Rising insurance rates strain facility budgets

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This article was published 24/08/2019 (2144 days ago), so information in it may no longer be current.

Municipal community centres and recreation facilities across the Southeast are seeing sharp increases in their annual insurance premiums, placing additional strain on already-lean budgets, board members and administrators say.

Joe Masi, executive director of the Association of Manitoba Municipalities, said municipalities participating in the association’s commercial insurance program saw premiums rise an average of 12 percent this year.

All but one or two of the AMM’s 137 member municipalities participate in the program, Masi said.

He pointed to flooding in Ottawa, wildfires in Fort McMurray, and hail storms near Dauphin as catastrophic events in the past year that have prompted insurers across Canada to hike their rates.

But Masi said the increases in Manitoba could have been as high as 50 percent had the AMM’s program not softened the blow by drawing on its pooled buffer fund.

“What we’ve seen in the last little while is that the commercial market has been hardening,” said Orville Giesbrecht, co-owner of Harvest Insurance in Steinbach.

“Insurance companies are becoming more stringent…It all comes down loss ratios.”

Giesbrecht said arena and hall boards should prepare for the possibility that higher premiums will continue in 2020, but cautioned the insurance market tends to be cyclical.

Locally, the tightening insurance market hit home in the Town of Ste Anne. Chief administrative officer Marc Darker told council last week the town is paying nearly $20,000 more this year to insure its arena and curling club. The complex will pay $69,000, up from $51,000 last year, Darker said. The new figure represents 45 percent of the facility’s total operating budget.

Mayor Richard Pelletier said council only had two weeks’ notice that the insurance bill would be 35 percent larger than last year. But the town, which participates in the AMM program, has a growing assessment base that is partially offsetting the effect of the insurance increase on the town’s budget.

The RM of Tache accesses the AMM program to insure the Lorette Community Complex. The annual insurance premium for the 55-year-old facility rose by $1,000 last year, but increased by $3,000 or nine percent this year, said CAO Christine Hutlet.

“We’ve taken some sharp increases across the board,” she said. “It’s going to put a strain on all of our budgets.”

To cope, the municipality hiked user fees by two percent, but Hutlet said if annual increases of around 10 percent continue, other measures will have to be considered.

Still, Hutlet said the AMM’s program offers better rates than what the municipality could secure on its own.

The RM of Hanover, another AMM program member, saw a 14 percent increase in insurance rates for the municipal facilities it operates in five different LUDs.

“We did face quite an insurance hike, pretty much across the board,” said Derek Decru, Hanover’s chief financial officer. “Unfortunately, the rec centres weren’t exempt from this.”

In the RM of Reynolds, the annual cost to insure the Hadashville Recreation Centre more than doubled between 2008 and 2018, said Penny Samec, the board’s secretary-treasurer.

The facility now costs more than $5,000 to insure, compared to $2,400 in 2008.

Last year alone the premium jumped by nearly $1,500, an increase Samec called “totally outrageous.”

Board members are saving money on maintenance by doing more repairs themselves, sometimes with used parts, and Samec hopes upcoming fundraisers, including a fall supper, sell out to help cover costs.

“We have to sell 3,600 perogies just to pay the increase—just the increase—for insurance,” she said.

Rising Hydro rates are compounding the financial challenge posed by the higher insurance premiums.

“I think all halls and all community centres are worried and wondering how are they going to exist,” Samec said.

“That shouldn’t be the purpose of a community centre, to raise enough money just to pay the bills.”

Giesbrecht said he sometimes advises commercial clients struggling with sharp premium increases to consider increasing their deductible rather than lowering their insurance coverage.

“You don’t really want to look at reducing values of buildings,” Giesbrecht said, noting replacement costs “have just been going through the roof.”

On its website, the AMM lists long-term rate stability and cost savings as two benefits of its insurance program, which offers both property and liability coverage through Western Financial Group.

In a presentation delivered to municipal delegates in June, the AMM said even the best insurance programs with low loss ratios are seeing rates rise by seven to 10 percent.

Masi said the AMM has doubled the size of its pooled buffer fund, in the hopes of better mitigating any increases that arrive next year.

“We’re really well-positioned going forward,” he said.