March 4, 2014 by Canadian Underwriter
Insurance premiums for Ontario municipalities have climbed by $35 million since 2010, and members of provincial parliament from all three parties recently spoke in favour of a motion to reform the province’s law on joint and several liability.
The Ontario Legislature called on the government Thursday to implement a “comprehensive, long-term solution to reform joint and several liability insurance for municipalities by no later than June 2014.”
The motion was tabled by Randy Pettapiece, the Progressive Conservative party’s rural affairs critic and MPP for Perth-Wellington.
“Under the Negligence Act, damages can be recovered from any defendant, even if they are found to be only 1% at fault,” Pettapiece said in the legislature.
“Municipalities often targeted as insurers of last resort can be on the hook for massive damage awards.”
Ontario’s Negligence Act states: “Where damages have been caused or contributed to by the fault or neglect of two or more persons, the court shall determine the degree in which each of such persons is at fault or negligent, and, where two or more persons are found at fault or negligent, they are jointly and severally liable to the person suffering loss or damage for such fault or negligence ….”
Because of this law, insurance premiums for municipalities have increased by $35 million in the last four years, suggested Julia Munro, PC MPP for York Simcoe.
“Medium-sized municipalities, similar to the town of East Gwillimbury in my riding, with a population of 24,000 people, have seen an average increase of 35% in liability insurance premiums,” said Munro. “We know that people in some communities spend more on insurance than they do for their library. In another county, for every $2 spent on snowplowing, another $1 is spent on insurance.”
The Insurance Bureau of Canada “welcomes the debate on the implications of joint and several liability on Ontario municipalities,” Pettapiece said, quoting from a letter he received from Ralph Palumbo, IBC’s vice president for Ontario.
The Association of Municipalities of Ontario reported in 2011 that municipal liability premium costs increased 22% from 2007 to 2011, said Monique Taylor, the New Democratic Party (NDP) MPP for Hamilton Mountain.
Taylor added she spoke to a worker in the City of Hamilton’s risk management division.
“He told me to think about it this way: Two trucks are driving toward each other on a country road,” Taylor said. “They collide and one veers off and hits a tree on a municipal easement. The judge in this case has an award of $5 million and finds the municipality 1% at fault. The driver, who is significantly at fault, only has $1 million of liability coverage. Thanks to joint and several liability, the municipality is on the hook for the remaining $4 million.”
In 2011, Taylor added, municipalities paid a total of $155 million for insurance and $85 million for liability premiums.
“That’s just for the insurance; that doesn’t include the legal fees, settlements and court-mandated awards,” Taylor added.
Glenn Murray, Ontario’s Minister of Transportation and Infrastructure (and Liberal MPP for Toronto Centre), also spoke in favour of Pettapiece’s motion.
“There’s not much to debate, Mr. Speaker, in this particular motion because we agree with it,” he said to the Legislature. “It’s already well in progress. We’re working with (the Association of Municipalities of Ontario) and (the Rural Ontario Municipal Association) to a solution.”
A former rural mayor also spoke in favour of reforming joint and several liability.
“I know, myself, as (then) mayor of South Glengarry, we were in court a number of times, drawn in because of the threat-really, at no fault, and, in almost all cases, proven that way in court,” said McDonnell, PC MPP for Stormont-Dundas-South Glengarry.
“But our insurance company was in there because there was a threat of hundreds of thousands of dollars of liability. Because we were the municipality, 1% could bring us in.”
The motion did not go into specifics about how the laws should be changed.
“Joint and several liability insurance reform is, I recognize, very complex,” Pettapiece said. “It involves existing provincial laws, it involves years of legal precedent, and it concerns many competing interests. All of these must be considered. That is why this motion does not dictate a specific avenue of reform. It is not intended to. The government needs to listen to the advice it has received from AMO, from municipalities, from insurers, from the legal profession and from its own public service. Solutions are not straightforward, but we know they are possible.”