Canadian municipalities are struggling with liability insurance. These policies are being impacted by rising insurance premiums while exclusions and deductibles increase. How and why is this the case? With the launch of EQUA’s exclusive Municipal Liability Insurance Program, we look at what is burdening municipalities and the circumstances that prompted us to respond with this solution.
Why are Canadian Municipalities Experiencing Higher Premiums at Renewal?
While Joint and Several Liability (the 1% rule) has taken the spotlight in recent years as the ultimate culprit for rising premiums, there are a few other trends that have contributed to the insurance challenges that municipalities are facing. Namely, the increase in natural disasters, class action lawsuits, and cyberattacks.
It’s well documented that the frequency and severity of climate change-driven weather events has increased. Accordingly, the cost to municipalities has as well, in terms of damages and insurance premiums. While municipalities in Alberta have suffered under the spotlight, with the likes of the 2016 forest fires in Fort McMurray and this year’s hailstorm in Calgary, these events have consequences for municipalities across Canada. Simply put, the more costly a line is for an insurer to write, the more costly it will be for their policy holders across the board, even if they aren’t historically prone to natural catastrophes.
Class action lawsuits have also been trending upward in frequency and severity (in terms of size of settlement). Because municipalities are viewed as “deep pocket” defendants, they’re often named in lawsuits – and because of the 1% rule, as long as the prosecution can prove marginal negligence, they will often be mandated to pay the majority of a settlement owed to a plaintiff. COVID-19 is expected to increase the number of class action lawsuits brought to court.
Lastly, a common feature of the ongoing pandemic has been the constant stream of headlines touting cyberattacks on Canadian businesses and organizations – municipalities are no exception. In addition to the $1M phishing attack that Saskatoon suffered in 2019, there have been a number of other high profile attacks in 2020, affecting St. Johns, Quebec, a municipality in Manitoba, and countless others. With budgets already constrained, networks and systems often outdated, and with no joint response protocol to follow, municipalities will often pay ransoms to cybercriminals because their alternatives are simply more costly. Altogether, these conditions make municipalities favourable targets for cybercriminals, and thus, more costly to insure.
The Current State of Affairs
The challenges described above have created an unsustainable reality for municipalities and their taxpayers. Now, municipalities are seeing their insurance premiums skyrocket, with some close to doubling. The increase in cost is forcing municipalities to cut and reallocate budget away from social programs to their risk management departments, all at the expense of their constituents.
When founding EQUA, our CEO, David Richards, recognized that we would be facing an extremely difficult market: “We noticed insurers retracting from the marketplace, providing narrower coverages, having more exclusions, higher deductibles, lower limits, and higher premiums. Now, the ongoing pandemic is accelerating that cycle and exacerbating the challenges that municipalities have been facing - it’s clear that municipalities need market relief and a better insurance solution that addresses their liability concerns.”
Market Relief for Canadian Municipalities
We’ve listened, and we understand your needs. Our incredible relationships in the insurance market have allowed us to create a unique and highly competitive liability insurance solution for municipalities that is exclusive to EQUA.
Our program offers broader coverage, along with a greater variety of endorsements and included policies at a competitive rate. Click here for a downloadable copy of our program, outlining coverages, endorsements, policies, and retroactive dates.
Let’s Get Started
With a steadily growing, fully mobile team of over thirty-five employees, five offices across Canada, and deep, meaningful relationships in the marketplace, we have the capacity to serve you wherever, whenever, and however you need. We’re here to help protect you, so you can focus on the health and safety of our communities.
Are you in need of immediate market relief? Do you think you can benefit from our expertise and market access? Email email@example.com to get started today. We look forward to hearing from you.