Premier Doug Ford recently announced Ontario will launch consultations into municipality insurance in order to address concerns many have about their liability in the event of injuries on public property. Rural municipalities have long been calling for reforms to the joint and several liability rule, which they say causes so-called “liability chill” and prevents them from running healthy and robust communities.
Under the joint and several liability rule, a claimant can pursue an obligation against any one party as if they were jointly liable and it’s up to the defendants to sort out the proportions of liability and payment. If other jointly liable parties are unable to pay, the municipality could be left shouldering 100% of the cost, even if they only beared minimal responsibility.
An extreme example given by the Association of Municipalities of Ontario (AMO) is that if a drunk driver gets into a collision, lawyers could technically go after the municipality for damages by arguing that the road surface was partially responsible for the incident.
“Victims of any type of accident obviously have to be fairly compensated, we get all that,” said Gary McNamara, warden of Essex County and a past AMO president. “They should be treated fairly and with respect. We get that, but it shouldn’t be solely on the backs of municipal taxpayers. We can’t be held accountable 100%. It just doesn’t make sense.”
The “liability chill” refers to the struggle rural municipalities face when balancing services and liability, explained Robin McCleave, VP, risk manager, public sector, and Gwen Tassone, VP, business strategy, public sector, both at JLT Canada. In the past, municipalities would have conducted activities and events geared towards supporting a healthy and robust community. Now, they’re faced with the potential of being held financially responsible in circumstances beyond their own negligence, which is freezing intent towards community activities.
Speaking to the Rural Ontario Municipal Association in January, Ford said the province will launch consultations about “the joint and several liability” rule. He said: “We’ve heard your concerns about increasing insurance costs and the impact that these costs can have on property taxes, on municipal taxpayers, and on the average Ontario resident. We will look at the evidence and develop a solution that makes sense.”
McCleave and Tassone told Insurance Business they would like to see a more balanced assessment of liability come out of the consultation, as well as changes to legislation so that municipalities are not left to pick up the liability of negligent parties.
“Municipalities have to provide certain essential services and programs to enhance the quality of life for their residents,” they said. “A common grievance that municipalities have is that no matter what they do, what policies and procedures they have in place, or the care they take – they can be held financially responsible by the application of joint and several liability.
“We need to look at the larger picture and focus on the insurance industry as a whole – municipal insurers are generally paying out more in claims then they are collecting in premiums. This is not sustainable. Our biggest concern is that when the market corrects itself, it is municipal tax payers who will feel the most pain. Brokers should work alongside their municipal clients by being a voice in amending the joint and several legislation.”
According to McNamara, municipalities across the province of Ontario are having to pay out in excess of $300 million to insure their communities. Some have taken to banning activities like street hockey and tobogganing in order to avoid potentially costly claims. The city of Hamilton banned tobogganing for years after a man won a court settlement of nearly $1 million after his toboggan hit a snow-covered drainpipe and he injured his spine.
“When an eight-year-old child has got a toboggan in tow and he goes up to that hill and then somebody, a bylaw enforcement officer, says, ‘Sorry but you can’t toboggan down this hill’ – why? Because there’s a massive lawsuit in Hamilton that’s driven other municipalities to say, ‘Can we take the risk?’” McNamara said. In conversation with the Canadian Press, he added that the ‘liability chill’ has had some really unfortunate outcomes for rural municipalities.
When municipalities look for answers to their liability woes, they will often tap the services of a local broker. It’s those brokers – at the heart of Canadian communities – whom JLT’s McCleave and Tassone are encouraging to engage with the consultation process in Ontario in order to take some load off the backs of municipal taxpayers.