Two more Simcoe County municipalities have been invited to join the county-wide insurance pool.
One said yes, absolutely, and the other said no, not yet.
Representatives from Axxima, actuarial and insurance management advisers, were in front of Oro-Medonte Township council on Thursday and Essa Township council on Wednesday, providing councillors in both municipalities with more details on the local insurance pool that's scheduled to launch in June.
Promising a 10 per cent reduction on their current premiums for the first year of the program and significant savings over the first five years, the Axxima reps made the same pitch to Oro-Medonte and Essa that was made to a number of other county municipalities over the past few weeks.
According to the presentation in Oro-Medonte, the township will save about $105,000 in the first year. At the end of five years, the municipality could realize a savings of about $663,000.
“It’s always good to get news about saving money,” Oro-Medonte Deputy Mayor Peter Lavoie said following the presentation.
Oro-Medonte council voted unanimously to join the pool.
The presentation in Essa on Wednesday night noted the township would save almost $85,000 in the first year and about $530,000 over the first five years.
Essa council had additional questions that will be addressed at an upcoming meeting.
“Essa has not joined the insurance pool yet,” said Michael Mikael, Essa's chief administrative officer. “I will be reporting on this subject to council at the next meeting.”
According to Ryan Durrell, chief information officer at Axxima, 15 of 18 local municipalities have agreed to move forward, including the City of Orillia and the County of Simcoe. Some have approved the program, he said, but still require ratification.
There are three more presentations to be held over the next two weeks, he added.
The City of Barrie is the only municipality in the county that didn’t want a presentation.
“Barrie didn’t even want to be part of the initial feasibility study, so they didn’t reject the plan, they rejected even exploring the concept at all,” Durrell said.
“Otherwise, the program has been universally supported by the participants," he added.
Durrell said there have been some thoughtful questions and concerns raised at all levels.
“I think all of those have been assuaged by a strong foundation of analytical work done by the actuaries, as well as the prudent approach taken at the advice of the technical working group,” he said.
The technical working group, Durrell explained, is a subcommittee for the pooling project made up of municipal staff from various municipalities, which proposed for the deferral of savings in favour of enhanced stability on start up.
According to Durrell, if each municipality opted to buy its own insurance and not participate in the pool, the projected 2025 premiums for the 18 municipalities would be $20.6 million. Of that, about $7 million will pay for expected losses.
The remaining $13.5 million goes to areas other than losses, including insurance company profit and risk margins, operating expenses, broker compensation and premium tax.
“Right now, municipalities in Simcoe County retain about $1.8 million in losses under the deductibles and then send out about $20.6 million in premiums, to never be seen again,” he said.
Under the pool program, the losses under the deductibles category will increase slightly — $238,000 — to almost $2 million.
The pool will retain $8.4 million and $7.7 million will be earmarked for excess insurance premiums.
“That will cover all of the losses in the same way that they are today, but will still generate a $4.3-million savings, or 19.2 per cent,” Durrell said.
Rather than offer each municipality a 19.2 per cent reduction out of the gate, they were offered an immediate reduction of 10 per cent to ensure the program had the maximum opportunity to succeed.
“What we’ve proposed is that in lieu of taking the 19.2 per cent savings right up front, we defer 9.2 per cent of that and provide all of the municipalities with a 10 per cent savings over their expiring costs,” Durrell said.
According to the presentation, municipalities that join the pool will see an immediate 10 per cent saving and a 9.2 per cent deferred saving in the first and second year.
In the third and fourth year, they will see a 16.7 per cent saving and a 9.2 per cent deferred saving.
In the fifth year and beyond, the municipalities are projected to see a 25.9 per cent saving.
“Coverage under the pool will be largely the same or better than what you have now,” Durrell said. “Everybody will get the benefit of having the largest available limit and it should provide improved coverage, but at the very least, it won’t be worse than what you have today.”