City's insurance costs on the rise again

For the third consecutive year, the cost of the City of North Bay's comprehensive general insurance coverage is on the rise, but, as they did last year at renewal time, municipal officials maintain North Bay is faring better than many other municipalities when it comes to the price of premiums.

"In Ontario, the average increase experienced by other municipalities is in the range of 20 to 30 per cent, annually," noted Deputy Mayor Maggie Horsfield. "In the City of North Bay, it is only 9.8 per cent annually."

Horsfield continued, "Currently, the insurance market is categorized as 'hard,' meaning insurance rates are higher. Even though the City's claims coverage has been below average, it is not shielded from the increase in premiums, which is required to ensure the claims are paid."

North Bay City Council approved during its June 6 regular meeting a $1,512,558 contract to Intact Public Entities Inc. (in partnership with Kennedy Insurance Brokers Inc.) for municipal comprehensive insurance for a term of five years, with an option in favour of the City of North Bay to extend the agreement for three additional terms of up to one year each. Coun. Sara Inch cast the lone dissenting vote. Councillors Chris Mayne and Mac Bain were absent.

The City went back to market by issuing a request for proposal, inviting prospective proponents to submit proposals for comprehensive municipal insurance. The expiring 2022–23 insurance program had a renewal premium of $1,360,922 so the coverage approved by council for the coming year is an increase of $151,636 or just under 10 per cent.

For the one-year period expiring May 1, 2022, the City had comprehensive general insurance coverage with Frank Cowan Company Limited (in partnership with Kennedy Insurance Brokers Inc.) Intact Financial Corporation acquired the Frank Cowan Company and the one-year contract that ended May 1 was with Intact Public Entities (in partnership with Kennedy).

See related: City's 2022-23 insurance premium jumps 16 per cent, up $188K

In 2022, there was an increase of $188,278 over the previous year's policy — a 16 percent rise. The expiring 2021–22 renewal premium of $1,167,769 was $105,148 or 9 per cent over 2020's rate minus cyber insurance coverage, equalling a 13 per cent bump over 2020 without cyber included.

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

"We also know that in certain cases, municipalities have been denied coverage for certain areas of their business, and that is not the case for North Bay," added Horsfield. "There are a number of areas that are impacted by this increase in cost, including climate change, class actions, joint and several liability, the changing legal landscape, future care costs, and transit claims.

The previous council also faced similar premium hikes.

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

The associated staff report states, "Generally, insurance is a cyclical business. It has been defined as being either 'soft' when the market exhibits low rates, generous terms, an abundance of capital and more competition or 'hard' when the market has higher rates, restrictive terms, reduced levels of capital and less competition."

The approved bid price of $1,512,558 represents the total cost for the first year. Per the report, "Under the terms of the contract, the City will negotiate coverages and renewal rates with the successful proponent annually, which may vary based on operations requirements and budget availability. The proposal from Intact Public Entities Inc., in partnership with Kennedy Insurance Brokers Inc., scored highest and provides the best overall value to the City. Their bid is considered fair and reasonable."

Some notable aspects of the policy:

• The municipality casualty policy premium has received a 6.8 per cent increase — below the average for municipal clients for the 2023 term.
• Property coverage premiums received a 13.5 per cent increase — within the average increases received by municipal clients for the 2023 term. 
• Insured limits related to building have received an 11 per cent inflationary increase resulting in $43,422,150 in additional coverage. The total insured value has increased from $439,855,000 to $483,277,150.
• Automobile Fleet and Transit premiums received a 10.3 per cent rate increase which is below the average of Intact's Public Entities program.