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Uncontrolled Municipal Insurance Costs Continue to Rise

Just like your personal insurance, municipal insurance 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.

AMO, the Association of Municipalities of Ontario, recently released the results of a comprehensive survey of municipal insurance costs across the province. 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.

It doesn't seem to matter how much your community pays for police, fire and emergency services to ensure public safety. The coverage they offer does not mitigate rising insurance costs.

Since 2007, AMO discovered the following:

"Liability premiums have increased by 22.2 per cent 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."

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."

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. Municipalities pay even more, thanks to the imposition of the HST by the current government: another 13 per cent on top of the total.

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).

The survey broke down the per capita costs: on average, taxpayers in communities under 10,000 paid $37.56 per capita insurance costs. Taxpayers in communities with over 75,000 people paid only $7.71 per capita.

It's clear there is an inequitable discrepancy between the costs for smaller municipalities shoulder a higher per-capita burden.

The report does not note whether premiums also take into account special event coverage and some other special factors. Some communities may be paying even higher premiums to host cultural and recreational events -- the lifeblood of many municipalities.

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 (close to the average in my home town: around $3,500). The report said, "Fully $200 of their tax dollars are being used for municipal insurance coverage." That family pays another $700 to $1,000 for home insurance, plus car and other insurance packages.

AMO blames the high premiums on "the legal reality that municipalities are 'deep pocket' defendants."

AMO continues, "(Municipalities are) 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: it's cheaper to pay than fight in many cases.

My own town also puts aside an additional $35,000 to cover low-level claims under the town's $5,000 deductible.

AMO's solution is "continued advocacy... to help change this legal environment and explore alternatives such as proportionate liability."

Municipalities 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 -- and get a promise to bring in proportional payment so smaller communities don't carry an inequitable per-capita burden.

You can read the full survey at

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