Will Ontario’s new law result in a flurry of snow removal capacity?
December 9, 2020 by David Gambrill
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On the day before heavy, wet snow and slush graced the streets of southern Ontario, the provincial government passed a law Tuesday that brokers believe will make it easier for them to find insurance coverage for snow removal contractors.
The Insurance Brokers Association of Ontario (IBAO) said it’s optimistic that “Bill 118 will encourage more insurance companies to write this line of business, if not for this season, for 2021-22.”
Bill 118 is intended to make it easier for brokers’ commercial clients to defend themselves against slip-and-fall personal injury lawsuits related to snow and ice. Section 6.1(1) of the province’s Occupiers’ Liability Act now bars a claimant from taking legal action to recover personal injury damages caused by snow or ice unless defendants have received 60 days’ notice of the intent to sue.
The 60-day window represents a change from an earlier version of the bill, which previously called for only 10 days’ notice. The 10-day notice was too short for an injured claimant to obtain information about the defendants, critics of the earlier version had argued. The amended version, now passed into law, has a 60-day notice period.
Before Bill 118, the notice period was two years.
The thinking behind Bill 118 is that it’s more difficult for a defendant to gather relevant evidence about what happened two years ago, say, than just 60 days after an accident. The province’s brokers believe the change will reduce the liability exposure of snow removal contractors and businesses responsible for clearing snow and ice away from their properties. That, in turn, may make it more attractive for insurers to underwrite the risk, which has been deemed to be unprofitable for some time.
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One snowplow operator told Canadian Underwriter in February that his insurance premiums had jumped from $16,000 a year to $52,000 a year.
In Canadian Underwriter’s March 2020 issue, Gary Hirst, president and CEO of Toronto-based managing general agent CHES Special Risk, listed two key reasons for the increase in insurers’ claims costs related to snow removal.
“A lot of big corporate entities that have public places in need of snow clearing have extremely onerous contractual conditions that pass on all liability to snow-clearing contractors,” Hirst observed.
Also, he noted, legal costs and awards arising from slip-and-fall cases in Canada are on the increase.
In Ontario, most slip and fall personal injury awards are settled, meaning the amounts are not publicly reported, according to personal injury firm HimPro. Ottawa personal injury firm augerhollingsworth.ca has posted online several examples of settlement amounts for slip and fall cases related to ice and snow; they range between $70,000 and $270,000.
The high costs caused several insurers to exit the class of business altogether, meaning that in wintry Canada, it was all but impossible in some cases to find an insurer willing to write the snow removal business.
“Brokers across Ontario have been hearing from policyholders that availability of snow removal insurance for their businesses was scarce to non-existent in some regions, meaning some operators wouldn’t be able to secure the necessary liability insurance to cover their business this winter, and therefore would be unable to operate,” IBAO observed in a media statement. “Bill 118 establishes new criteria around snow removal liability that will encourage insurance availability to return in Ontario.”
With the new law in place, said IBAO CEO Colin Simpson, “We’re…optimistic that rural and small to medium-sized snow clearing businesses will resume operation once the insurance industry is able to respond to this positive move.”
Feature image by iStock.com/skhoward
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The increase noted in the article is small. My client’s premium went from less than $50k to over $150k in a single year. I have a feeling there will be far fewer snow removal contractors available this year.
In addition to this type of change insurers for this class should offer adjustment premium options. It’s impossible to predict the weather in some areas so estimating revenue is extremely difficult.
This is a tough class of business.
This is a welcome change regarding statute of timing for claims. Legislators must also address more fundamental issues of responsibilities of plaintiffs. Personal injury lawyers have to do some morality soul searching as well.
I have been in the snow clearing business fo 45 years, in the last two decades Liability ins. has been a must. Property owners don’t want to pay increased snow clearing rates (because of insurance increase)but want operator’s to insure their property. Why is a property insured by contractor and owner for liability. The property owner should always be first payer not the contractor. When a contractor leaves a property serviced he is not responsible what happens tomarrow because of melt and freeze.
This has definitely been a challenging class of business to place for the past two years in particular for sure. I’m hopeful that this change will have a positive impact.
hhopefully two things will happen. The price will come down for snow removal operations. Secondly more insurance companies will want to write these operations knowing they might make a buck doing so.
The wild card is in 2-3 years time the ambulance chasers will learn how to “work around” the legislation. This will increase the lawsuits and payouts once again.
There 3 certain things in life death. taxes and creative ambulance chasers!
Maybe I am missing the point, but how is this going to make insurers more likely to write this tough class?
While it is nice to have some recognition of a problem, closing the window of “opportunity” for erroneous lawsuits does little for the contractor paying exorbitant insurance rates. The problem lies in insurance companies taking the easy way out and settling lawsuits rather than taking the “risk” of fighting them. Something they taut is what we buy insurance for in the first place.
Any action taken now is already too late for many great contractors in this business, keeping good records has been a norm for sometime now, it won’t matter whether the lawsuit is filed 60 days or 3 years after an incident.
Judgements need to be lowered, lawyers need to start arguing to defend rather than settle, plaintiffs need to foot their own legal costs.
As a 35 year veteran of the industry it is hard to look back at when I was 18 remembering insurance was able to charge more for inexperience based on age. (Essentially age discrimination) Now with 35 years of plowing without so much as a windshield claim and $100s of thousands in premium, to be categorized by my industry rather than my experience is a harder pill to swallow. Insurance rates need to be regulated.
It is easy for insurance to say they lose money on snow and not prove it when settlements are private, that losses are due to snow rather than mismanagement.
Contextually on a small end of increases, premiums ( mine doubled in the last 3 years) are a small part of the equation. We now have a deductible of $7500 (for us anyway) per slip and fall.
Its a wonder great contractors are leaving the business in which they excel and love.