City of Thunder Bay takes former insurer, OMEX to court

The City of Thunder Bay will take its former insurer, OMEX, to court.

The city issued a statement of claim for $30 million, plus $1 million in damages on Tuesday morning.

The Ontario Municipal Insurance Exchange (OMEX) was the city's insurance company during the 2012 flood, when hundreds of homes had flooded basements, and Thunder Bay's sewage treatment plant flooded out.

The plant's tunnels and much of its machinery was overtaken by water, and emergency repairs were needed to get the plant operational.

"Extensive repair work had to be done," said Norm Gale, Thunder Bay's city manager. He said the cost of those repairs is about $58 million. That figure included plant-related repairs, emergency response to the facility as well as operating and capital costs.

"OMEX's claims are that the costs are associated with upgrades that improve the condition of the plant. I would like to note that the insurer did say that the costs were insurable, and it was years after the work had been done that OMEX made that claim."

Gale said some money has already been recuperated by the city from OMEX. He wouldn't give an exact dollar figure.

He said the city was disappointed it came to a lawsuit to try and recoup the $30 million that has not been reimbursed.

"Work with the insurer, work towards what is owed to us via the insurance policy. When that hits an impasse, we go to court."

Gale said all of the work at the Atlantic Avenue Wastewater Treatment Plant has been paid for by the city, through various funds. 

The city carries a $300 million property insurance policy. From 2004 to 2016, OMEX was the city's insurer. That switched to Northbridge Insurance Inc., brokered by Aon Risk Solutions on January 1, 2017 after the city went through a tendering process for insurance.

The city will pay $1.75 million this year for insurance.