Yet another city has ended up with surging municipal insurance costs – but this time, the city of St. John’s in Newfoundland and Labrador is stuck with an insurance expense that’s nearly twice the amount it paid last year.
According to St. John’s mayor Danny Breen, the cost of insurance for cities has been steadily increasing for years. Last year, St. John’s allotted $528,555 for risk management and insurance, but this year, it had to add an additional $462,846 - representing an 88% increase in insurance costs.
“We compare regularly with other similar jurisdictions across the country; we’re seeing rates increase anywhere from 45% to 186% in one place, and so we’re at the lower end of that,” said Breen.
“But it’s still a large amount of money and that’s a significant concern to us.”
The mayor explained that there are several factors that can affect municipal insurance rates, noting that the current market is not particularly competitive this year, and thus lower rates were difficult to secure.
“One of the things that’s had a big impact is the impacts of climate change, the impact of major disasters on damage to infrastructure in the country,” the mayor told CBC News in an interview.
The mayor also explained in the interview that the cost is not just influenced solely on St. John’s claims experience – the city is weighed together with a larger pool of other similar municipalities, which ultimately impacts the rates of all the cities grouped together. The COVID-19 pandemic was also mentioned as a factor by Breen, impacting the insurance industry.
Breen added that the number of lawsuits faced by the city were a factor as well, but would not elaborate on any exact details.
“The whole municipal industry is under pressure, particularly the larger ones, and that’s the one where we fit in. If you were to look around the province, I don’t think they’d have very significant increases in municipalities in the province in their insurance because they don’t offer the same types of service and the same size of services and facilities that the City of St. John’s has,” he said.
Other municipalities across Canada have also reported increases to their insurance rates for 2021, such as North Huron in Ontario and the Sunshine Coast Regional District (SCRD) in BC. The SCRD in particular also cited hardening insurance market conditions, the pandemic, and the damage caused by natural disasters as factors in its insurance cost hike.
