City's insurance premium up $105K over 2020

Up against a May 1 deadline, North Bay City Council had little choice but to approve a comprehensive general insurance coverage premium that has risen more than $105,000 over last year's number.

The policy will run for one year until May 1, 2022, and will cost the City of North Bay $1,167,769 plus applicable taxes, $105,148 over 2020's rate, according to the associated report from City Solicitor Peter Leckie and Chief Financial Officer Margaret Karpenko. The nine per cent rise in premiums works out to a 13 per cent bump over 2020 as cyber insurance was included in the last policy and is not in the new quote. The City says it will explore other options in the emerging cyber insurance market. Overall, the increase comes despite what the City calls an "exemplary" claims history that can be attributed to a “hardening” market globally.

"Most commercial insurers, having followed a period of strong competition," over the past decade "are underwriting risk more aggressively and require more premium to shoulder the risk they choose to insure. This is happening in almost all lines and around the world." For the full report, click here.

With Council's approval during Tuesday's regular meeting, the contract has been awarded to Frank Cowan Company Limited, in partnership with Kennedy Insurance Brokers Inc. The vote was unanimous with Mayor Al McDonald and Coun. Mark King declaring conflicts and Coun. Marcus Tignanelli abstaining due to personal business connections to Kennedy.

According to the City's report, North Bay "is not alone when it comes to experiencing challenges with the insurance market, there is a good deal of unhappiness, but we continue to do better than many."

Coun. Mac Bain encouraged his colleagues to approve the insurance contract, noting the Federation of Northern Ontario Municipalities (FONOM) had performed a survey of municipalities in northeastern Ontario, and rate increases were reported across the board.

"There is an increase in the premium and the report explains why," said Bain. "The rate increase as far as insurance premiums for this current year ranged from as low as seven per cent to one, as high as 83 per cent."

Bain observed the rate hikes are also being felt across the province and FONOM, AMO (Association of Municipalities of Ontario) and ROMA (Rural Ontario Municipal Association) have all addressed the insurance premiums as a major concern and will be discussed at length at their next meetings, including the planned FONOM conference in May. 

Later in the meeting, Coun. Bill Vrebosch gave notice of a motion on the insurance premium increases for the May 4 regular meeting.

Bain added, "I would encourage all of Council to pass this because the policy takes effect May 1st and time doesn't allow us to review this or to go out [in search of another deal] any further. I don't think we would see any savings. I trust our staff have done comprehensive research into this matter." 

The City reports in the last year, other municipalities experienced the doubling of its insurance premiums "some of which was clearly the result of their claims history but also attributed to such things as the general hardening of the insurance market and the impact of joint and several liabilities.

"Insurers declined to renew municipal insurance programs leaving municipalities to find alternate markets. Others increased self-retention limits but nevertheless premiums doubled, coverages were lost, and had difficulty securing excess insurance. Yet others were warned to anticipate 50 per cent increases."

Data shared by FONOM and the Northwestern Ontario Municipal (NOMA)  Association on rising insurance premiums in over 60 member municipalities reveals the average rate of increase is just over 20 per cent, a trend which "for many smaller communities, this is simply not sustainable," according to Rick Johal a senior advisor with AMO.

In Johal's article Joint and Several Liability & Rising Municipal Insurance Costs, cited in the City of North Bay report, the author writes, "One municipal government noted that it must now increase taxes to ratepayers by 2.5% to simply make up for the increase on its insurance premiums. This scenario, left unaddressed, will continue to draw property tax dollars away from key public services for Ontario residents.

"This issue will not go away."