In this issue of Managing Risky Business, read about:
As I mentioned in my covering letter, we’ve had a comparatively good year as a group, growing our capacity to manage risk and keeping costs down:
Compared to last year, we have seen a reduction in the frequency of cooking fires. Fire and water damage claims continue to make up the bulk of our property claims – representing 28% and 41% of our total property claims respectively:
Though we hear less about incidents involving water damage in the media, we do see a lot of these types of claims in our program due to aging infrastructure, tenant accidents and freeze and thaw weather in the winter.
Here’s a historical graph that shows us when you should ensure Emergency Contractor is not on vacation:
Winter is a particularly challenging time of year for claims. To ensure that you’re prepared, check out Marsh Canada’s winter weather precautions checklist.
Here’s what our overall property claims picture looks like over the past two policy terms. In the first graph below, we’re looking at property claims frequency over the year:
Not all claims, however, have the same financial impact. You’ll note in the graph below that in 2013/14, when we had a $10M Claims Fund, the fund was depleted in the first three months of the policy term due to a number of expensive winter claims, as we reported back then. As a result, for 2014/15, underwriters requested a larger Claims Fund in order to keep premiums steady. This year, use of our Claims Fund was more consistent over the course of the year and did precisely what it was intended to do: fund smaller, more frequent property claims to enable underwriters to focus on larger, less common catastrophic claims:
Unlike municipal insurance, where liability claims represent the bulk of claims costs and activity, in the housing sector liability claims are less frequent. The graph below shows the breakdown of liability claims to the program over the past two years. Slip, trip and fall claims lead the pack by a considerable margin:
Insurance Reference Group
The new Insurance Reference Group, which I mentioned in my last update, had its second meeting in mid-October. Topics discussed included this year’s group insurance renewals, tenant insurance and raising deductibles.
The group generally agreed that raising the minimum group deductible would be a positive step – because it would lower the group premium, slow the depletion of the Claims Fund and would encourage providers to be more conscious of day-to-day risk management. Respondents to our poll in the last issue of Managing Risky Business also agreed. However, the group suggested that we should start by focusing on educating Service Managers and providers about the benefits and obtaining feedback on the best approach to take – like we approached the development of the tenant insurance program.
Resolution of RST Issue
Earlier this month we were able to resolve a longstanding issue relating to provincial Retail Sales Tax (RST) on HSC’s Property Claims Trust Fund (Claims Fund). Providers will not have to pay retroactive RST on past Claims Fund contributions.
HSC worked hard to negotiate a ruling that would minimize the financial impact to our clients while complying with the insurance program’s legal obligations. While we were unable to persuade the Ministry of Finance that our Claims Fund should be RST-exempt, we were able to avoid a situation where providers would be obliged to pay any retroactive tax. We were able to do this by:
The resolution of this longstanding issue owes much of its success to the ‘power of the group’ in that:
Now that we’re a little more than one month into our 2015/16 policy term and a new year is upon us, we’re starting to think about ways in which we can further improve the risk profile of the sector and drive down costs. Here are just a few things that you can look forward to:
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 stories on incidents reported in the news since my last update:
Kudos to Renfrew County Housing, Wellington-Dufferin-Guelph Public Health, Elgin St. Thomas Public Health and Sudbury & District Board of Health. These organizations all recently took action to eliminate smoking from their local social housing portfolios. Renfew implemented a smoke-free policy in late October; Wellington-Dufferin-Guelph is recommending a policy; Sudbury and Elgin St. Thomas is urging both private and social landlords to voluntarily adopt no-smoking policies. Over the border, the United States Department of Housing and Urban Development (HUD) is seeking to ban smoking in American public housing over the next few years. HUD estimates that this “will help improve the health of more than 760,000 children and help public housing agencies save $153 million every year in healthcare, repairs and preventable fires.” Interested in going smoke-free? Check out the Smoke-Free Housing Ontario website for resources.
In September, I was happy to read that our largest group member, Toronto Community Housing, is proposing to implement a series of measures to improve community safety. I look forward to hearing about their progress on these items and applaud their efforts to make risk management a priority. On a related note, there was an interesting article on a pilot to crack down on illegal dumping in Hamilton. One of the pilot’s successes involved a social housing complex where “‘random people’ were driving by and throwing bags of trash near the pickup location for several townhouses. Bylaw covert ops played a role in catching at least some dumpers in the act.” Council is being encouraged to make the pilot permanent.
Over the past few months, we’ve also seen an all-too-regular stream of stories involving low-income tenants who aren’t insured — examples in Welland, Guelph and London are just the tip of the iceberg. In addition to the impact on tenants, it also puts pressure on local social services and community agencies to find resources to help the affected people rebuild their lives and avoid slipping into deeper poverty.
Having adequate risk management supports – such as tenant insurance, regular unit inspections and regular communications with tenants – is also important because tenant behaviours can sometimes result in disasters. For example, a recent fire investigation in Woodstock was the result of a tenant tampering with fire alarms; notably in this case, the tenant was charged. In London, a complaint about bedbugs led the provider to discover that the tenant was spraying furniture with water and kerosene, a highly flammable mixture. Acknowledging the problem and providing appropriate advice to residents enables providers to better manage risk.
Finally, I’d like to thank to Cornwall Housing for sharing this water overflow prevention tip:
Magiplug is a plug that prevents bathtub overflows because the plug opens when the head of water over it reaches a certain level. Seemingly a cost effective way to mitigate the risk of overflowing tubs.
Since our last update, our small team here has been busy finalizing the HSC Group Insurance Program renewal, resolving the Retail Sales Tax issue, managing claims and supporting providers in their risk management efforts with education and hands-on support.
In terms of meetings and outreach with clients, here’s where we’ve been:
We’d be happy to visit you in your community to assist you in improving the safety of your buildings and residents. Just send me an email or call me at 1.866.268.4451 x.314.
Have a safe and happy holiday!