Territory faces skyrocketing insurance premiums
Jorge Barrera
Northern News Services
Yellowknife (Mar 02/01) - A sudden shift in the global insurance market has blind-sided the territory's municipal association with skyrocketing premiums.
Because of increased litigations across the country, insuring municipalities is becoming unprofitable and causing supply to drop and premiums to spike.
This has hit the NWT and Nunavut Municipalities Association hard, forcing their premiums to jump by $1.1 million.
"We weren't ready for this," said Yvette Gonzalez, chief executive officer for the NWT Association of Municipalities.
"We thought we'd get an increase of 10 to 15 per cent in our premiums but not this," she said.
The NWT's premiums will jump by more than 50 per cent, going from $870,000 to $1.44 million. The city of Yellowknife, having the largest population in the territory, is seeing its premiums double from $200,000 to $400,000. The city contributes 25 per cent of the total insurance bill in the NWT.
The territory's Department of Municipal and Community Affairs is stepping in to offset some of the cost increases.
Roger Allen, minister for MACA, is expected to make a statement on the issue today.
"It will be closer to the end of next week before we have a definitive answer," said Shaun Dean, communications director for the department.
Until then the city of Yellowknife is playing wait and see.
"We're going to be looking at other options which could include other sources of insurance," said Yellowknife Mayor Gord Van Tighem.
"But I'm not worried at this point because all options haven't been explored," he said.
In terms of covering any costs the territory doesen't foot, Van Tighem said the city will have to "find savings in other areas."
Earlier this year the associations sent requests for quotes to 20 insurance companies but received only one reply.
The association's current policy runs out at the end of the month and its current company has advised them it will not continue in coverage. According to Roy Clarke, chairman of the association's insurance committee, insurance companies are getting cold feet because more courts are awarding claimants at the expense of the municipalities.
"It's deep pocket syndrome," said Clarke.
Wood said a similar shift in the market occurred in 1986 during a world wide liability crisis.
The current slew of catastrophes including the Walkerton water crisis and Wednesday's Seattle earthquake have caused the same trend. Re-insurance companies that insure insurance companies are hiking their premiums and the costs get passed down.
Clarke is worried about the future.
"Even if the government comes in this year, what about next year," he said.
The associations are currently in negotiations with the insurance company.
The name of the insurance company cannot be released for legal reasons.
