January 27, 2020
Rising insurance rates racks snow and ice industry
We are in the midst of an insurance crisis,” says Tony DiGiovanni, Executive Director of Landscape Ontario.
DiGiovanni says he is receiving calls from concerned business owners across the province who can no longer get insurance for their snow and ice removal operations. Others report their insurance rates have doubled or tripled, while deductibles have also increased.
“The quantity of lawsuits, probably encouraged by relentless advertisements, has resulted in many insurance companies pulling out of providing winter service coverage,” DiGiovanni explains. “With no coverage, there will be no service. This is an extremely serious issue that will affect every member of the public. The services of Landscape Ontario members and other professional winter maintenance firms are essential. They keep the economy going and the public safe.”
Last spring, Miller put forward Private Member’s Bill 118, Occupiers Liability Amendment Act. The bill, which passed second reading on June 6, 2019, proposes to reduce the notification period for slip and fall lawsuits from two years to 10 days, bringing the private sector in line with the current standard for municipalities.
“In Ontario, I would simply say, obviously, you want anyone who is hurt to be looked after,” Miller told Landscape Ontario during a recent phone interview. “But we have winter. We are going to fall down the odd time; it doesn’t necessarily mean that someone else is at fault.” Miller says he felt that a 10-day notification period made sense, because it would “provide more certainty for businesses and make it much easier to be able to keep records and to be able to defend themselves in cases where they are sued.”
He was also troubled by the amount of slip and fall lawsuits in the province.
“We are becoming more like the United States, more litigious,” Miller said. “When I drive back to Parry Sound, I see big billboards advertising services of lawyers, if you think you’re hurt, then sue somebody, and frankly, I don’t like that trend. It’s my feeling that if you hurt yourself, it’s not necessarily somebody else’s fault and businesses shouldn’t necessarily have to pay for it.”
NDP MPPs, including Tom Rakocevic (Humber River-Black Creek), voted against the bill at second reading. “Many injuries don’t even manifest within (10 days),” Rakocevic said. “Certainly, many injured may not even know where to turn when lying in a hospital bed, if they can turn at all. As they lie there, a week and a half flies by and, with it, any chance for rightful compensation.”
Rakocevic also painted the bill as part of a larger pattern by the Ford government to advantage large business interests.
“This bill thus protects large, negligent private property and business owners from individuals who have been injured on their properties. Yet again, this government puts forth legislation that gives more power to our society’s most powerful members — always at the expense of the little guy,” Rakocevic said.
Belinda Karahalios, PC MPP for Cambridge, voiced her support for the legislation during the second reading. “Bill 118 makes it easier for businesses in Ontario to defend themselves in cases of slip-and-fall incidents and will reduce the number of frivolous lawsuits, thereby decreasing insurance costs for snow removal companies,” she said at the Ontario Legislature during the bill’s second reading.
“It will also help relieve the backlog in the courts. With a limit of 10 days, there is sufficient time to give notice for legitimate claims against genuine cases of negligence. People who suffer significant injuries are also protected by the exceptions outlined in this bill.”
Marsh is the endorsed insurance supplier for the Canadian Nursery Landscape Association, who represent members of all provincial landscape and horticulture associations across the country.
On the insurance market side, Amadori says this is the first “hard market” in over a decade, contributed to by climate change and the increase in catastrophic natural disasters.
“Over the last 24 months or so, there has been over a $160 billion in global natural disaster, catastrophic claims,” Amadori explains. “Tsunamis, fires, anything that makes the news. We saw Hurricane Harvey in Houston a few years ago and the headline was that it created $9 billion of damage. Much of this was incurred by the retail insurance marketplace.”
That $160 billion over two years equalled the cumulative total for the previous six years, Amadori said.
“Those disasters have depleted the global pool of insurance capital,” Amadori explained. “The resulting rate increases have trickled down from re-insurance companies, to retail insurers and ultimately passed on to the retail purchaser of commercial coverage. There is a co-relation with what happens at a global/macro level and the impact on insurance that is available to small businesses at a regional level.”
Norm Miller
David Lammers
David Amadori
Slip and fall claimants can also wait up to two years to file suit, making it difficult for insurance companies to quantify risk and costs up front. Another problem has been the willingness of some insurance companies to settle slip and fall claims out of court, rather than standing up for the contractor by taking the case through the legal process.
