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Liability premiums for Ontario municipalities increase 22% since 2007


September 9, 2011   by Canadian Underwriter


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Liability premiums for Ontario municipalities have increased by 22.2% since 2007 and are among the fastest growing municipal costs, according to the Association of Municipalities of Ontario (AMO)’s first-ever comprehensive survey of municipal insurance costs.
Total 2011 Ontario municipal insurance costs are $155.2 million, the survey found. Liability premiums make up the majority of these expenses at $85.5 million.
Property taxpayers are paying this price.
The survey results are weighted from a sample size of between 97 and 122 municipalities representing approximately 50% of the Ontario population.
AMO said municipalities’ insurance costs are higher than annual province-wide municipal spending in each of these respective areas: maintaining bridges and culverts, administering and providing Ontario Works employment assistance benefits and funding Conservation Authorities.
Smaller municipalities saw average liability premium increases since 2007 of 13.4% for municipalities with populations of up to 5,000 and 15% for municipalities with populations of between 5,000 and 10,000.
“These costs disproportionately affect small municipalities,” AMO says. “The per capita insurance costs for communities with populations under 10,000 are $37.56. By comparison, per capita costs in large communities with populations over 75,000 are $7.71.
“Property taxpayers in one northern community are spending more on insurance than their library. In one southern county, for every $2 spent on snowplowing roads, another $1 is spent on insurance.”
AMO says the survey was prompted by anecdotal reports of rising insurance costs. “It sought to quantify, in part, some of the costs associated with joint and several liability in the provincial Negligence Act. It does not include legal fees, self-insurance costs, settlements, risk management expenses or court mandated awards.”
Based on current trends, insurance costs will rise to $214 million annually by 2020, AMO notes.
The full survey results are available at:
http://www.amo.on.ca/AM/Template.cfm?Section=Municipal_Insurance_Survey&Template=/CM/ContentDisplay.cfm&ContentID=162774


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