Joint and several liability 'not the silver bullet' for rising municipal premiums

Your insurance is going up because the world's on fire and there's nothing you can do about it.

That was the grim message a provincial working group gave to local delegates at the Association of Municipalities of Ontario (AMO) conference last week.

Cities and towns have seen their insurance premiums skyrocket over the past few years — many by as much as 30 per cent, according to a show-of-hands poll at the start of the meeting.

Some have theorized it's due to a legal precedent called "joint and several liability," which holds that if an entity is even one per cent responsible for an accident, the victim can recover the full damages from them.

Municipalities say this has led to them paying out a disproportionate amount of settlements, since slip-and-falls, toboggan accidents, and road injuries all often happen on locally owned land, even though the municipality may not be directly at fault. AMO has called on the province to institute a cap on awards.

Attorney General Doug Downey has never been quite so sure, saying joint and several might not be the boogeyman civic leaders were hoping for. Nonetheless, he stood up a working group to investigate concerns.

It held 15 meetings with AMO representatives and stakeholders in insurance, law and road maintenance, and reported its findings at the conference last Tuesday.

Joint and several liability might play a factor — there's not enough data to say for sure — but "it's not the silver bullet solution that we were hoping it would be, from a policy perspective," AMO Senior Advisor Bridget Cherry said.

Insurance is in a "hard market" right now, said Shannon Devane, AMO Local Authority Services' program manager for municipal risk management. When she worked as a risk manager for the City of Vaughan, Devane said she was known as the "fun-killer" at work for discouraging ideas like rock-climbing walls.

The insurance market is always cycling between hard and soft, Devane said. Hard markets come with higher premiums as companies are less willing to take on risk. This hard market started in 2019 after 15 years of softness — part of the reason premiums feel so high right now is that cities and towns had it good for a long time, she said.

Hard markets come in hard worlds, the group said. Climate change is driving up costs everywhere as more extreme weather claims come in. Inflation is still making insurers skittish. Acquisitions have made the market smaller. Even "micromobility" devices like e-scooters are a new risk factor for cities.

Tecumseh's premiums have more than doubled over the past decade as the town battles shoreline erosion and flooding from Lake St. Clair, Mayor Gary McNamara told The Trillium. 

"It's quite high,"  the mayor of the town of 24,000 said. "To insure our municipality now it's close to $400,000 on a yearly basis."

Municipalities had suggestions to lower premiums, but the group found many wouldn't work. Raising minimum coverage for drivers would just make things more expensive for individuals, and making municipalities less liable for accidents is impossible, legally speaking, said Earl Dumitru, a lawyer and adviser with the Ministry of the Attorney General.

Essentially, municipalities can't legislate their way out of a market issue. A city can ban tobogganing if it wants — but it will still absorb the risk of tobogganing in nearby municipalities, the rest of the province, and the world, Cherry said.

Over the next 18–24 months, Devane said the group will look at potential solutions like reciprocals (not-for-profit insurance companies) and insurance pools (municipalities sharing coverage — see page 2 here). 

One delegate asked if AMO could create its own insurance company.

"Everything's on the table," Devane said.