In many cases, it’s cheaper for an insurance company to settle with a claimant than to fight a drawn-out court battle. However, those settlements incentivize any bad actors that may exist to continue to pursue frivolous suits, and they perpetuate the problem that we see today.
Amadori says the personal injury law industry has expanded in Ontario, particularly in the Greater Toronto Area, in recent years. And the industry’s marketing efforts have become increasingly aggressive.
“We’ve seen a real increase in the last decade with respect to marketing efforts from the legal community,” Amadori said. “You used to go across the border to Buffalo and see Celino and Barnes and personal injury lawyer billboards and that was something unique. That model has come up here. And if you turn on the radio or CP24 you are likely to be inundated with reminders that you have access to free legal counsel with no costs associated with your representation unless a settlement is reached. With this information being constantly pushed into the public consciousness, attitudes may have shifted towards rolling the dice with a lawsuit, as there is no downside, only a time commitment for a claimant.”
Norman Miller says the The Ontario Trial Lawyers Association has contacted his office to voice their opposition to Bill 118. The OTLA was asked to comment for this article, but representatives did not provide a response by press time.
Insurance Brokers Association of Ontario president Joseph Canevale said, “There’s no doubt that Ontario Brokers have been impacted by the shortage of insurers willing to offer coverage for snow plow operators and are seeing increased rates on renewal. In turn, this has created issues for snow plow operators and their own clients. Norm Miller’s Private Member Bill 118, Occupiers’ Liability Amendment Act, intends to curb the number of lawsuits insurers have to payout as a result of slip and falls, thereby reducing the burden on landlords and snow plow operators. It’s our hope that this would reduce frivolous lawsuits against landlords, decrease claim payouts and the costs associated with insurer claims, and reduce the pressure on premiums for those landlords and their snow plow operators. However, we would want to ensure measures are in place that protect consumers who are legitimately impacted by negligence surrounding slip and falls and ensure they have proper recourse within a reasonable timeframe.”
“Property managers have been well ahead of the curve and they have been pushing the liability onto the snow removal contractor for quite some time,” Amadori said. “And so, a slip and fall claimant isn’t actually suing Tim Hortons or some other large corporation, they’re suing a guy who might have five trucks and six employees and works 18-hour shifts for three and half months straight. Unfortunately, contractors, not all of them, but some, have been signing contracts that require them to assume far too much liability — much more than is reasonable.”
David Lammers, President of Garden Grove Landscaping in Waterdown, Ont., acknowledges the industry-wide problem of taking on too much liability. Lammers believes legislative changes need to be made in order to level the playing field.
Lammers said, “Business owners need to start sitting down with the customer, the property manager, and discuss these matters including hold harmless clauses. As contractors we need to stop signing contracts that include those clauses. He added, “The laws (also) need to change in Ontario in order for these property managers to stop putting out these legal contracts that contain all the clauses.”
Ultimately, the liability should be shared, Lammers said. “We believe that as we move forward as a professional snow and ice industry that we will partner with our customers and we will have contracts that have fair clauses. We need to be responsible for the things that we do. We’ve got to take ownership of the right and the wrong, and if we haven’t done something that we were contracted to do, that’s on us.”
At the meeting, DiGiovanni encouraged LO members to contact their local MPPs, and if possible, to arrange face-to-face meetings with them to show their support for Bill 118 and to impart the seriousness of the issue. However, he acknowledged Bill 118 is not the silver bullet that will solve the problem.
DiGiovanni outlined the various strategies LO is currently working on:
“What we try to do in the contracts is make sure that we are holding a property manager harmless, but only with respect to negligence, for what is outlined in the scope of work,” Amadori explained. “This would acknowledge that the contractor is on the hook, but only if they were to drop the ball, and it could be shown that they were negligent to their contractual obligations. This is a big change from some of the contracts that hold the contractor responsible for everything and anything that happens on site 24/7, 365.”
On the back end, Amadori says Marsh’s insurer partner is committed to defending claims, “whenever contracts and contractor’s logbooks and documentation allow for, even if it means incurring higher legal fees.
