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With the 2009-2010 insurance renewal term finally completed, I thought I would talk about the things affecting insurance premiums: losses, economic environment, legislation and the size of an organization.

The first item to consider is loss history.  An organization with a high loss ratio (Ratio = Losses/Premium) is more likely to see a premium increase than one with a low loss ratio.  Generally, your premium will not increase if you incur one loss because you are purchasing insurance for that one catastrophic loss.  This is one reason having a sound risk management program is essential to any organization, not just non-profits.  A successful risk management program will result in a reduction of your overall insurance premiums.  However, insurance premiums are based on a number of other criteria, not just on one’s loss history.

This brings me to my second point, which is economic environment.  You may have heard of “soft” and “hard” markets.  Insurance companies make most of their money from their investments and public investments into their companies, so a soft market is dependent on the buoyancy of the stock market.  During a soft market, insurers are eager to write new business and so they compete to write new accounts, they offer relatively low premiums and they are inspired to identify new coverages and products to meet the needs of our sector.  By contrast, when the economic cycle is on a downturn, generally we move into a harder market.  A hard market brings higher premiums, more restrictive coverages and lower limits.  To generate revenue lost on their investments, insurers increase premiums to make up for the shortfall.  Some coverages may cease to be available or they are severely restricted, limits are reduced and exclusions are imposed.  It is not uncommon for some types of businesses to be unable to find reasonable insurance arrangements.

Legislation is another factor in considering insurance premiums.  Insurance is highly regulated in Canada, with each province and territory having its own insurance legislation.  Insurers are restricted to certain types of investments only and must adhere to strict government regulations when operating their businesses.  For example, insurers in Ontario are not allowed to invest in stock that is deemed to be too risky.  They must maintain cash reserves equal to the amount of business they write at any given time so that they are able to pay for any and all claims to which they may be exposed.  Legislation in Ontario is constantly changing as claims that are brought before the courts are decided and become precedents.  Auto insurers are legislated to provide a minimum amount of liability insurance for all vehicle owners in Ontario in addition to minimum accident benefits.  As precedents are set and reforms to existing legislation are made, insurance rates are affected both positively and negatively.

My final point is about the size of one’s organization.  Insurers consider the physical size of the organization’s structure, the number of employees, the scope of the organization’s business and the number of locations and the environment surrounding these locations. The larger the organization, the larger the spread of risk which helps reduce the rate of insurance and in turn reduces the insurance premium.  That is why group programs are effective when obtaining terms from insurance companies.  The volatility of the marketplace is one of several reasons why purchasing insurance as a group affords a certain level of protection during uncertain times.  A group such as SHSC allows us to consider alternatives to the normal insurance marketplace to meet the needs of our sector.

This is basic summary of a much more complex process. Hopefully, it will give you a basic understanding of how the insurance industry works.  Remember you can access valuable insurance and risk management information in our newsletter, Risky Business.  Check it out under Useful Forms & Newsletters in the Insurance section of our website.

Recently Finance Minister Jim Flaherty announced that the federal government will stick with its two-year economic stimulus strategy but won’t be enhancing it with any new spending programs in the 2010 budget.

In the housing sector, many providers are scrambling to use Social Housing Renovation and Retrofit Program funding before it disappears. In the mad rush to put together plans, follow guidelines and implement projects, there’s been some confusion on the correct processes and controls for spending the money. We’ve heard this in calls to the new SHSC Customer Care line — particularly around procurement and purchasing. For vendors and service providers, this isn’t an issue. They’re focused on moving product. But for you, it will make a difference — since you’re accountable for the spending decisions you make.

Here are a few things to consider so you can avoid your own personal eHealth scandal:

• Are you following the approved practices in force in your municipality?
• Are you doing public competitive procurement?
• If you’re using a bulk purchaser, are they following SHRRP purchasing rules?

You can also check out the SHRRP-compliant SHSC Appliance Bulk Buy program.

Consider that the world-renowned International Panel on Climate Change (IPCC) warns that there is a 90% chance that there will be more frequent heat spells and more severe weather. But wait, what does climate change mean to housing providers? Higher utility bills and maintenance costs! If those reputable predictions become a reality, climate change impacts will quickly become one of the most pressing issues facing our sector.

And then there is the opposition who question the IPCC’s assessment of climate change and who do not consider it to be as pressing an issue. After all, why should society spend billions of dollars to mitigate a threat that may not be as bad as predicted?

