Municipalities are upset about rising insurance costs

·4 min read

Barry’s Bay – To some, death and taxes are the only certainties of life, but rising insurance costs are now running a close third for some, and nowhere have they become more vocal especially about rising municipal insurance costs than at the Madawaska Valley Township council table.

The issue was raised again at last Tuesday’s regular council meeting where MV Township Treasurer Amanda Hudder presented a 14-page report that attempted to answer why the township’s insurance rates have been rising faster than the waters of recent spring floods.

MV Chief Administrative Officer, Sue Klatt, pointed out MV was not alone in its concern for those rising insurance costs. She listed off the town of Renfrew that is reportedly facing a 22 per cent increase; Killaoe, Hagarty and Richards with a 14 per cent rise, Pembroke with 13 per cent, Petawawa with 10 per cent, McNab Braeside 20 per cent, and Admaston-Bromley that is facing a whopping 46 per cent increase in its insurance costs over last year.

Currently, MV has its general liability policy with the Frank Cowan Company, an insurance firm that claims to have been ‘insuring the public interest since 1927.’ According to Ms. Hudder, Cowan insures 48 MV Township buildings, including everything from its municipal office to several communication towers that Cowan considers buildings.

Her report noted Cowan argued that escalating insurance claims are the real culprit, as more municipalities make claims as a result of climate change, joint liability, class action suits, rising legal costs, future care costs, transit system claims and, somewhat surprisingly, cyber-attacks that Cowan said are now beginning to affect small Ontario municipalities.

Cowan said rising insurance claims are not only driving up municipal government premiums, but the company noted the current situation has already forced one major insurance firm, Omex, to stop underwriting municipal government insurance policies all together.

Essentially, the Canadian insurance industry ‘pools’ many of its catastrophic liabilities and particularly when dealing with the recent and rising costs of climate change. Or as Cowan put it in Ms. Hudder’s report, “What was deemed to be a 100-year storm, years ago, now occurs with increasing frequency.”

In a phrase, whether it’s the increasing number of damaging spring floods in Renfrew County or wildfires and hurricanes occurring elsewhere in North America, Renfrew County municipalities can certainly expect to see escalating insurance premiums.

For instance, actuarial societies in the United States and Canada publish a quarterly index known as the Actuaries Climate Index (ACI) that measures climate extremes across the two countries. Over the past five years, the ACI remains at record-breaking levels. Overall losses from worldwide natural catastrophes in 2016 totalled $175 billion, up from $103 billion in 2015. And insured losses for 2016 were not only higher than average for the past 10 years, but for the past 30 years as well. Put another way, as Cowan said, “Clearly both severity and frequency are on the rise.”

All to say, Canada and Renfrew County are far from immune. The 2016 Fort McMurray wildfire was the single most catastrophic loss in Canadian insurance history, according to Cowan. The next year was no better; in the first half of 2017, Canada experienced five more catastrophic insurance events, or, put another way, in those first six months of 2017, Canada had more catastrophic events that it had experienced in a single year, ever. Which leaves the insurance industry ‘pooling’ it’s industry-wide loses.

Interestingly, Cowan acknowledged: “Simply put, property and reinsurance rates are on the rise (and) often, when rate targets cannot be solely achieved with increases on one line, rate increases will spill over to other lines as well (i.e. primarily auto and liability.)

All to say, no matter how hot and bothered Renfrew County municipal politicians may get at the mere mention of rising insurance rates, it’s pretty much a sure bet, that like death and taxes, every new fire or flood you hear about elsewhere in California or downtown Edmonton, will likely show up in rising insurance premiums here in Renfrew County.

Still, there is some good news for municipalities such as MV. Last Tuesday, Ms. Hudder had no new recommendations for council in how to deal with rising insurance rates, but she did note that: “In comparing the premium for the Commercial General Liability policy with other municipalities that have roughly the same population,” said the treasurer’s report to council, “the amount that Madawaska Valley is paying is still significantly lower.”

Barry Conway, Local Journalism Initiative Reporter, The Eganville Leader