The proposal was to bring in a third-party collection agency to recover fire costs. This proposal was estimated to bring in $485,000 per year, even after paying 30% to the collection agency. The fees in question are theoretically charged to homeowners after the fire department responds to a call at their house, which would then be covered through the individual’s homeowner insurance. The collection agency would then collect from the insurance company, keep some of the proceeds and pass the net amount to the fire department.
Territory 6 Director Suzanne Pountney spoke to CTV about the issue to clarify this complex issue.
In their presentations and on their website, the collection agency claimed that their services wouldn’t increase insurance rates, which, as insurance professionals, we knew to be factually inaccurate. The cost of the claim would naturally increase by the amount “paid” by the insurance company, which would eventually flow through to increases in policy premiums.
On behalf of IBAO, Suzanne, IBAO CEO Colin Simpson and LIBA President Sam Off explained the situation in a letter to the Mayor of London. Adding a fee to the cost of insurance claims related to fire would certainly affect the insurance rate. Rather than recouping lost costs, the extra money promised to the city would come from residents paying for the service through both their taxes and increased insurance rates, a form of double taxation on homeowners.
The City Council ultimately voted down the proposal. A news story in the London Free Press cited our letter as a contributing factor in the discussion.
If you hear that your municipality has been approached about “recovering fire costs,” please contact Colin and we can reach out to your elected officials and help them to understand the proposal before they vote on it.