“We want to make sure that our program supports the industry and builds the reputation that Hortprotect, through CNLA, through Marsh, will not be a source of quick settlements for would-be claimants,” Amadori said. “The long-term intent of this defence first philosophy is to have the legal community recognize that the path toward a settlement will be much more laborious and taxing on their time with our insurer compared to others involved in the space. Our insureds keep meticulous records and have contracts that are reasonable, so why shouldn’t they be entitled to a proper defence?”
Using this defence first philosophy, the Marsh program has “closed over 70 per cent of our slip and fall claims over the last decade at zero liability,” Amadori said. “That’s a number we are quite proud of. Part of the reason this has been so successful is that we have isolated the legal representation to one specific firm for the GTA (where the bulk of the slip and falls exist). Our program is represented by a firm with expertise in defending contractors in this space. The benefit here is to the contractor. When their representation shows up at discovery they have a keen understanding of precisely what they’re doing, who they are representing, and all of the other benefits that come from working with absolute expertise in a niche area of law.”
Landscape Ontario members also have access to the Snow and Ice Risk Management Guidelines, developed by CNLA in conjunction with Marsh Canada.
Updates on the various initiatives will be available in future issues of Landscape Ontario magazine, via LO weekly enews and the association website at HortTrades.com.
More resources on this issue:
DiGiovanni says he is receiving calls from concerned business owners across the province who can no longer get insurance for their snow and ice removal operations. Others report their insurance rates have doubled or tripled, while deductibles have also increased.
“The quantity of lawsuits, probably encouraged by relentless advertisements, has resulted in many insurance companies pulling out of providing winter service coverage,” DiGiovanni explains. “With no coverage, there will be no service. This is an extremely serious issue that will affect every member of the public. The services of Landscape Ontario members and other professional winter maintenance firms are essential. They keep the economy going and the public safe.”
Reducing frivolous slip and fall lawsuits
Norman Miller, the Progressive Conservative MPP for Muskoka-Parry Sound, recognizes the seriousness of the issue and its implications for everyone in society. Miller says after hearing from several snow contractors in his riding, he decided to take action.Last spring, Miller put forward Private Member’s Bill 118, Occupiers Liability Amendment Act. The bill, which passed second reading on June 6, 2019, proposes to reduce the notification period for slip and fall lawsuits from two years to 10 days, bringing the private sector in line with the current standard for municipalities.
“In Ontario, I would simply say, obviously, you want anyone who is hurt to be looked after,” Miller told Landscape Ontario during a recent phone interview. “But we have winter. We are going to fall down the odd time; it doesn’t necessarily mean that someone else is at fault.” Miller says he felt that a 10-day notification period made sense, because it would “provide more certainty for businesses and make it much easier to be able to keep records and to be able to defend themselves in cases where they are sued.”
He was also troubled by the amount of slip and fall lawsuits in the province.
“We are becoming more like the United States, more litigious,” Miller said. “When I drive back to Parry Sound, I see big billboards advertising services of lawyers, if you think you’re hurt, then sue somebody, and frankly, I don’t like that trend. It’s my feeling that if you hurt yourself, it’s not necessarily somebody else’s fault and businesses shouldn’t necessarily have to pay for it.”
NDP MPPs, including Tom Rakocevic (Humber River-Black Creek), voted against the bill at second reading. “Many injuries don’t even manifest within (10 days),” Rakocevic said. “Certainly, many injured may not even know where to turn when lying in a hospital bed, if they can turn at all. As they lie there, a week and a half flies by and, with it, any chance for rightful compensation.”
Rakocevic also painted the bill as part of a larger pattern by the Ford government to advantage large business interests.
“This bill thus protects large, negligent private property and business owners from individuals who have been injured on their properties. Yet again, this government puts forth legislation that gives more power to our society’s most powerful members — always at the expense of the little guy,” Rakocevic said.
Belinda Karahalios, PC MPP for Cambridge, voiced her support for the legislation during the second reading. “Bill 118 makes it easier for businesses in Ontario to defend themselves in cases of slip-and-fall incidents and will reduce the number of frivolous lawsuits, thereby decreasing insurance costs for snow removal companies,” she said at the Ontario Legislature during the bill’s second reading.
“It will also help relieve the backlog in the courts. With a limit of 10 days, there is sufficient time to give notice for legitimate claims against genuine cases of negligence. People who suffer significant injuries are also protected by the exceptions outlined in this bill.”
