Niagara to seek one-year insurance coverage extension

‘Market has only improved marginally,’ with fewer options for insurers, councillors told

Due to shifts in the insurance market, Niagara Region’s corporate services committee is recommending staff seek a one-year extension on the municipality’s policies with Marsh Canada Ltd.

The policies protect the region’s assets, as well as those of Niagara Regional Police and Niagara Regional Housing.

“The insurance market has only improved marginally, and we still believe that the most efficient way forward is to work with the current broker for one year,” corporate services commissioner Todd Harrison said during last week’s committee meeting.

“Some critical work still needs to be done related to specified property and loss-control reports.”

Harrison said if the full council endorses the recommendation, Niagara staff will return in the first quarter of 2025 with a plan for competitive procurement.

“This is an extension to continue with the terms of that original contract for one additional year,” Harrison said. “It’s similar to what we did with Deloitte last year. We did it one year, and we’re coming to market this year with the RFP for the auditors.”

Harrison later noted there has been “a contraction in the insurance industry,” and that “there are fewer (insurers in the market) than two years ago, and definitely less than eight years ago, so we believe this is the best approach.”

The region had already exercised its last one-year option to renew with Marsh for 2023-24. It also combined coverage for Niagara Region, the NRP and NRH for similar and improved coverages at a modest premium increase.

The insurance premium for 2022-23 was approximately $2.44 million, compared to $2.341 million in 2021-22.

The region hired an independent external consultant, Axxima Insurance Service, to report on difficulties with competitive procurements.

Axxima recommended the region revisit its approach of procuring insurance frequently and in the same manner as other services.

Its report said retained losses (the amount of money the policy holder must pay per claim), price volatility and diminished coverage could erode any short-term savings.

Although there is some indication the market is improving, capacity issues and rate increases are the norm in the municipal sector, which is difficult to insure due to the complexity of its inherent risk.

Given the conditions, “competitive insurance procurement does not necessarily result in multiple cost-efficient bid submissions.”

The extra year will also allow for staff to review the possibility of insurance consolidation with Niagara Transit Commission.

Due to its risk profile, insurers are less likely to take on a new standalone transit account if it is not already part of the overall municipal program.

Given the transit commission assumed operational responsibility for bus services across Niagara on Jan. 1, 2023, there is a “lack of substantive claims history (pre-consolidation) to draw upon.”