Skip to content

Managing Risky Business: Q4 2023

Managing Risky Business: Q4 2023

In this issue of Managing Risky Business, read about:

Renewal Results

Negotiations on the group premium were extremely challenging this year due to our group’s claims performance in 2023-24 and global insurance market conditions

Market conditions

As we have mentioned before, the hard insurance market has continued, with the demand for property coverage exceeding the supply of insurers willing to underwrite high-risk portfolios.

Geopolitical instability, such as the war in Ukraine, has impacted the global insurance market with costs currently estimated by UK industry experts to be $17B to $20.5B (£10B to £12B) and growing

Climate change has had a profound (and growing) impact on the global insurance market, and the property insurance market particularly. In 2022 alone, Swiss Re estimated insurance losses of $125B as a result of natural catastrophes

Wildfires and major losses in Canada have affected insurance costs as well. In a July 2023 article, the New York Times noted that “before 2009, insured losses [for wildfires] in Canada averaged around 450 million Canadian dollars a year, and now they routinely exceed $2 billion. Large reinsurers pulled back from the Canadian market after several crippling payouts, increasing prices for homeowners and businesses.” The Derecho that affected Ontario and Quebec (May 2022; $875M in damages) and the 2016 Fort McMurray fire ($8.9B) also involved major payouts for insurers

Furthermore, the increased severity and frequency of claims associated with the multi-residential sector has made it an unfavourable risk. Many large insurers have exited the market – including Intact, which used to provide coverage for community housing in Ontario. As one industry publication notes “accounts with a challenging loss history, poor risk quality – such as older frame construction – and with outstanding loss control recommendations, are seeing the most pressure, and the most difficulty when it comes to capacity and rates… [and] will continue to see rate increases of 25% up to 150%”

2022-23: A Difficult Term

With the total cost of claims in excess of $30M, the 2022-23 term has been one of the most difficult in many years for our program. The high volume and cost of claims in the first six months of the term meant that the program’s $22.5M Claims Trust Fund (CTF) was fully depleted in July; since then, claims costs have been covered by insurers and will continue to be with the time remaining until the close of the term. 

This year, the program saw a marked increase in fire claims related to tenant negligence (arson, careless smoking, candles, cooking-related). Fire claims are almost always more costly to resolve than other types of claims.

Historically, HSC has offset the cost of claims by subrogating where there is the possibility of a monetary recovery (e.g., cases where negligence has been a factor). However in the 2022-23 term, there have been fewer opportunities to recover funds since providers with claims have not implemented (or enforced) mandatory tenant insurance policies.

These ongoing losses signal elevated risk to underwriters, who have demanded conditions to mitigate their risk exposure and have impacted their pricing of our program.

2023-24 Insurance Costs

Our insurance costs are driven in large part by how effectively we manage risk as a group. Accordingly, our performance as a group informs our negotiating power. That said, in spite of the difficult term, the high losses for our group, and the challenging market conditions for the multi-residential property sector, we were able to negotiate an average 20% increase across the program. For the year ahead, our program will also see:

  • Automatic 10% inflationary increase to property values
  • $30M Claims Trust Fund
  • Increase to provider deductibles ($25K minimum for Stream A; $50K minimum for Stream B)
  • Mandatory increases for providers with high claims frequency and elevated loss ratios

What We’re Doing

HSC recognizes that increased premiums have a significant financial impact on providers. To mitigate an increase on the property portion of the group premium of almost 30%, our client-based Insurance Reference Group supported an allocation of $2M from our Global Trust Fund surplus against next year’s Claims Trust Fund. 

We also recognize that insurance costs for providers have dramatically outpaced inflation. To address this concern, HSC has reached out to the Ministry of Municipal Affairs and Housing to provide them with our renewal information to support them in their update of the benchmark indices. Our Director of Sector Services, Kerry Hobbs, will also be speaking about insurance costs in terms of the End of Operating Agreements and Mortgages and long-term sustainability at the ONPHA conference. We are also holding an event with large providers (insured values in excess of $100M) on risk mitigation strategies due to the size of their portfolios. Furthermore, we will continue to work closely with providers with difficult claims histories.

2022-23 in Review / Program Performance

The first quarter of the term was by far the most difficult; February had almost 1 claim a day and was also the costliest month ($6.9M incurred). December was the second mostly costly month with $4.6M incurred.

