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Managing Risky Business: Q2/2018


In this issue of Managing Risky Business, read about:


Mid-Term Claims Picture

A poet once said that April is the cruellest month. In our program this year, I would say April and May were the cruellest months. The chart below gives you some sense why:

In April and May 2018, claims volume was significantly higher than in recent years past – May claims being almost double what they were in the past two years. Claims payouts have also been much higher this term, compared to recent years:

So what’s been happening? These two pie charts provide some insight into the challenges our group has been experiencing:

Fire and water claims typically represent the bulk of the claims to our program, so there’s nothing new there. But what’s new and notable are the wind claims, which swept across Ontario in April and May and represent almost 20% of property claims this year. Wind damage wasn’t just confined to our program. According to the Insurance Bureau of Canada, May’s wind storm alone caused $380M in damage across the province. Other extreme weather events have also caused an additional $316M in property damage in Ontario this year. Several of our water claims this term arose from this extreme weather, a number of them occurring due to heavy rains and flooding.

If you compare the two pie charts above you’ll note that in this term, fire claims were more costly than water claims. This, in part, is due to the impact of the catastrophic fire at Barrie Municipal Non-Profit Housing (Barrie Housing) in April. Thankfully there was no loss of life. However, servicing the claim will require the $2.5M maximum from the Property Claims Trust Fund and will cause insurers to pay an additional $8.5M. We have not had a loss of this magnitude since 2010. You can learn more about this claim in the video below.

While it’s hard to predict how we will end the policy term, our program is fundamentally sound in the long-term. Providers in our group are committed to active risk management. They are supportive of the inclusive values of the program. Correspondingly, we have put in place a program structure that reduces our exposure to the volatility of the insurance marketplace; has returned dollars to providers; has kept claims costs down through active management; and funds the creation and delivery of other risk supports. It was a relief to see a lull in claims in June. We are hoping that the second half of the term will be quieter!


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2018-19 Renewals

Important Dates

  • July 13: Completed applications due back to Marsh Canada
  • September 28: Policy renewal documents and invoice issued, applications for premium financing made available
  • November 1: Coverage for 2018-18 starts and payment is due

For more information, download our 2018/19 Program Guideline.

In late May, HSC CEO Howie Wong and I had our annual meetings with underwriters to obtain coverage for the program and discuss our desired terms. While we emphasized the fundamental strength of the program and recent funding announcements for the National Housing Strategy, the response we got from underwriters was more muted than in the past.

I attribute this to two things: the recent claims trend in our program (see above) and the broader losses experienced by property and casualty insurers over the past year. Due to the global nature of the industry, which mitigates risk by distributing it, catastrophes all over the world effect premiums. 2017 was one of the costliest years in the history of the global insurance industry due to catastrophic natural and man-made disasters.

We don’t know yet what the results will be. Much will depend on what happens with claims in the months to come. An increase in the property premium is possible – particularly given that we’ve managed to get insurers hold it at the same level since 2014. But the Property Claims Trust Fund helps moderate any increases. It focuses insurers on covering catastrophic claims and surges in claims in bad years, thereby protecting program participants from dramatic spikes in insurance costs.

Rest assured, we will do everything in our power to minimize costs to providers and further strengthen the value of the program.

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Video Case Study: Fire at Barrie Housing

Barrie Municipal Non-Profit Housing (Barrie Housing), is a provider in Simcoe County that has a total of 953 units across 14 different sites. In April 2018, Barrie Housing had two fires, the second of which was catastrophic and displaced all 77 residents living in the building. In the video, you’ll hear about the experience from the provider’s perspective and their important lessons learned. You’ll also understand why HSC has promoted its contingency planning workshop and templates so much.

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Download Contingency Planning Guide & Template Contact me to arrange a workshop

Update on Marijuana Legalization

Since our last newsletter, there have been a number of notable developments on the recreational use of marijuana, which will become legal on October 17, 2018. The Ontario Cannabis Store, which will be responsible for sales in our province has a website for updates and is determining retail sites. In its proposed place of use regulations, the Province is proposing to permit the use of cannabis in places beyond residences. What’s noteworthy here is the inclusion of licensed cannabis lounges and designated outdoor areas for multi-unit dwellings.

