Southgate's insurance bill goes up 25 percent

·2 min read

Many factors are causing insurance rates to go up 25 percent for Southgate, but liability is a prime one, council heard last week.

A representative from NFP (formerly Secure) Dundalk office and Jeff Coleman, VP of public entity for Frank Cowan Insurance, spoke to council in an electronic delegation.

In particular, Mr. Coleman blamed the escalating cost of claims, and a particular aspect of the law called joint and several liability.

The original reason for this law was to protect those injured in a case where the party mostly responsible is under-insured, he said.

It means that if a municipality is found to be even "one percent" responsible, and another party is not able to cover its share of the award, the township is held responsible for the rest – even if that is multiple million dollars, Mr. Coleman said.

Public entities are included in third-party claims in any kind of vehicle accident, he said. And the size of awards is rising, he added. Municipal and public sector insurance has very large limits, as much as $25-50 million per claim.

The 40 percent increase in the general liability premium is the largest increase among the different types of insurance the township carries, with "owned automobile" just behind at 37 percent.

Southgate is not the only municipality facing a steep increase in its bill, and Mr. Coleman said that the company is getting inundated with requests to price insurance for other municipalities right now. The company has been supplying municipal insurance for about 90 years.

Mr. Coleman mentioned other factors affecting the insurance markets, including class action suits in many areas including those related to COVID-19, and growing claims due to fire and flood. He said that since insurance companies operate by investing the money they hold, low interest rates are another factor.

All those aspects as well as other international issues are affecting the three major companies that Frank Cowan uses as reinsurers.

In 2019, the Ontario government asked municipalities for input on the problem of the burden of ther rising rates and measures that could help.

In October of 2019, the Association of Municipalities of Ontario submitted its comments to that process. It said that Saskatchewan already has made reforms that include making any excess amount the municipality pays proportionate to its fault in cases where the plaintiff contributed to the loss.

M.T. Fernandes, Local Journalism Initiative Reporter, Dundalk Herald