August 11, 2016 by Canadian Underwriter
The Ontario Municipal Insurance Exchange (OMEX) announced on Thursday that it will suspend Reciprocal underwriting operations effective immediately “to allow it time to fully assess the needs of Ontario municipalities with a view to redesigning its products to better service the needs of its future members.”
As a result of this decision, OMEX will immediately cease to write renewal business for the remainder of 2016, and will not pursue new business, OMEX said in a press release. Existing members are being advised to seek coverage from alternate insurers.
All “in-force” policies will continue until their natural expiry, and OMEX will continue to serve all existing and former members “as well as responding to all existing claims, and all new claims as appropriate,” the release said.
OMEX said that the decision is part of a strategy to redesign the Municipal Reciprocal to more effectively address the emerging needs of its future members.
“While it is regrettable that OMEX has had to take this step in its evolution, management is committed to invest the time and energy required to remodel the Reciprocal, with the full support of its board of directors,” the release said. “It has also taken this strategic step at a time when the finances of OMEX are very strong, enabling it to discharge all financial obligations as they arise. Other than the fact that OMEX will have no new or renewal premium for the next year, it will be ‘business as usual.’”
While OMEX remains committed to the original concept of sharing risk and expertise between members of the Reciprocal, it has struggled in recent years to grow in an extremely soft insurance market and a highly competitive business environment, the insurer reported. “This low pricing environment, combined with the impact of joint & several liability on municipal claim settlements has made it difficult to offer sustainable pricing while still addressing the municipalities’ concern about retro assessments.”
OMEX will work with its reinsurers during the underwriting hiatus to address these issues in all future potential product offerings.
OMEX is a not-for-profit insurer dedicated solely to providing insurance to Ontario municipalities since 1989. It is a member-governed alternative to the conventional insurance market.