In this issue of Managing Risky Business, read about:
As Howie Wong mentioned in his newsletter in June, we entered our face-to-face negotiations with domestic and UK underwriters in early July knowing that they would be challenging for two reasons.
First, even though this year has been better than last year on claims so far, we secured our 2019 group premium before the end of the 2018 term when some of the big claims rolled in. 2018 was ultimately a difficult term on a program-wide level; we fully depleted the $13M group deductible fund (formerly the property claims fund) and, in addition, property underwriters paid out more than $9M in claims (almost double the premiums we paid them).
Secondly, the global marketplace for habitational insurance (insurance for places where people live) has been ‘hardening’ for some time now. In a hard market, demand for insurance outstrips supply and prices rise. Some insurers simply stop underwriting riskier client groups and assets; the ones that remain in the market demand more profitability and higher premiums. This produces a capacity shortage and gives those still insuring an upper hand in setting terms – as well as an opportunity to recoup losses from previous years and make a profit.
We’ve noticed this trend as we’ve seen a growing number of providers come to our program because they were being denied coverage or quoted rates beyond their means. HSC has experienced the hardening too with our pilot bulk tenant insurance program; we are securing a new insurer because AIG (the current one) is no longer underwriting personal lines in Canada.
But as one article notes, “even though underwriters are retrenching, they still want and need to write business. The difference is that they are looking for better business [and] better submission quality.” Canadian Apartment magazine, which notes that private apartment landlords should expect increases, states that multi-residential operators should “direct their attention towards preventative maintenance, risk management and emergency response – and have a water mitigation plan.”
This year Howie and I were joined in the renewal process by Sarah Baker, HSC’s Chief Operating Officer. We entered underwriter negotiations with a strong case for our program – its scale, its diversity and its design, which diffuses risk exposure and promotes good risk management at multiple levels. Negotiations were definitely tougher than in years past: while underwriters recognized that we make efforts to communicate and offer risk supports to members, they want to see more in terms of driving better risk management. They want to see more evidence that our group is addressing risk trends in our program and those facing the property sector in general.
We too want to improve the safety of our communities. The feedback they offered was tremendously valuable and we will be moving to implement some of these suggestions in fairly short order.
The good news is that our group of underwriters suggested that they see us as core to their business and we will move to negotiating terms. However, we anticipate increases on the group property premium owing to broader market conditions. We’re uncertain of the magnitude of the increases at this point, however we are hoping that the strengths of our program and our direct relationships with underwriters will help us. To mitigate costs, we also expect that we will likely need to raise the minimum property deductible and possibly make other adjustments. We will strive to do this in a fair and transparent way and supports our capacity to offer guaranteed coverage to all.
For providers seeking insurance outside of our group, particularly those with past claims, the market looks very tough. In the August 1 issue of Business Insurance, an industry expert commenting on the state of the market says “If you’re a clean account and have not had a loss, you’re still looking at 10% to 20% increases, coupled with deductible changes right now…If you’ve had a loss or poor performance, in some ways all bets are off. We’ve seen those accounts go for 30% to 50% increases, and it can be more.”
We will do our best to negotiate the best terms as we move to the next phase of negotiations.
The current hard market is affecting all housing providers, driving up insurance costs and in some cases making coverage impossible to obtain. Therefore, I wanted to take the opportunity to remind Service Managers that HSC offers guaranteed insurance to all affordable housing providers in Ontario. We use the power and diversity of our group and our innovative program design to address the market failure that exists for many social purpose organizations. Our current clients include:
Often non-Housing Services Act providers do not interact with HSC so they rely on finding us through Service Manager staff. Help us help you!
|Download our Program Brochure||Email me to find out more|
In this update, we’ll take a look at claims in multiple areas.
Directors’ & Officers’ Claims, 2012 – present
Over the past several years, we have seen an increase in these types of claims – specifically claims related to employment and discrimination (ableism, ageism, sexism). We also recently saw our first cybersecurity claim, an area of emerging concern.
To support social housing providers in effectively managing and mitigating Directors and Officers risk, HSC check out our D&O training guide. It covers:
|Download our Guide to Managing Directors’ and Officers’ Risk|
Property Claims, November 1, 2018 – present
Here’s a look at property claims, breaking out detailed cause areas. At a high level, the causes remain fairly consistent, with water and fire claims making up the bulk of claims. “Other” claims encompass claims where the origin is unknown, under investigation or don’t easily fit our standard categories.
