City's annual insurance premium jumps 16 per cent, up $188K

Although North Bay City Council has approved a hefty increase in the City of North Bay's comprehensive general insurance coverage for the second consecutive year, officials maintain the City is faring better than many other municipalities when it comes to the price of premiums.

For the one-year period expiring this May 1, the City has comprehensive general insurance coverage with Frank Cowan Company Limited, in partnership with Kennedy Insurance Brokers Inc. The Frank Cowan Company was acquired by Intact Financial Corporation and the City's contract for May 1, 2022, to May 1, 2023, is with Intact Public Entities, in partnership with Kennedy.

The 2022–23 insurance program with Intact, approved at Council's most recent regular meeting, has a  renewal premium of $1,360,922, an increase of $188,278 over the current policy, and a rise of 16 per cent.

Mayor Al McDonald declared a conflict of interest as Kennedy is his insurer.

See related from 2021: City's insurance premium up $105K over 2021

The expiring 2021–22 renewal premium of $1,167,769 was $105,148 or nine per cent over 2020's rate minus cyber insurance coverage, equalling a 13 per cent bump over 2020 without cyber included.

The newly approved policy is also without cyber insurance, so there will be additional costs. As in 2021, the City will explore other options in the cyber insurance market.

Still, even with the 13 and 16 per cent premium increases in back-to-back years, the City of North Bay's independent insurance advisor says, "The sad truth is that many municipalities — particularly those who have not engaged in careful management of risk that is evident in the claims results of the City of North Bay — are experiencing much higher rate increases; some in the range of 35–45 per cent."

According to the staff report, the request to reduce deductibles to this year's expiring levels has been made to Intact and is being considered by its senior management team.

Without any relief from Intact, the City's deductibles are on the rise for 2022–23:

• Property: $10,000 to $25,000
• Flood: $25,000 to $50,000
• Equipment Breakdown: $10,000 to $25,000

Chris Bevan of Kennedy Insurance says these increases are being "applied across Intact’s program for municipalities with large total insured amounts and that the City of North Bay is within this category."

The report highlights some notable aspects of the policy. The municipality casualty policy premium has received a 16 per cent increase — below the average for municipal clients for the 2022 term. Property coverage premiums received a 19.5 per cent increase — within the average increases received by municipal clients for the 2022 term. Automobile Fleet and Transit premiums received a 12.9% rate increase which is below the average of Intact's Public Entities program. Insured limits related to building have received the standard 4 per cent inflationary increase resulting in $28,561,620 in additional coverage. The total insured value has increased from $411,293,380 to $439,855,000.

The report also notes the final renewal premium was reduced down to 16 per cent by Intact after a review was requested by Kennedy. Bevan secured an
8 per cent reduction on the initial premium increase presented — a reduction of approximately $18,000. It was confirmed by Intact that the "rates provided were the lowest available under the Intact Public Entities Program."

The independent insurance advisor adds, "The City’s results since the inception of the Cowan/Intact program have been excellent with over $4 million paid in premiums with less than $1 million in net incurred claims. The claims results have been consistent over that period driving an earned loss ratio of less than 23% over four years — very impressive and clearly a reflection of risk well managed."

See also: Steep rise in insurance rates has Council's attention

The report sums up with, "In general, claims are driving premium and the drivers of escalating claims costs include climate change, cyber attacks, joint and
several liability, class actions, the changing legal landscape, the increasing amount of damage awards and future care costs."