Central York Fire Services wants to recover additional costs for its services by pushing more of the burden onto home insurance companies, which it says will not have an impact on consumers — a claim that the insurance sector contests.
The Newmarket and Aurora fire service is proposing to contract third-party Fire Marque Inc. to recover firefighting costs for incidents involving property damage on buildings that are insured. The contract will not directly cost the towns, with Fire Marque getting 30 per cent of whatever is collected on behalf of the fire service, according to Acting Fire Chief Rocco Volpe.
The towns' joint council committee on fire services approved the move Sept. 10, with Volpe saying it would help to fund fire services.
“The proposed cost recovery program would enhance current efforts to recover firefighting costs from insurance companies,” Volpe said.
The program would see Fire Marque contact insurance companies on behalf of Central York Fire Services depending on the incident. Some home insurance packages have coverage for charges based on fire department services. The company would not act in cases where the home lacks insurance, or the homeowner is not making an insurance claim.
Although the figures are not exact, Volpe's report said possible billable incidents through Fire Marque the past three years would have ranged between 71 and 103 in Newmarket and Aurora, and he estimates this could result in recovery of $75,000 annually.
Aurora Councillor Wendy Gaertner said it is "fantastic for us," questioned if there really would be no increased insurance premiums on homeowners upon renewal.
“Maybe it will make people more careful,” she said.
But Fire Marque said the cost recovery should not impact consumers' premiums. While property owners may get letters regarding the costs, the company said only their insurance companies have to pay and will handle everything.
“Your property insurance policy already has the fire department expense coverage in it. Insurance companies have calculated premiums to include cost recoveries for your fire department’s services,” the company said in a brochure provided to the committee.
Volpe said Fire Marque has been success stories in surrounding areas.
“I asked if there were ever any homeowners that ever called the fire department and complained and dealt with any matters, and none of them dealt with it. They were all handled by Fire Marque,” he said.
But the company, its methods and the copy of bills to insurance firms that homeowners receive have not gone without controversy over the years. Municipalities and council members have grappled with questions on double billing or the possibility of increased premiums. Insurance providers have pushed back on Fire Marque’s claim there would be no cost to property owners.
Rob de Pruis, national director of consumer and industry relations for the Insurance Bureau of Canada, has previously cautioned municipalities on the activities of agencies like Fire Marque.
“The Insurance Bureau of Canada does not support the use of third-party collection agencies (Fire Marque) to recoup fire department expenses from residents and insurers following a property claim,” de Pruis told CollingwoodToday in 2023, as Springwater also sought to bring on Fire Marque last summer. “Third-party collection agencies aim to maximize the cost recovery amount for fire-related services following a property claim from insured property owners only, which is not fair and equitable.”
Ultimately, the activity of these companies can lead to higher premiums for consumers in the marketplace, as insurance providers see more cost for these claims, De Pruis said.
That is a sentiment that has been echoed for several years. Port Hope-based Eliott Insurance Services posted an interview to its website in 2017 from HTM Insurance president and CEO Alex Harmer addressing the impact that Fire Marque can have.
“As insurance companies, our premiums are driven by our claims costs. So, if we are now paying for fire department charges that we were not paying for before, our claims are going to go up, and we will have to raise premiums to cover the extra costs,” Harmer said at the time.
The insurance providers have said that fire departments are funded by taxation already, which should cover the cost of them.
But Fire Marque has said while taxation can pay for fixed costs like a fire hall, trucks and equipment, there are additional costs fire departments incur like the use of fire suppressants that these insurance policies can provide to the fire department.
Volpe provided another example; when fighting fires, they might see their hoses burst due to the pressure and the flames, and they can use the insurance funds that Fire Marque collects to pay for up to 50 per cent of damaged equipment.
Generally, auto insurance premiums go up after a driver is involved in an accident. But Fire Marque said that home insurance is a different scenario, not based on the person but on the building and factors like building age.
“Auto policies are rated on a driver’s driving record,” Marque said. “Property insurance is rated on the building and contents.”
The fire department already has a cost recovery program, which Volpe said averages about $125,000 in revenue each year, for things like false alarms, gas leaks as well as motor vehicle collisions. Generally, the fire department gets back these costs from insurance companies.
But Volpe said they lack some of the expertise that Fire Marque could provide to get more from insurance companies for property damage.
Committee chair and Aurora Councillor Rachel Gilliland said Volpe and the fire department have been ahead of the curve on the cost recovery program.
“This is just another added component,” she said. “So I’m really excited about this and I’m proud that you’re able to bring this forward.”
-With files from CollingwoodToday
