Simon Glairy is a recognized expert in the fields of insurance and Insurtech, with a specialized focus on risk management and AI-driven risk assessment. Today, Simon shares insights into the decision by Bradford to join the County of Simcoe’s insurance pool and what this means for the town’s future.
Why did Bradford decide to join the County of Simcoe’s insurance pool?Bradford chose to join the County of Simcoe’s insurance pool to share resources and reduce insurance costs. By pooling resources with other municipalities, Bradford aims to mitigate risk and secure better insurance rates, hoping to save significant amounts in premiums over the coming years.
How much is Bradford expected to save by joining this pool?Bradford is projected to save about $1.94 million in direct insurance costs over five years. These savings could potentially be even greater because the projected savings are based on conservative estimates. As more municipalities join and the pool stabilizes, efficiencies and better risk assessments might increase these savings further.
What are the primary factors driving Bradford’s increasing insurance premiums?The primary factors include the town’s growth, an increase in claims nationally due to catastrophic events like floods and forest fires, and limited competition among insurance providers. These elements have contributed to significant increases in Bradford’s insurance premiums over the past few years.
How have other regions, like Waterloo and Durham, benefited from similar insurance pools?Regions like Waterloo and Durham, which established their insurance pools in 1998 and 2000 respectively, have benefited from stable membership and lower insurance costs. These historical cases demonstrate the long-term viability and benefits of such insurance pools, providing a model that Bradford and Simcoe County hope to replicate.
What does it mean for Bradford to be a founding subscriber to the pool?Being a founding subscriber means Bradford is one of the initial members setting up the insurance pool and contributing to its initial risk pool and governance structure. This allows Bradford to help shape the pool’s policies and processes from the ground up.
Which municipalities are also joining the County of Simcoe’s insurance pool?Alongside Bradford, municipalities like Oro-Medonte, Orillia, Springwater, Collingwood, Midland, New Tecumseth, Penetanguishene, and Innisfil are joining the pool. These municipalities might have chosen to join due to shared interests in managing risks collaboratively and reducing insurance costs, as well as the proven benefits seen in other regional pools.
What is the significance of the “fair number of moving parts” mentioned by Ryan Durrell in his presentation?The “fair number of moving parts” refers to the various factors that influence the potential savings and effectiveness of the insurance pool. These include different claims histories, varying levels of risk, the integration of additional members, and the management of the insurance pool’s financial health over time.
Can you elaborate on the three layers of the insurance pool system?The insurance pool consists of three layers:
- The deductible layer, where each municipality pays deductibles ranging from $10,000 to $100,000.
- The pooled layer, covering claims that exceed the deductible up to $500,000, offering better overall coverage especially for smaller towns.
- The commercial insurance layer, covering extreme events to prevent large claims from bankrupting the pool. For instance, if a claim amounts to $15 million, the town pays its deductible, the pool covers up to $500,000, and the commercial insurer covers the rest.
How will the advisory board oversee the insurance pool?The advisory board, with representatives from each participating municipality, will govern the insurance pool. An actuary on the board will advise on risk assessments and help determine contributions based on factors like exposure to risk and claims history.
How does Bradford’s current $1.9 million insurance premium compare to the expected $1.66 million after joining the pool?Bradford’s current insurance premium is approximately $1.9 million, but after joining the pool, it is expected to decrease to around $1.66 million, reflecting significant cost savings for the town.
What happens if a member municipality wants to leave the insurance pool?If a member municipality decides to leave the pool, they can do so and will have their equity in the pool paid out. This provides flexibility for municipalities to opt-out if they feel the pool no longer meets their needs.
How does the insurance pool manage large claims to prevent bankruptcy of the pool?The pool is structured to handle large claims through its three-layer system. For example, if a municipality faces a $15 million claim, the deductible layer covers the initial amount, the pooled layer covers up to $500,000, and the remaining amount is covered by the commercial insurance layer. This structure helps distribute large risks and prevent financial strain on the pool.
Besides liability, property, and automotive coverage, are there other types of insurance Bradford will still need to buy separately?Yes, Bradford will still need to purchase additional coverage for specific risks not included in the pool, such as cyber insurance and insurance for environmental damage.
What is the purpose of the 9.2% deferred savings in the insurance pool plan?The 9.2% deferred savings are set aside to create a financial buffer for the pool. This buffer helps to stabilize the pool against unexpected claims or fluctuations in insurance costs, ensuring its long-term sustainability.
What deadline do participating municipalities have to meet to join the insurance pool?The initial deadline for municipalities to subscribe to the insurance pool was February 14th, but it has been extended to early March. This extension allows additional time for municipalities to complete their assessments and formalize their participation.
you have any advice for our readers?For municipalities considering joining an insurance pool, it’s crucial to perform due diligence and understand the benefits and risks. Collaborating with other municipalities can provide significant cost savings and better risk management, but it’s essential to ensure that the pool’s structure and governance are well-organized and transparent.
