groups, charities and service clubs.
Ouch! More than 22 per cent in four years! And this total doesn't include "legal fees, self-insurance costs, settlements, risk management expenses or court mandated awards." You can read the full survey here.
AMO predicts that municipal insurance costs alone will rise to $180 million annually by 2015. That's a 16% increase in just four more years. Ontario municipalities already pay more for insurance annually than they collectively pay for bridge and culvert maintenance ($125 million), street lighting ($145 million) and conservation authorities ($109 million).
What's interesting is how the survey broke down the per capita costs. On average, taxpayers in communities under 10,000 paid $37.56 per capita insurance costs. That's about $12 more than what we pay here with a population of twice that number. Odd.
Taxpayers in communities with over 75,000 people paid only $7.71 per capita. An inequitable discrepancy, that strikes me.
Judging by this comparison, we are overpaying for insurance, but our premiums may also take into account special event coverage and some other special factors. I will have to investigate that further.
The study found that a family of five, living in a modest home in a small community, pays an annual tax bill of $3,010 (I believe our average here is around $3,500). The report said, "Fully $200 of their tax dollars are being used for municipal insurance coverage." In Collingwood, that same family would be paying about $130 for the town's insurance.
AMO blames the high premiums on "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."
In its presentation, AMO noted, "Municipalities are the targets of litigation when other defendants cannot pay high damage awards. As stipulated in law, a fraction of fault can cost a municipality millions. This is known as joint and several liability."
In other words, municipalities are easy targets for legal and liability claims.
Collingwood also puts aside an additional $35,000 to cover low-level claims under the town's $5,000 deductible. So add that to the $518,000 we pay (in reality: $555,000 thanks to Dalton McGuinty's HST).
AMO's solution is "continued advocacy... to help change this legal environment and explore alternatives such as proportionate liability. I think we should push this as an election issue and get the party leaders to commit to an overhaul of the province's insurance system that has allowed this to happen. Plus get a promise to bring in proportional payment so smaller communities don't carry an inequitable per-capita burden.