At the sector level, there’s also been activity as a number of providers have updated (or reiterated) their smoke-free building policies to explicitly include marijuana, including Ottawa Community Housing and Huron County. ONPHA has published a two-part blog featuring common questions and answers. I was invited to participate at a provider forum put on by Niagara Regional Housing in February and have also contributed to a number of other discussions on the insurance impacts. For my commentary, you can view the materials from our SHARE webinar back in April.

John Dickie, president of the Canadian Federation of Apartment Associations, notes that one of the key issues will be reconciling questions of “reasonable enjoyment of the premises” and grandfathering in smoke-free buildings. Dickie is right, I think, in expecting questions around pot smoking to be tested at the Landlord Tenant Board.

To me it seems unlikely that we will see a surge in smokers after legalization – those who use it now will continue to use it. I anticipate that the widespread availability of commercial pot for recreational will reduce the interest people may have in growing their own – which requires much more effort to cultivate.

I will continue to share updates as they emerge.

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Recent Insurance Events in the News

While disasters aren’t pleasant to talk about, they can help us get new insights into risk management and lend perspective to the human and economic cost of claims. The following are just some of the recent stories on claims incidents to the HSC Group Insurance Program reported in the news:

Elsewhere in the News…

In recent years, we have seen a noticeable increase in flooding claims. A recent article in the Toronto Star examines new research that links urbanization and climate change to increased “pluvial” flooding (that is from rainwater that is unable to be soaked into the ground). The article suggests that municipalities could invest more in storm water infrastructure to reduce the risk of flooding but the costs make it a political issue. It’s also an insurance issue, with an Insurance Bureau of Canada spokesperson characterizing “water [as] the new fire.”

From time to time, we get claims relating to appliances failures. This article, by a fire investigation expert that specializes in electrical and electronic failures, sheds light on the common causes of failures. It’s worth reading since we have so many of these appliances in our buildings.

Finally, there was a story a few months back on the fires hazard posed by contraband cigarettes – the likely cause of at least two fires in London in a month and four fire fatalities since 2014. Unlike legal cigarettes, these cigarettes lack self-extinguishing features and keep burning, regardless of whether they’re being puffed, which is also the case with hand-rolled tobacco or marijuana cigarettes. Due to their lower cost, contraband cigarettes are extremely common in social housing.

While moving towards smoke-free buildings is the best way to mitigate this risk – we recognize that it takes time for communities to go completely smoke-free. Therefore, raising awareness with residents that smoke on the risks that contraband cigarettes and the measures they should take to dispose of cigarettes pose could be helpful. The National Fire Protection Association (US) has a set of myths and realities about fire safe cigarettes. In addition, the Ontario Office of the Fire Marshal has resources on smoking fire safety.

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Risk Management in the Sector

“Individual commitment to a group effort – that is what makes a team work, a company work, a society work, a civilization work”

— Vince Lombardi


In this section, I’d like to acknowledge providers who are taking steps to improve the safety of their communities and our sector’s risk profile.

I’d like to acknowledge and thank the District of Muskoka, Windsor-Essex Community Housing Corporation and the United Counties of Leeds and Grenville for implementing smoke-free policies this year.

I’d also like to commend Toronto Community Housing for its recent investments in Life Safety. TCH has made major updates to its enterprise risk and emergency management plans. They’ve also added tools and training for its Fire Life Safety Program, including partnering with Toronto Fire Services.

Ottawa Community Housing is also making major investments in safety initiatives, committing $11M+ to repair and retrofits relating to the upgrading of all fire life safety systems.

Finally an older item: I recently came across a case study on Hastings County relating to their success in using of safety elements. It’s from 2011, but speaks to the effectiveness of the technology in mitigating risk.

How are you managing risks in your community? We want to hear from you and share your stories with the sector!

Contact me to share your story

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[view previous issues of Managing Risky Business]


Call Me Maybe
One Life
Turn Me On
Glad You Came
Rack City
Stand Behind The Music
Ninjas in Paris
What Makes You Beautiful
The Motto
Wild Ones
Turn Up The Music
Middle Finger
Sorry For Party Rocking
Is Anybody Out There?
Safe and Sound