By Cecilia Nasmith
While budget-conscious Northumberland County likes to shop around for the best deal on behalf of its taxpayers, there is no way to find savings on the insurance bill of just over $1-million that it will pay in 2023.
The problem, as Jones Deslauriers Partner and Account Executive Tracy Drew explained at the May meeting of county council's Finance and Audit Standing Committee, is that so few companies even offer coverage to municipalities any more.
“It used to be, years ago, you had a couple of different opportunities to find coverage in different areas,” Drew said.
“You will see it's the 1% rule that is killing our municipalities in Ontario, at the very least, and in Canada. Year over year over year they don't seem to be addressing that.
“The losses are significant, so there are few players who want to ensure municipalities. But it has to be done.”
Drew knows of three companies – Marsh Canada, through which they broker Northumberland's insurance, as well as Intact Public Entities and Cowan Insurance – still offering any coverage to municipalities.
“I know Intact had indicated they have a municipal program, but I don't think it is as broad as the Marsh program,” she said
And at any rate, she continued, Intact likes to pick and choose carefully whom they want to ensure, “so you're not always able to get all the quotes out of the Intact program.
“So this is what you are stuck with, and the prices seem to be going up and up and up.”
Asked by Committee Chair Lucas Cleveland to explain the 1% rule, she invoked the term “deep-pocketed” that is often applied to municipalities and other organizations deemed to have significant assets.
In liability cases, she said, a judge typically will find every party to be liable to at least some degree, even if it's only 1%. And it has long been assumed municipalities have reserves and assets to draw on for large payments – deep pockets.
Provincial legislation subscribes to the joint-and-several-liability principle that holds all parties responsible, even if they are deemed to be only 1% at fault.
And even if the other party is held to be 50% liable, Drew continued – if that party can pay only a small portion of the damages, the rest of the bill is paid by the municipality.
“They could find only 1% on that municipality, and that municipality will have to pay the lion's share of the claim.”
