For group programs to effectively meet the needs of its members, member participation is critical. Our Insurance Advisory Committee was created so that HSC understands the provider and service manager environment relating to insurance and to help us deliver effective programs. The committee meets every two months and is comprised of provider representatives from both large and small organizations across the province:
In 2012, the advisory committee played an important oversight role in the insurance consultations and how the feedback translated into the new program design. It also reviewed the new program guidelines and is now monitoring the Claims Fund. In 2013, the Committee will be reviewing proposed rules for the property Claims Fund and a “captive” option for property insurance – captive insurance is where policyholders effectively own the insurance company and so the insurer is ‘captive’ to the policyholders. We will keep you posted on any developments that affect the program structure. I would like to extend my gratitude and recognize the valuable contribution of our committee members.
Top Causes of Property Claims, 2012
In 2012 the top six highest valued claims were generated by Stream A providers – providers with total insured values of less than $100M. Five of the six were fires and the most expensive claim ($3M+) was for water damage caused by a burst pipe. The most significant weather event was the Thunder Bay record rainfall on May 28, which generated 47 claims valued at $1.2M and caused extensive flooding across the city.
Top Causes of Liability Claims, 2012
Liability claims data from 2012 shows the importance of clearly written maintenance contracts, particularly winter maintenance contracts, which include a transfer of liability from the housing provider to the contractor, also known as a hold harmless and indemnification clause. SoHo staff can help by reviewing your maintenance contract to help ensure that this is addressed. Slip trip and falls generated the most claims. Disrepair of property includes falling ceiling tiles, infestation and falling trees.
Claims are the single most important factor for rising insurance premiums. Since 2004, insurers that underwrite your insurance program have been paid $97.5M in property premiums but have paid out $107.2M in claims.
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. Here are just some of the stories on incidents at participant sites in recent months:
On behalf of HSC, I would like to thank the providers, their staff and our adjusters who go above and beyond the call of duty responding to these events.
The goal of the Claims Fund is to pay for expected losses and insure catastrophic property claims, based on historical trends. When the Fund was established for the 2011/12 policy term, the insurance experts looked back at claims for past years and then estimated the amount required to pay the previous year’s claims and that was $9.8M. To date the combination of payments and claim reserves for the 2011/12 policy term is $10.3M, which means the property Claims Fund absorbed most of the claims generated and this will have a positive impact on future premiums. For 2012/13, Claims Funds were created for each stream and your Claims Fund contribution was added as a separate line on your invoice (in the prior year it was integrated into the property premium). You can find more about the Claims Fund by calling us at 1.866.440.2492.
Service Managers Meetings
HSC has been meeting with Service Managers to provide details on the costs of the 2012/2013 premiums and to discuss insurance budgeting and benchmarking. In our initial presentation to Service Managers, we looked at why premiums are rising – because the number of property and liability claims has been rising, along with the total insured values (the total portfolio the program insurers), it costs insurers more to cover social housing providers, which has led to increased premiums.
You can view the presentation online or request a copy by calling me at 1.866.268.4451 x.314.
One way of controlling insurance costs is to adjust your deductibles. By raising your deductible the right amount, you can achieve the lowest cost of risk.
Higher Deductible = Lower Premium
SoHo staff can help you analyze what deductible level is required to achieve your lowest cost of risk. Feel free to give them a call and ask about this. If you do this prior to renewal in September, you will have time to report to your boards. Rest assured, you don’t lose any service in the process. In the event that you choose a higher deductible, our adjusters will continue to assist you in the management of your claims.