Liability Claims

We saw a total of 63 new liability claims this year. As usual, slips, trips and falls led the pack in terms of the number of claims — with claims primarily occurring outside due to issues such as uneven walking surfaces, cracks and snow and ice.

At this point, claims costs from 2022-23 sit at about $963K. However, liability claims often take years to close and tend to grow in cost over time.

New Resources Available

HSC is pleased to offer a new guide and series of checklists to assist housing providers in their day-to-day work.

Managing Tenant Risk: A New Resource Guide

This guide builds on our tenant-focused edition of Managing Risky Business earlier this year, offering insights and strategies to mitigate tenant risk in your buildings. It also includes links to valuable resources.

Property Inspection Checklists

These simple checklists are meant to help housing provider staff/property managers in their regular inspections. Together, they serve as a template to document this work. Having such documentation is important in the event of a liability claim, since specific documentation will be requested and can help achieve the best possible outcome for your organization.

Upcoming and Past Webinars

To end 2023, HSC will be putting on an encore performance of its popular Contingency Planning webinar on November 7.

We have also posted recordings and the slides from previous webinars in 2023 on our website:

Do you have aluminum wiring in your building? It could be a fire hazard!

In the mid-1960s to the late-1970s, the price of copper soared, leading to the widespread use of aluminum in both single-family and multi-residential electrical systems. Many structures were wired entirely with aluminum, while others feature a blend of aluminum and copper.

The use of single-strand aluminum wiring (also known as branch circuit wiring) was discontinued because it posed a significant fire hazard – due to the metal’s material properties and issues associated with its improper installation and maintenance.

Neglected connections in outlets, switches and light fixtures containing aluminum wiring become increasingly dangerous over time. Poor connections cause wiring to overheat, creating a potential fire hazard, endangering residents and your buildings.

Insurers are concerned about the hazard. Towards mitigating these concerns, we are interested in identifying providers in our program that may have aluminum wiring. We hope to work with them over the next year to ensure that the wiring is properly inspected by a qualified expert and does not present a hazard.  

Identifying Aluminum Wiring

  • Age of building/building addition: was it built during the time frame in which aluminum was commonly used?
  • Colour of wiring: is it silver instead of copper-coloured?
  • Labels and markings: Is the cable covering marked with the word aluminum, “ALUM” or “AL approximately every 12 inches? Are the binding terminals marked CO/ALR (copper/aluminum revised)? Are the wall switches, receptacles or circuit breakers marked CU-AL?

You should be able to see the colour of the wiring and the labels in an electrical panel, behind outlets or where there is exposed wiring (attic, basement, or other unfinished spaces). Be careful not to touch the wires, as live wires can be very dangerous. If you’re unsure, can’t find any markings, or don’t see a safe way to examine the sheath, then call a professional electrician to determine whether there is aluminum or copper wiring.

Warning Signs

Aluminum wires overheat much more easily than copper. Most problems with it occur at connection points, such as where the wires connect to your outlets, switches, sockets, and receptacles.

  • The surface of plate covers on your outlets and switches are warm or hot to the touch
  • Faceplates show signs of discoloration
  • The smell of burnt insulation or burning plastic
  • Outlets emit a high-pitched ringing noise
  • Flickering lights

Aluminum wiring should be evaluated by a licensed electrician who is experienced in evaluating and correcting aluminum wiring problems. Not all electricians are properly trained to deal with defective aluminum wiring. The electrician should first assess the job and complete a checklist developed by the Electrical Safety Authority — ensure that the wire type checkbox at the top of the list is ticked.

[Please note: in an earlier version of this article, we indicated that ESA needed to be involved in approving the electrical work. This is no longer the case]

Additional Resources:

ESA Bulletin on Electrical Safety Inspections [includes link to the checklist]

The Problem With Aluminum Wiring In Your Home

Aluminum Wiring & Your Multifamily Property

Claims in the News

As we mentioned earlier, 2022-23 has been an extremely difficult term. These are just some of the claims that made the news.

