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Managing Risky Business: Q4 2022

Managing Risky Business: Q4 2022

In this issue of Managing Risky Business, read about:

Renewal Results

Once again, it was a tough year for the global insurance marketplace. There were many things that did not look promising for our group when we went into negotiations for the 2022-23 group premium.

The volume of claims was significantly higher compared to previous years. Inflation was dramatically increasing, driving up repair and restoration costs. The broader insurance marketplace was not altogether positive. The Russia-Ukraine war has already cost global insurers an estimated $1.3B. Lloyds of London has estimated that COVID-19 will be the largest loss on record. The increasing scale, frequency and cost of climate change-related events continue to have a major impact, with last May’s Derecho causing over $875M in property damage across Ontario and Quebec. Furthermore, multi-residential property portfolios remain a less-than-desirable category of risk for underwriters.

Nevertheless, we negotiated on the basis of our largely consistent track record with our longstanding underwriters, our efforts at managing program risk and successfully controlling claims costs. We were pleased with the results. In spite of the factors above, we were able to hold our group premium to a 15% increase — though your individual premium will vary based on your reported property values, your claims history and other factors (e.g., flooding risk). To keep costs under control and continue to improve our program, we made some adjustments: we increased the Property Claims Trust Fund, which covers smaller but more frequent claims, to $20M. And we introduced a risk rating system. We also made two key changes to our Directors & Officers insurance, switching carriers and introducing a D&O Claims Trust Fund. The story below elaborates on these changes.

New for the 2022-23 Term

This term is marked by several changes in the HSC Group Program. The changes are reflective of our goal of controlling costs so that the program remains as affordable as possible and can offer guaranteed coverage to all housing providers, regardless of their claims history.

Risk Ratings

The new risk rating considers the severity and the frequency of individual provider claims. Ratings are assigned on a scale of 1 (low risk, no losses) to 6 (high risk, multiple and/or costly losses).

The purpose of this rating is to help you understand how the risk associated with your non-profit is perceived by the insurance market. It empowers providers to take action and connect with us regarding their risk profile to discuss ways to improve it.  Our ultimate goal is to control insurance costs by using the risk rating to support the improvement of the group’s performance overall.

This term the ratings have been assigned for reference purposes only. The financial component of the risk rating will be implemented gradually over the next several years. This will offer providers an opportunity to improve their risk profile where warranted.  

Currently, program providers are distributed as follows:

You’ll note that nearly 70% of providers have very good risk ratings – ratings of both 1 and 2 are excellent, the only differences being total insured values (this increases risk) and/or single (small) losses over the past five years, relative to property coverage paid.

At the opposite end, we have 15% of providers with risk ratings of 5 and 6. Larger providers may have higher risk ratings, due to the magnitude of their total insured values, major losses and a higher frequency of claims – though this is moderated by the amount they pay for property coverage and higher deductibles. Smaller providers can have high risk ratings if they have had major (or multiple) losses, low deductibles and have not implemented any risk measures. Sometimes frequency is a challenge because a provider houses highly vulnerable residents, and claims may be more likely.

Providers with high-risk ratings might consider performing a deliberate evaluation of the risk mitigation measures they have in place and draw on the practices of similar, well-performing organizations. HSC also plans to work more closely with providers that have frequent claims – to support them with recommendations to improve their risk profile. Doing so will also improve the overall risk profile of the program.

To those with low risk ratings: congratulations! You are crucial to controlling premiums for our province-wide group and we commend you for your excellent track record. That said, we encourage you to be mindful of managing risk in your buildings. As you will note in the graphs below, smoking fires represent the costliest threat to providers, so having a no-smoking policy can go a long way to preserving your track record, keeping your risk rating low and preventing the disruption associated with handling a property damage claim.    

If you have any questions about your risk rating, please feel free to reach out. We’re happy to help!

D&O Carrier and Claims Trust Fund

For the 2022-23 term, we are pleased to have Travelers Insurance as our new D&O carrier. We believe that providers will appreciate access to their legal services hotline (1-877-473-9797) to handle D&O concerns as they emerge. They have experienced staff who can offer you proactive support before any claim or while it is underway. The goal is to better mitigate disputes and manage the (sometimes significant) expense of defending claims.

Hotline Details


When calling, please be prepared to provide your HSC policy number and identify HSC as the named insured.
What’s Included:
This 24/7 hotline provides general information about Canadian laws, such as employment law, contracts, taxation, real estate, consumer law and limitation periods. It can also offer HR support on hiring, absences/leaves, safety, discrimination, immigration, benefits and temporary employees. The call is confidential, providers can access the services as often as needed and it will not impact your premiums by accessing it for support.
What’s not included:
Please note that lawyers providing legal assistance services will not provide legal opinions or represent providers. The legal assistance services does not cover insurance law or criminal law.  In the event of a D&O claim, please click here for details on how to report a claim.

Travelers also brings to our program considerable experience with community housing, having served as the D&O carrier for the British Columbia Non-Profit Housing Association’s insurance program for several years. Finally, we were able to negotiate with Travelers a three-year rate guarantee, which will help us control overall insurance costs.

Because D&O claims have been escalating in the past 10 years, we have also introduced a D&O Claims Trust Fund. Like the Property Claims Trust Fund introduced in 2012, our goal is to help protect providers from the volatility of the global insurance marketplace. You will note that your premium invoice identifies your D&O Claims Trust Fund contribution amount. This contribution is held in trust and used for the benefit of program participants, in consultation with HSC’s sector-led Insurance Reference Group. For more information on the fund structure, please refer to this year’s Group Insurance Program Guidelines.

Reminder: Margin Clause

Introduced last term, the margin clause is important because it makes current building valuations essential.

