Priority IV: Relief From Skyrocketing Insurance Premiums

Skyrocketing insurance premiums are a worldwide phenomenon that continue to affect a multitude of sectors. This “hard” insurance market is driven by a variety of factors including climate change, cybersecurity, and more. However, when speaking specifically to the municipal sector, the rise in premiums is driven primarily by claims that have a ‘long-tail’ nature. It can be more than seven years from when an incident occurs until it even sees a courtroom. Meanwhile legal fees are amassed throughout that time. Many municipalities in Ontario are reporting increases to insurance costs of more than 20% per year.

Joint and several liability also continues to be an issue. While many have begun to acknowledge that reforming it will not be the panacea they hope for, courts seem to be increasingly placing the responsibility on municipalities rather than on negligent plaintiffs. Municipalities are often on the hook for extravagant financial payouts through lawsuits and settlements spurred by those who are injured on their roads – even if they bare very little responsibility for the incident. Furthermore, the damages being awarded continue to rise. Eight years ago, a $5 million settlement was a big deal. Now, settlements of $10-15 million are seen routinely.

The province can assist municipalities in limiting the upward pressures on their insurance premiums. Making public infrastructure safer and adapting it to a changing climate will help reduce these pressures. However, without systemic reform to joint and several liability, municipalities will always be targeted for their “deep pockets”.

Solution: Reform Joint and Several Liability

In its current form, joint and several liability unfairly puts the burden of paying the majority of liability losses on Ontario municipalities. As a result, municipalities continue to face increased premiums and self-retention levels that divert municipal funds from other essential municipal services and responsibilities.

To date, the only meaningful attempt to address the problems associated with joint and several liability was the creation of the Minimum Maintenance Standard (MMS). The MMS has not been the ironclad solution that was hoped for when it was created. Since its inception, it has been under constant and direct attack from defendants trying to circumvent the protection that it affords municipalities.

As the lead organization responsible for updating the MMS, Good Roads has earned unparalleled expertise and experience in trying to find solutions to joint and several liability. In addition to the roadways already covered by the MMS, the standard was also expanded to include bike paths and sidewalks in the latest five-year review. The expert committee that led this review feels that there is little further room to move on this front.

The principles contained in joint and several liability have long been established as tenets of Canadian law. Good Roads therefore believes that there is room to reform joint and several liability while still maintaining it.

Building on the efforts of other reform initiatives in Canada, Good Roads believes that any reform of joint and several liability should take into account the following principles:

  • proportionate liability where a plaintiff is contributorily negligent;
  • proportionate liability where a defendant is a "peripheral wrongdoer" – a defendant whose fault is limited and secondary when compared to that of other defendants; and
  • the proportionate reallocation of the uncollected share of a damages award attributed to an insolvent defendant.

A reform predicated on these principles will ensure that the benefits of joint and several liability are retained. It will also align such a reform with the other significant precedents where joint and several liability was amended.

Recommendation: That the province reform joint and several liability and explore the viability of a provincial fund for catastrophic losses to individuals that could limit municipal exposure to health costs. The pooling of insurance amongst municipalities to lower costs should also be considered.