Brokers must make sure that childcare clients avail of adequate coverage, with a new nationwide scheme set to see some day cares face skyrocketing demand and potentially greater risks, an insurance expert has warned.
Affordable, flexible, and high-quality childcare might soon be a reality for all Canadians, after the federal government and Canadian provinces signed agreements to introduce a $10-a-day childcare scheme nationwide.
The $30-billion plan is a welcome relief for Canadian families that struggle with the high cost of childcare. Under the scheme, parents would receive rebates with qualifying childcare facilities, providing more than $9,000 in annual savings per family in some provinces.
For childcare business owners and operators, the $10-a-day would bring more opportunities for growth. But an expert told Insurance Business that the government’s move, potentially puts facilities at more risk as they cope with skyrocketing demand for limited spaces on top of chronic staff shortages.
“Not all childcare providers have adopted the scheme, which means that the ones that have are in high demand,” said Andrew Poulton, vice president of sectors at Markel Care (pictured below). “Not all will have capacity. We think there are availability issues even as the program was rolled out in Ontario.”
In March 2022, Canada achieved a historic feat after Ontario, the country’s most populous province, sealed an agreement with the federal government for subsidized childcare. It was the last jurisdiction to sign onto the national plan.
We're making child care more affordable for families right across Canada.
— Bill Blair (@BillBlair) January 9, 2023
Rates are already down by an average of 50% and we're on track to reach our $10-a-day goal by 2026! pic.twitter.com/TTpi4J4TVd
Poulton urged licensed childcare business owners and operators to rigorously manage their operations, quality of care, and risks as they expand. Brokers must also support childcare facilities by ensuring adequate coverage.
The federal government has said nearly half of provinces and territories have either announced childcare fee reductions or already achieved an average cost of $10-a-day or lower for licensed childcare.
According to the Canadian Child Care Federation, the national plan is set to create an estimated 146,000 childcare spots by 2026. But there are concerns the childcare industry might not be able to meet soaring demand.
Childcare centres are under tremendous pressure to plug worker shortages, with early childhood educators and caregivers leaving in droves due to low pay and long hours. The lack of trained staff at these facilities means families will be forced to wait for space or choose higher-cost childcare.
From an insurance and risk management perspective, maintaining a good worker-child ratio is critical for childcare facility operators, Poulton noted.
“What is the ratio of employees to the number of children within their facility? Capacity is important, but I think how employees are trained is also an important risk consideration,” he said.
Childcare facilities must be registered with their provincial government to qualify for the $10-a-day incentive. In Ontario, each registered facility is subject to regular inspections. According to the Canadian Press, 92% of Ontario operators have signed onto the scheme.
These businesses will be under greater pressure to ensure high-quality care and adequate staffing. On the other hand, regular inspections also encourage facilities to take more steps on risk mitigation, making them more qualified for insurance coverage, Markel Care said.
According to experts at Markel Care, the following considerations will be top of mind for insurers when it comes to gauging childcare facilities’ risks:
Poulton advised brokers to ensure adequate coverage, including modular coverage like casualty, abuse, professional liability, property, and crime.
“Commercial general liability is a fantastic place to start for childcare facilities. From a bodily injury perspective, slips, trips, falls and accidents from young children running around [are common],” he said.
“One of the other aspects of coverage, particularly from an early education perspective, is professional liability. Brokers should also be looking at any exclusions in the policy.”
Finally, businesses should discuss their concerns with their insurance brokers and providers.
“There is a real interest in childcare providers that can offer those cost saving to parents,” said Poulton.
“With growth, comes with the pain of expanding their operations. That’s where we can help and work with our brokers to ensure those organisations that are growing with the demand in the right way, to raise the quality of service and care they deliver to families.”
What are your thoughts on the childcare industry’s risks and the impact of the $10-a-day childcare scheme? Sound off in the comments.