What is causing the crisis?
David Amadori, VP Commercial, Marsh Canada, says the rising rates are the result of a combination of regional factors, including slip and fall lawsuits, as well as conditions in the global insurance market. The snow removal industry in Ontario was generally not well positioned for a turbulent insurance market.Marsh is the endorsed insurance supplier for the Canadian Nursery Landscape Association, who represent members of all provincial landscape and horticulture associations across the country.
On the insurance market side, Amadori says this is the first “hard market” in over a decade, contributed to by climate change and the increase in catastrophic natural disasters.
“Over the last 24 months or so, there has been over a $160 billion in global natural disaster, catastrophic claims,” Amadori explains. “Tsunamis, fires, anything that makes the news. We saw Hurricane Harvey in Houston a few years ago and the headline was that it created $9 billion of damage. Much of this was incurred by the retail insurance marketplace.”
That $160 billion over two years equalled the cumulative total for the previous six years, Amadori said.
“Those disasters have depleted the global pool of insurance capital,” Amadori explained. “The resulting rate increases have trickled down from re-insurance companies, to retail insurers and ultimately passed on to the retail purchaser of commercial coverage. There is a co-relation with what happens at a global/macro level and the impact on insurance that is available to small businesses at a regional level.”
Norm Miller
David Lammers
David Amadori
Why are snow operations risky for insurance companies?
One of the reasons snow operations are risky for insurance companies is because they have such a “long tail, meaning that a claim can grow over time as the injuries sustained develop,” Amadori says.Slip and fall claimants can also wait up to two years to file suit, making it difficult for insurance companies to quantify risk and costs up front. Another problem has been the willingness of some insurance companies to settle slip and fall claims out of court, rather than standing up for the contractor by taking the case through the legal process.
In many cases, it’s cheaper for an insurance company to settle with a claimant than to fight a drawn-out court battle. However, those settlements incentivize any bad actors that may exist to continue to pursue frivolous suits, and they perpetuate the problem that we see today.
Amadori says the personal injury law industry has expanded in Ontario, particularly in the Greater Toronto Area, in recent years. And the industry’s marketing efforts have become increasingly aggressive.
“We’ve seen a real increase in the last decade with respect to marketing efforts from the legal community,” Amadori said. “You used to go across the border to Buffalo and see Celino and Barnes and personal injury lawyer billboards and that was something unique. That model has come up here. And if you turn on the radio or CP24 you are likely to be inundated with reminders that you have access to free legal counsel with no costs associated with your representation unless a settlement is reached. With this information being constantly pushed into the public consciousness, attitudes may have shifted towards rolling the dice with a lawsuit, as there is no downside, only a time commitment for a claimant.”
Norman Miller says the The Ontario Trial Lawyers Association has contacted his office to voice their opposition to Bill 118. The OTLA was asked to comment for this article, but representatives did not provide a response by press time.
Insurance Brokers Association of Ontario president Joseph Canevale said, “There’s no doubt that Ontario Brokers have been impacted by the shortage of insurers willing to offer coverage for snow plow operators and are seeing increased rates on renewal. In turn, this has created issues for snow plow operators and their own clients. Norm Miller’s Private Member Bill 118, Occupiers’ Liability Amendment Act, intends to curb the number of lawsuits insurers have to payout as a result of slip and falls, thereby reducing the burden on landlords and snow plow operators. It’s our hope that this would reduce frivolous lawsuits against landlords, decrease claim payouts and the costs associated with insurer claims, and reduce the pressure on premiums for those landlords and their snow plow operators. However, we would want to ensure measures are in place that protect consumers who are legitimately impacted by negligence surrounding slip and falls and ensure they have proper recourse within a reasonable timeframe.”
Fair contracts
Another part of the problem has been the way property owners and managers have pushed liability onto snow contractors by including hold harmless and other clauses in their contracts.“Property managers have been well ahead of the curve and they have been pushing the liability onto the snow removal contractor for quite some time,” Amadori said. “And so, a slip and fall claimant isn’t actually suing Tim Hortons or some other large corporation, they’re suing a guy who might have five trucks and six employees and works 18-hour shifts for three and half months straight. Unfortunately, contractors, not all of them, but some, have been signing contracts that require them to assume far too much liability — much more than is reasonable.”
