An increase in insurance rates could mean fewer recreation options or a big tax hike in your municipality.
County of Simcoe council is adding its voice to the chorus of municipalities calling on the provincial government to help deal with the rising costs of municipal insurance, which is weighing heavily on municipal budgets across Ontario.
“There’s really only two options at this point: either we continue to increase taxes exponentially to pay for this or start being more risk-adverse and close toboggan hills, skating rinks and all those fun things we don’t want to close,” said Deputy Warden and Innisfil Mayor Lynn Dollin during a County of Simcoe committee of the whole meeting earlier this week.
There have been multiple factors that have contributed to the spike in rates, including climate change and increased litigation.
“We could all sit here for hours and tell ridiculous stories about claims that have been put before us,” said Dollin.
In 2019, the Association of Municipalities of Ontario (AMO) put out a submission to Ontario’s Attorney General Doug Downey entitled "Towards a Reasonable Balance: Addressing growing municipal liability and insurance costs."
With a provincial election coming in June 2022, AMO has recently asked municipalities to lend their support by putting more pressure on the province, hoping the province will take action on the seven recommendations contained in the report.
The first recommendation is for the province to adopt an insurance model of full proportionate liability to replace joint and several liability.
Under joint and several liability, a plaintiff may recover all the damages from any of the defendants regardless of their individual share of the liability. Under a proportional liability model, each member of a group is held responsible for the financial results of the group in proportion to its participation.
“Joint and several liability means higher insurance costs. It diverts property tax dollars from delivering public services,” wrote Jamie McGarvey, AMO President, in his letter to Downey. “It has transformed municipalities into litigation targets while others escape responsibility. It forces municipal government to settle out-of-court for excessive amounts when responsibility is as low as one per cent.”
Many municipalities, at the local level, have also added their voices to the AMO recommendation.
As part of the 2022 Town of Collingwood budget, it was noted by Daniel Cole, manager of public works, that the town has seen an increase in insurance claims made against it.
At their Jan. 24 council meeting, Collingwood councillors voted in favour of also supporting AMO's motion, put forward by Coun. Deb Doherty.
As part of that discussion, Doherty said Collingwood’s insurance rates have risen 50 per cent in the past five years.
In January, Midland also dealt with a motion regarding the issue.
During 2022 budget discussions in Tiny Township, councillors discussed their rising insurance costs, preparing for a 10- to 20-per-cent increase in their premiums.
During Tuesday’s meeting, Wasaga Beach Deputy Mayor Sylvia Bray said the matter is a big one for all municipalities.
“AMO has asked us to help put a little bit of pressure on the provincial government. I fully support that,” said Bray, noting that Wasaga Beach had seen a 12.3 per cent increase in 2021 to their insurance rates, and the municipality has budgeted for another 10 per cent increase this year.
“I was shocked to see our increase actually came in at 36.5 per cent,” said Bray. “I’m not sure how any municipality can manage to keep taxes down.”
Bray noted the County of Simcoe pays nearly $5 million a year in insurance.
“It seems to me this issue has been coming up for 20 years or so,” said Tay Township Mayor Ted Walker. “It’s time for the province to step up on this.”
