The numbers aren't pretty: insurance costs are up 40 per cent in Greater Sudbury's police budget, almost 55 per cent in building services, 37.1 per cent in waste collection, 48.6 in Ontario Works, 40.3 per cent in children's services, 29.1 per cent in emergency services – and on and on.
Former Police Chief Frank Elsner, at the Oct. 10 meeting of the police services board, said Sudbury and other forces in Ontario are dealing with similar increases.
“When I saw that number, I was shocked,” Elsner said. “It seems to be right across the sector and we're really not sure what's driving it up.”
“Obviously, policing is a high-risk occupation, and vehicles and all of our other types of insurance costs have really taken a huge, huge, jump this year.”
So what's going on? Bill Riley, who works for Municipal Insurance Services, the city's insurance company, says there are a few factors at play.
While unable to give details about any specific clients, Riley said he could comment on general trends and issues in Northern Ontario. Unlike home or auto, Riley said there are only so many companies that offer municipal insurance. And cities are involved in many risky areas like policing, water, roads, winter maintenance, arenas, day cares – all sectors where there is potential for big lawsuits.
And Ontario's Negligence Act includes what's known as 'joint and several liability.' Also called the 'one per cent rule,' Riley says it means several people can be named in a lawsuit, including municipalities. In cases where other defendants have no money, a city that's found to be only marginally responsible for an incident can be on the hook for the entire damages award.
Riley cites the case a few years ago where a driver who had been drinking – even had a beer in his lap – drove threw a stop sign and caused a serious accident. The judge in the case ruled the municipality was partially responsible because the signage alerting drivers about the stop sign was inadequate.
In another case, a judge sided with two sisters who received catastrophic injuries in an accident and sued two municipalities. One sister, who was driving, thought another car was coming at her head-on and veered away, crashing into a ditch. The judge ruled there was inadequate signage and road markings, and awarded the sisters $30 million, although the final amount that survived appeals hasn't been publicly disclosed.
“That's what municipalities are faced with” when they go to court, Riley said.
Making matters worse for cities, under Ontario's no-fault insurance laws, you can't sue the other driver in an accident unless you have severe injuries.
“And even if you can sue the other party, they generally only have $1 million in liability coverage,” he said. “So plaintiff lawyers looking for higher dollar amounts can sue anybody else involved in the automobile accident – AKA, the municipality.”
Current laws encourage lawyers for plaintiffs to include municipalities whenever possible, since they are viewed as having deep pockets and can increase taxes if they need to raise money to pay a claim.
That has led to a massive increase in lawsuits in Northern Ontario, especially related to winter maintenance, Riley said. The biggest single increases are in slip-and-fall lawsuits, where someone slips on a sidewalk and sues the city.
Cities like Sudbury, North Bay, Timmins and Sault Ste. Marie are particularly vulnerable because of extreme changes in winter weather.
“It could be plus 2 one day, minus 30 the next, then plus 2 again the day after that,” Riley said, creating slippery sidewalks where people can easily fall and get hurt.
Even though such awards are smaller than roads lawsuits – still as high as $250,000, Riley said – they are much more common and the cases take an average of seven years to work their way through the court system, a process almost as expensive as the award.
“It's creating havoc for municipalities,” he said. “Municipalities (have become) great targets for plaintiff lawyers, because they have the means to pay.”
The Association of Municipalities of Ontario has been lobbying the province for years to change the rules around joint and several liability. Matthew Wilson, senior adviser with AMO, said they have done considerable research into the issue since 2010, and the province may finally be listening.
In August, Attorney General John Gerretsen told them they're willing to take another look at the rules. Another meeting is planned in January.
“We want them to take a look at all aspects of the issue,” Wilson said, adding that they're not trying to take money away from victims who deserve compensation, just protect cities and towns that have become targets.
“People know municipalities have the ability to pay,” he said.