Property Claims Volume, November 1, 2018 to present
This year, the winter months brought the highest number of claims (lots of water damage claims) while July was a busy month for fires. We’re hoping that as we end the term, claims activity slows down.
Casualty & Liability Claims
Though property claims represent the bulk of our program claims and costs, we do see a fairly regular stream of liability claims. We’ve had 101 in the current term so far, with a total of 514 claims since the start of the 2015/16 term.
Slips and falls are the most frequent and eat up the greatest costs. Miscellaneous claims don’t fall under the typical broad categories and can include dog bites, bodily injury (beyond slips and falls), property damage and theft.
Casualty & Liability Claims, November 1, 2015 to present
The majority of slip and fall claims take place during the winter, so ensuring walkways are clear of snow and ice and are in good repair (to prevent tripping) is so vital.
Need help in making your community safer? I’m happy to work in partnership with Service Managers to deliver sessions on practical risk management for groups of providers.
|Contact me for help|
We are pleased that our message about the value of tenant insurance – to both residents and housing providers – is increasingly taking hold. Almost half of the providers in our program are claiming our mandatory tenant insurance credit at renewals; 66% of this group is tracking compliance, ensuring tenants stay insured.
We’ve seen a corresponding 78% increase in active policies in our tenant insurance program since 2015, which now counts almost 16,000 policyholders. However, we are seeing a significant variance between tenants insured by the HSC program and provider units. While we don’t expect everyone to use our program, we do encourage providers to keep an eye on this, since tenant re-housing and living expenses as well as a provider’s risk exposure increase greatly if tenants are not actually insured; we’ve heard of instances where tenants get insurance when they need to provide proof and then subsequently cancel it.
HSC’s Tenant Insurance Program can help you keep an eye on this by providing you with regular reports on tenants using our program. For more information, contact me.
Our pilot Bulk Tenant Insurance Program eliminates this challenge but is currently on hold as we secure a new underwriter and work with the sector on how to efficiently administer it – particularly in cases where the resident is paying the cost of the insurance. We’ve had considerable interest in this program and are doing our best to move things forward. We will keep you posted as developments unfold.
We’re in the dog-days of summer and Labour Day is ahead! Are you getting lots of requests from tenants to use common areas for social gatherings or barbeques? These events are a great way to bolster community spirit in your buildings, but they can put your organization (or the event hosts) at risk if anything goes wrong.
Housing providers can require Common Room Insurance when you rent out your common rooms. The party or event host will then be covered for the duration of their special event, and you’ll be protected too.
HSC Insurance’s Common Room Insurance starts at just $32 an event (tax included) and offer $2M coverage and a $500 deductible.
|Learn more about Common Room Insurance|
Claims in the News:
Other Items of Note
Finally, I wanted to share with you an update on 100 Little Avenue, a Barrie Housing property we featured in a video we did last year. The loss was catastrophic but Barrie Housing and Simcoe County staff did a great job in managing the crisis. And our group program moved into action immediately after.
The need to rebuild, combined government funding dollars that were available, provided Barrie Housing with a unique opportunity to create 11 new units – by adding a floor to the structure. HSC was able to help by negotiating for greater flexibility in the resolution of the fire claim. While this changed the timeline for the restoration, it affords the community the long-term benefit of additional units. As you can see below, final trusses were installed about a month ago and the project is proceeding well.
Over the past few years we’ve been working with the Northern Ontario Service Deliverers Association (NOSDA) on providing insurance for District Social Services Administration Boards (DSSABs) beyond housing. The ten DSSABs in the North are different from the southern Consolidated Municipal Service Managers in that they provide only social services, children’s services and emergency medical services and serve geographically vast municipalities and territories without municipal organization.
In May, we made a significant step forward when we locked in highly competitive coverage for the Cochrane DSSAB, who joins Manitoulin-Sudbury DSSAB for whom we’d developed a custom solution a few years ago. We thank Cochrane for joining on and look forward to onboarding new DSSAB customers in the near future.
If you’re at a DSSAB and are interested in more information about this program, contact me!
Saskatchewan Residents Can Now Use the HSC Tenant Insurance Program
In mid-July, the HSC Tenant Insurance Program became available to residents of social housing in Saskatchewan, thanks to a new partnership with Network of Non-Profit Housing Providers of Saskatchewan (NPHPS). NPHPS comprises of eight housing providers in Battleford, Regina, Lloydminster, Meadow Lake and Prince Albert.
Our low-cost insurance for residents of social housing is also available in Alberta and Manitoba. For more information on it, visit https://tenant.hscorp.ca