August 2023

‘Confirmed structure’ fire in Whitby

Cause: Unknown

Fire causes damage to row of four townhouses in Greenboro area, Ottawa

Cause: Unknown

Cause of late night fire under investigation, Guelph

Cause: Unknown

July 2023

‘Suspicious’ apartment fire causes $200K in damage: London police

Cause: Arson

Apartment fire led to evacuation of building, Marathon

Cause: Kitchen/cooking

Ottawa firefighters quickly contain high-rise fire in Carlington

Cause: Unknown

May 2023

Ottawa fire crews tackle four separate fires Wednesday (Charlebois)

Cause: Careless smoking

Windsor police investigate suspicious house fire

Cause: Unknown

April 2023

Person injured in weekend Hess Street apartment fire dies in hospital, chief says, Hamilton

Cause: Arson

Several people displaced following College Ave house fire, Windsor

Cause: Candle/Incense

Firefighters tackle Limbrick fire, Thunder Bay

Cause: Unknown

Fire forces evacuation of Arnprior apartment building

Cause: Careless smoking

March 2023

No smoke alarms in Sarnia townhouse fire

Cause: Careless smoking

One woman dead following apartment building fire in Sandy Hill, Ottawa

Cause: Unknown

Kitchener townhouse fire displaces two people, unit considered a total loss

Cause: Electrical Motorized Device

Apartment fire in London Wednesday night

Cause: Kitchen/cooking

Sunday evening fire in London

Cause: Unknown

February 2023

No injuries reported after third-floor fire at Rideaucrest Towers, Kingston

Cause: Careless smoking

One person taken to hospital for smoke inhalation after apartment fire in Heron Park Thursday afternoon, Ottawa

Cause: Careless smoking

Woman rescued by fire crews as blaze breaks out in Petrolia apartment building

Cause: Careless smoking

Nearly 30 Seniors Displaced After Fires in Dryden, Sioux Lookout

Cause: Electrical and Candle/Incense

Two people taken to hospital after apartment fire in Leslieville, Toronto

Cause: Unknown

Firefighters quell bed fire in Russell Road high-rise, Ottawa

Cause: Candle/Incense

Balcony fire causes evacuation of 30-unit apartment building in Welland

Cause: Careless smoking

No Injuries At Barrie Apartment Fire

Cause: Candle/Incense

Damage estimated at $350K in west Windsor house fire

Cause: Unknown

Toronto apartment building fire results in 1 death, 4 injuries

Cause: Unknown

January 2023

Fire involving two E-Bikes at home in Ottawa’s Lowertown neighbourhood

Woman injured in Ottawa house fire

Cause: Arson

Seven people displaced after bedroom fire at Russell Road row house, Ottawa

Cause: Explosion

December 2022

No Injuries Reported at 308 John Street Fire in Walkerton

Cause: Arson

Cambridge house fire causes $400K in damages

Cause: Electrical

‘Pretty devastating’: 20 tenants displaced, non-profit damaged following fatal fire in downtown Toronto

Cause: Unknown

Fire extinguished at Orillia non-profit housing complex on Christmas Day

Cause: Careless smoking

Fire near downtown Windsor

Cause: Unknown

November 2022

1 person dies in fire at Brampton seniors complex

Cause: Careless smoking

Two people rescued from highrise fire near Gerrard and Jarvis

Cause: Kitchen/cooking

Dog dies after house fire in London

Cause: Kitchen/cooking

Ottawa police arson unit investigating two fires at Little Italy building

Kathleen Ave. fire sends one to hospital, Sarnia

Cause: Arson

Firefighters battle blaze on Bronson Avenue, Ottawa

Cause: Arson

Fire at community housing now an arson investigation, London police say

Cause: Arson

Police arson unit needs witnesses to two fires at Gladstone Avenue apartment building, Ottawa

Cause: Arson

New Chair of Insurance Reference Group

As you will notice in the renewal commentary above, the Insurance Reference Group plays an important role in decision-making about our program and to ensure it meets client needs as best as it can.

For the past several years, Tina Gardiner (Risk Manager, York Region), has served as its Chair. Tina recently stepped down and another member of the Group, Anita Tsang-Sit (Director of Risk Management & Insurance, Toronto Community Housing) has agreed to take on the role.

We would like to say thank you to Tina for her time and effort and to welcome Anita as she takes the helm of this group of volunteers. We are appreciative that Tina will continue to serve on the Group as a member.

You can learn more about the Insurance Reference Group on the program overview page of our website.

Stay up-to-date on energy and insurance news, events, or updates from our CEO.

Join Our Mailing List!