Highlands East’s insurance costs are spiking significantly for the second consecutive year in the wake of an unstable insurance market.

Council voted to renew its insurance with BFL Canada June 9 for $291,644 plus taxes – a 28.68 per cent increase over last year’s $226,644. This comes after the insurance rate increased by 47 per cent in the last renewal, rising from $159,184 in 2018/19.

The municipality had planned to go out to market for this year’s insurance, but deputy CAO and treasurer Brittany McCaw said that did not happen due to time constraints caused by COVID-19. The pandemic is also expected to have more of an impact on the insurance market in the future.

“BFL has worked hard on our behalf to make sure we received a fair renewal with all the different challenges we’re facing right now,” McCaw said. “But this was the result of a challenging market.”

McCaw said BFL has reported markets hardening the past two years, with insurers withdrawing from certain classes of business, increasing premiums, and restricting coverage to mitigate exposure before the pandemic even hit. The Lloyd’s of London’s insurance company is expecting an overall cost of more than $100 billion to the global property and casualty insurance industry due to COVID.

Deputy Mayor Cec Ryall said he understands why staff could not go to market this year, but added the municipality needs to explore alternatives next year.

“I understand the market is what the market is, and everything goes up based on whatever drives overall costs up,” Ryall said. “It’s extremely important we get a state of the union here about what’s happening.”

McCaw said staff will be preparing necessary RFP documents at the end of 2020 to go to market for 2021. The Association of Municipalities of Ontario has advocated for changes to joint and several liability due to rising premiums, with the province launching consultations on the issue in 2019. Ryall said the municipality could be facing higher costs due to BFL’s losses.

“They may or may not be managing their company as well as others might be,” Ryall said. “It’s extremely important we investigate this extremely thoroughly before the next budget.”

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