David Lammers, President of Garden Grove Landscaping in Waterdown, Ont., acknowledges the industry-wide problem of taking on too much liability. Lammers believes legislative changes need to be made in order to level the playing field.
Lammers said, “Business owners need to start sitting down with the customer, the property manager, and discuss these matters including hold harmless clauses. As contractors we need to stop signing contracts that include those clauses. He added, “The laws (also) need to change in Ontario in order for these property managers to stop putting out these legal contracts that contain all the clauses.”
Ultimately, the liability should be shared, Lammers said. “We believe that as we move forward as a professional snow and ice industry that we will partner with our customers and we will have contracts that have fair clauses. We need to be responsible for the things that we do. We’ve got to take ownership of the right and the wrong, and if we haven’t done something that we were contracted to do, that’s on us.”
Next steps
Landscape Ontario hosted an emergency meeting on the insurance crisis on Jan. 9, 2020, featuring a panel discussion with insurance industry representatives and members of the LO Snow and Ice Management Sector Group. Nearly 300 industry members attended, and the frustration was palpable in the audience.At the meeting, DiGiovanni encouraged LO members to contact their local MPPs, and if possible, to arrange face-to-face meetings with them to show their support for Bill 118 and to impart the seriousness of the issue. However, he acknowledged Bill 118 is not the silver bullet that will solve the problem.
DiGiovanni outlined the various strategies LO is currently working on:
- Supporting MPP Norm Miller’s Private Members Bill. LO sent out information to over 1,000 members asking them to contact their local MPP.
- LO is part of a coalition asking the government for legislation that limits liability for professional Accredited Contractors who follow best management practices. Similar legislation exists in New Hampshire.
- Exploring a captive insurance model.
- The association has developed a standard form contract that helps limit contractor liability only to areas they are responsible for.
- Developed risk management guidelines.
- Endorse an insurance broker (Marsh) based on the principle that the more we pool our resources the better clout we have.
“What we try to do in the contracts is make sure that we are holding a property manager harmless, but only with respect to negligence, for what is outlined in the scope of work,” Amadori explained. “This would acknowledge that the contractor is on the hook, but only if they were to drop the ball, and it could be shown that they were negligent to their contractual obligations. This is a big change from some of the contracts that hold the contractor responsible for everything and anything that happens on site 24/7, 365.”
On the back end, Amadori says Marsh’s insurer partner is committed to defending claims, “whenever contracts and contractor’s logbooks and documentation allow for, even if it means incurring higher legal fees.
“We want to make sure that our program supports the industry and builds the reputation that Hortprotect, through CNLA, through Marsh, will not be a source of quick settlements for would-be claimants,” Amadori said. “The long-term intent of this defence first philosophy is to have the legal community recognize that the path toward a settlement will be much more laborious and taxing on their time with our insurer compared to others involved in the space. Our insureds keep meticulous records and have contracts that are reasonable, so why shouldn’t they be entitled to a proper defence?”
Using this defence first philosophy, the Marsh program has “closed over 70 per cent of our slip and fall claims over the last decade at zero liability,” Amadori said. “That’s a number we are quite proud of. Part of the reason this has been so successful is that we have isolated the legal representation to one specific firm for the GTA (where the bulk of the slip and falls exist). Our program is represented by a firm with expertise in defending contractors in this space. The benefit here is to the contractor. When their representation shows up at discovery they have a keen understanding of precisely what they’re doing, who they are representing, and all of the other benefits that come from working with absolute expertise in a niche area of law.”
How contractors can help
DiGiovanni suggests the solution to this crisis is multifaceted. In addition to contacting local MPPs to support Bill 118, solutions start with contractors enhancing their risk management processes. This includes using contracts that clearly delineate the scope of work, such as using Landscape Ontario’s standard form contract. In addition, operators must keep very detailed documentation that can either make or break a lawsuit in court. Technology exists to track all operations, including the use of cameras, local weather stations, truck sensors, salt application sensors, etc. The industry is encouraged to use technology as much as possible.Landscape Ontario members also have access to the Snow and Ice Risk Management Guidelines, developed by CNLA in conjunction with Marsh Canada.
Updates on the various initiatives will be available in future issues of Landscape Ontario magazine, via LO weekly enews and the association website at HortTrades.com.