Whichever side of the coin you happen to be on, investing in renewable energy systems is something everyone can agree on. Renewable energy systems that harness sunlight, wind, and geothermal energy for electricity, space heating or water heating accomplish three important goals: reducing climate change impacts, saving drastically on utility bills, and increasing tenant comfort. In short, renewable systems will help modernize buildings and will turn social housing into more cost-efficient and attractive businesses.

In the past, cost has been considered a barrier, and yes, there certainly are upfront costs to installing renewable energy systems. Fortunately, the government’s new focus on renewables has led to numerous incentives and funding programs like SHRRP, ecoENERGY – Renewable Heat program, the Ontario Solar Thermal Heating Incentive, and the Ontario Solar Energy Systems Rebate. The Micro Feed-In-Tariff program even gives providers an opportunity to add a new revenue stream by selling electricity generated with renewables. With all of the money out there ripe for the taking, there has never been a better time to get into the renewables game.

Before investing renewable energy it’s important to address any underlying energy efficiency and conservation issues in the building which will help maximize the economics of the system. Things like educating staff and tenants, and simple retrofits like air sealing around windows will make savings from renewable energy systems even greater.

GLOBE and SHSC have prepared a guide titled Strategically Planning Renewable Energy Projects for Social Housing to provide a short overview of the various renewable technology out there, what to consider when installing them, and some helpful questions and answers.

I was fortunate to be able to chair a session at the ONPHA conference on Sunday entitled Recruitment and Retention: Changing the “Image” of Social Housing. Our presenters for this session were excellent, but the real stars of the show were the conference participants that asked some great questions and offered insightful feedback.

Presenters from left: Neville McGuire, Michael Buzzelli, Merv Huges and Dave Colangelo

One of the best ideas was to establish an undergraduate housing essay competition. Not only would this motivate students at the undergraduate level to think and write about housing, it would also be an excellent public relations opportunity for a sector that could use a bit of good press. A bursary for students in financial need studying housing could also work in the same way. For the past three years SHSC has helped to fund and manage a research internship program for MA and PhD level students. You can see their work here.

A number of participants also mentioned the importance of involving tenants in the operation of their own housing. Who better to manage housing than someone who knows the place from the inside? This is a model that has quite a bit of traction in the UK (eg. Tenant Participation Advisory Service, Tenant Services Authority) and something that we could definitely use more of in Canada.

Fittingly, the conference wrapped up with awards for a group of tenants that had made outstanding contributions where they live. One of GLOBE’s Community Champions, Lynn Wood from Richview Residence, received an award.

If you have some examples of how tenants have made where they live a great place to live, or if you have ideas on how we can further engage tenants in the provision of housing, post a comment!

Well, it’s budget time again! Just got back from a breakfast forum put on by Global Public Affairs at the National Club entitled “Toronto’s Budget: Priorities for 2010” – it was covering the city of Toronto capital budget (the 10-year capital plan totals over $16 billion – http://www.toronto.ca/budget2010/index.htm). Councillor and Budget Chair Shelley Carroll described the budget process and the public consultations that are now underway to get input. They call this “the easy budget” – the operating budget will be the hard one (February, 2010).

A Markham Municipal staff described their zero tax policy – but that it may change in the coming years. The Markham staff person described the Toronto budget as a bellwether for most Municipalities. Bill Davis reminded everyone that wherever the $ seem to come from, they in fact all originate with the same tax payer. I found the debate interesting, and the challenges from Board of Trade on the flaws of the budget process and consultation, as well as the challenges and thoughts on how to raise funds (Peter Kuitenbrouwer of the National Post suggested some ways of raising funds – like selling Metro Hall). It made me think about how reactive budgets can be – Carroll wants to tie the city’s funds to the economy more closely so that as the economy grows, so do the funds. Others commented that this can be flawed in tough times. Either way, this budget is going forward and really is only representative of what is actually done with the money to make a sustainable and prosperous city.

And as I go into my own departmental budgeting process, I gain a new insight into the context in which I work. Social housing budgets are notoriously tight and constrained. To help with managing these dollars, SHSC has tried to provide insight into specific ways in which social housing as a sector can become more efficient and effective. Affordable Housing in Perilous Times is concerned with the framework of spending decisions, regulatory requirements, and housing programs which shape the production of new affordable housing and which protect the existing housing stock, both private and social. Check it out on our website under the SHSC Research section. Stay tuned for more thoughts on budgeting and how and what we do with the funds that fuel our communities.