A little competition…

To the average citizen who struggles to keep up with home and auto insurance rates, the amount it costs to insure a municipality seems staggering. 

The Town of Minto’s 2019 premium will be $272,161, up $12,190, or 4.7 per cent from 2018.

Mapleton’s 2018 premium of $233,000 was 25% higher than the township’s 2013 premiums, representing an average increase of 5% per year.

Of course municipalities own massive amounts of property and are exposed to innumerable liability risks, so any comparison with individual policyholders is pointless. However, a comparison of where municipality insurance rates are today with five years ago is pretty interesting.

Until recently, there was pretty much only one player in the municipal insurance market, in Ontario anyway. Each year company representatives showed up to answer questions from councils prior to a pretty perfunctory renewal, generally at a substantial increase in premium.

If anyone deigned to ask why rates were climbing, seemingly regardless of claims history, the insurers inevitably pointed to “joint and several liability,” a legal concept under which multiple parties can be held liable for the same occurrence and be responsible for all restitution required. In cases involving multi-million dollar claims for which other liable parties couldn’t pay the judgment, it could be, and often was, extracted from the municipality, viewed by courts as the party with the deepest pockets.

In response, municipalities spent years lobbying over the issue. Perth-Wellington MPP Randy Pettapiece took up the cause, introducing a private member’s resolution to reform joint and several liability for municipalities in 2014. Despite receiving consent from MPPs of all parties, the measure was never passed under the previous Liberal government. 

At the March 5 council meeting, Minto Mayor George Bridge expressed optimism that changes might at last be made to the system now that Pettapiece is part of a new Conservative government. And perhaps they will indeed find time to take up that cause, but past governments found the matter not so straightforward and only time will tell if this one runs into similar roadblocks.

However, in the meantime, municipalities have been lowering their rates by embracing the concept of good old fashioned competition.

In 2013, Minto’s premium, after years of steady increases, was at $249,925. It dropped to $228,246 the following year when the town opened up the policy to competitive bids, found a new carrier and never got back to the 2013 level until 2018, when the premium reached $259,071. 

In 2018 a request for proposals from Mapleton attracted quotes from all four primary players who have cropped up in the municipal insurance market in Ontario. The township ended up accepting a policy with a premium of $160,011 for 2019, more than $70,000 lower than the previous year.

As Minto treasurer Gordon Duff noted on March 5, “provincial action on joint and several liability is still encouraged and could reduce liability costs for all municipalities.”  True enough, but it’s good to see municipalities didn’t just wait around for that to happen. By taking matters into their own hands and seeking competitive bids for a valuable piece of municipal business, they have saved local taxpayers some cash. 

Sometimes, and clearly in this case, it pays to be proactive.