If municipalities across Simcoe County want to get on the train that will reduce their insurance costs by 10 per cent immediately, they have to punch their ticket sooner than later.
Set to launch on June 1, the Simcoe Municipalities Insurance Pool is a county-based program that will afford the county’s member municipalities (towns and townships) reduced rates and greater control over their insurance spend.
According to Trevor Wilcox, the county's general manager of corporate performance, municipalities that join the pool will pay 10 per cent less to the pool than their insurer and will have the option to become "founders," people who get on the train when it leaves the station, or they can risk never getting on the train at all.
“All founders get in,” Wilcox said during an interview with BarrieToday at the Simcoe County Administration Building in Midhurst on Tuesday. “They pay their premium, start getting equity in the organization and they are the decision-makers.”
Municipalities that don’t join the consortium at the outset will have to wait five years for their next opportunity to join, which isn’t guaranteed.
According to Wilcox, the founding members determine who will be allowed to join in the future and they’re not obligated to accept new members.
New members would also be responsible for making an equity contribution that would bring them up to the same level as existing members.
“In some cases, depending on the size of the municipality, that could be a significant amount,” Wilcox said. “The only way to guarantee a municipality is part of the program is to join at the founders level.”
Conversely, Wilcox noted, municipalities that join as founders can leave at their leisure.
“Their equity in the pool stays in place to pay for any outstanding claims and once they’ve been covered, the municipality would get their remaining equity back,” he said.
The county is launching the program following substantial investigation and review, which cost the county approximately $500,000.
Wilcox gives the majority of the credit for the new program to county council. He said council challenged staff to come up with ideas that could generate savings and improve efficiencies, or a combination of both.
“We researched some options and found that the insurance pool was a viable option,” Wilcox said.
Around the same time, the county’s chief administrative officer was meeting with the CAOs of the county’s municipalities.
“He told them that we were going to be investing in this and asked them if they were interested,” Wilcox said. “They were all in favour.”
According to Wilcox, Simcoe County, the towns of New Tecumseth and Penetanguishene and two other unnamed municipalities have committed to the pool so far.
Springwater Township council will receive a presentation on the program tonight (Jan. 15) starting at 5 p.m., prior to its council meeting.
Other municipal presentations are scheduled over the next few weeks.
In 2024, Springwater spent about $600,000 on insurance, Oro-Medonte Township’s coverage cost about $800,000 and Essa Township spent a little over $750,000.
According to Wilcox, the total spend by the municipalities and the county for insurance coverage last year was about $16 million, with about one-third — or around $5 million — going to cover claim costs. The remainder went to profit and administration costs.
Under the pool program, which will require the county to hire between six and eight individuals to administer, the costs and benefits are managed in-house.
“For individual municipalities, the cost of insurance is high,” Wilcox said. “They’re only buying a small piece.
“With the pool, we’re getting a group-buying benefit, a doing-stuff-ourselves benefit and we’re getting economies of scale — buy more, pay less,” he added.
Wilcox said the county’s insurance pool proposal has been given a technical term by the consultants who contributed to its creation — "the slam dunk."
“There is no reason why anybody should not go into this pool,” Wilcox said. “Instead of being subjected to the whims of the insurance companies, we’ll be able to decide, as a collective, what to do. And we can decide, not the insurance company, how quickly to do it.
“Instead of having a 10 to 15 per cent increase in one year because the insurance industry sees something coming, we could decide that we’re going to delay that increase and spread it out over three, four or five years," he added.
Under the pool program, coverage will be under a single policy, with each municipality having access to the highest limits under each coverage.
The pool structure is straightforward.
The individual municipality is responsible for paying the deductible — $10,000 to $100,000 — depending on the category, such as liability, property or auto.
The pool pays the next $490,000 to $400,000, to a ceiling of $500,000, dependent on the deductible amount. The insurer pays everything over $500,000.
According to Wilcox, the pool should have more than enough money to cover any claim.
He said an actuary looked at the claims history from all 18 local municipalities (including the separated cities of Barrie and Orillia) and ran a very detailed simulation. The largest claim in any one year that they saw were actually two claims that added up to $1.2 million.
The City of Orillia has been invited to take part in the pool, Wilcox said. The City of Barrie was also invited, but declined, he added.
To ensure the program would be on safe footing moving forward, the actuary was asked to determine the impact of a worst-case, once in a 50-year scenario — 40 claims of $400,000 for a total payout of $16 million.
“They said that would never happen, based on history,” Wilcox said. “The worst case he could run was $12 million.
“By the time we hit Year 4 of this program, our equity in the pool will be around $12 million," he added. “And the interesting thing, when claims are that large, they take a long time before they're paid out and the pool will be able to react to that.”