The goal of this clause is to ensure all providers in the program are adequately insured – so if you need to make a claim for a major loss (e.g., if a building is severely damaged or needs to be completely rebuilt), your property insurance will pay out the full replacement value. It prevents situations where the cost of restoring/repairing a building is greater than the declared value of the property itself – and where your organization, or other providers must cover the shortfall via their premium.

To achieve this, the margin clause defines a ceiling on how much you can claim relative to your declared insured values in your policy application. The margin is set at 115% of the value stated in your renewal document. In other words, the most the policy would pay for a location is a provider’s declared values, plus a 15% buffer applied to the building and contents limit.

This makes current building valuations essential. As such, it is important to review your valuations annually and to ensure what is on your application is accurate. To assist you in this, Marsh offers low-cost desktop building valuations. You can get more information about this service here.    

Should you have any questions about these changes, please reach out to us by emailing

2021-22 in Review / Program Performance

As we mentioned in our story on renewals, 2021-22 was a difficult policy term. We had more claims from more providers and had 11 claims that exceeded $1M. As a result, we exhausted the Claims Trust Fund more quickly and the underwriters needed to cover more claims than they usually would.

We had a total of 183 claims, which cost more than $25M. Fires comprised of 43% of the total number (78 claims) but represented 73% of the total claims costs. As usual, preventable careless smoking claims remained the costliest.

Burst pipe claims come in at number five for cost, however they were overwhelmingly the most frequent cause of claim incidents.

While January represented a difficult claims month, it was the Spring months of April and May that contributed the most to the high number this year. Not surprisingly, half of the weather-related claims occurred on May 5 when the derecho struck.

A derecho is characterized by straight-line winds (derecho is Spanish for ‘straight’) as opposed to a twisted wind, which is the type that exists with a tornado. This informed the path of this storm, which ran up the Windsor-Ottawa corridor, and the concentration of claims. Since 41% of Canada’s population live in the area affected by the Derecho, it damaged infrastructure upon which many people depend as well as countless homes and buildings. As such, restoring services and the cleanup took longer than usual. The weather event highlighted the importance of having a contingency plan, particularly when it comes to weather-related events. To this end, HSC will be offering a contingency planning webinar in 2023. You can receive notice as soon as the date and registration becomes available by signing up for our HSC Event Alerts.  

Liability Claims

We saw a total of 123 liability claims this year. As usual, slips, trips and falls led the pack in terms of the number of claims. To help prevent these types of claims, we have links to online resources that we encourage you to review.

At this point, claims costs from 2021-22 sit at about $1M. However, liability claims often take years to close and tend to grow in cost over time.

Directors’ & Officers’ Claims

This is an area of increasing concern for us. Over the past 5 years, claims volume and costs have risen. The breakdown of claims is as follows:

While the D&O component of your insurance premium is small, we are taking steps to manage the risk and minimize your overall insurance costs more effectively. The new D&O Claims Trust Fund will give us a better view on claims and control costs by reducing underwriter exposure to them.

New Resource Guides

HSC is pleased to unveil a series of new resource guides to assist providers in managing risk in their buildings. The guides are focused on practical ways to avoid problems and set out practices and procedures that can be incorporated into the regularly scheduled maintenance and inspection routines that providers have established at their sites.

Water Leak and Flooding Guides

This series of three guides examines aspects of emergency control planning relating to water as the source of property damage.

  • Water Damage Control Planning: A Practical Guide for Housing Providers offers general maintenance suggestions and checklists to help property managers develop programs to protect buildings against the risk of water damage. It examines this through the lens of key building systems and features
  • Water Leak Emergency Response Planning Guide outlines the steps you should take before, during and after an internal water leak. It includes a workbook to assist you in developing the key elements of an emergency response plan
  • Flood Emergency Response Planning Guide for Housing Providers identifies items to consider when preparing your building for potential flooding. It is an updated version of the guide we’d previously had on our website and includes new content

Helping Independent Local Housing Corporations Manage Risk

The Power of the Group enables our program to offer guaranteed coverage to all housing providers, negotiate with underwriters directly and moderate the insurance costs of individual housing providers. But sometimes this means taking a targeted approach to risk management to benefit the whole group – like working with individual providers (or a group of providers under a Service Manager) on improving their risk profile.

We’ve recently taken such an approach with Ontario’s Independent Local Housing Corporations (LHCs). We have created dashboards that enable these providers to track and manage their property claims as well as their internal claims (those that are under their deductibles). The dashboards also provide risk recommendations for LHC staff based on our analysis of their claims.

Why a tool for this group specifically? Ontario’s independent LHCs rank are the largest housing providers in HSC’s Group Insurance Program. That’s because they inherited the vast portfolio that belonged to the Ontario Housing Corporation prior to devolution and have grown since then. Currently, they manage over 90,000 units across almost 4,700 buildings. As such, they play a significant role in the scale of the program and the Power of our Group.

Our hope is that by pulling together key data points in a single place we will be able to assist these LHCs better manage risk in their large and complex portfolios and organizations. In the end, this not only helps the LHCs but benefits our group as a whole.


Claims in the News


No injuries reported as firefighters tackle early afternoon fire, Ottawa

Cause: Appliance malfunction



No injuries in basement fire, Sarnia

Cause: Unknown

E-bike charger listed as cause of $750,000 townhouse fire, Windsor

Cause: Under investigation

Townhouse fire at 116 Waller, Whitby

Cause: Careless smoking

Valley Street house fire leads to arson charges, Thunder Bay

Cause: Arson


Ottawa firefighters quickly knock down blaze in unoccupied Carlington-area apartment

Cause: Arson

2-Alarm Fire Durnford Rd. TFS Scarborough 8-21-2022, Toronto

Cause: Electrical

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