Chris Ingoe |
By Chris Ingoe
We want to take this opportunity to update you about what's happening with personal & commercial insurance rates.
At this point in time, further rate increases are anticipated for both car and home insurance for the rest of 2009 and into 2010, with typical increases ranging between 5% and 20%.
For business insurance, we expect to see only modest rate increases into 2010 as there has been less demand for business insurance due to the poor economy. Businesses with claims in the past year or 2 will likely see larger increases.
Why are Premiums Increasing? In general, premiums are rising because insurance companies are reporting a dramatic increase in claims, from rising benefit payments for injured car accident victims, to increased water and storm damage claims, and more lawsuits with higher court awards. Based on the low interest rates and deteriorating investment income of the past year, insurance companies also report that they will not be able to rely on investment income to offset the poor claims experience.
Under these conditions, the only way insurance companies can continue to have enough money to pay claims and maintain financial stability is to raise insurance premiums. Refer to these two articles from Wheels.ca for more information on why auto insurance rates are increasing: GTA Drivers Face 14% Insurance Hike (http://www.wheels.ca/Article%20Category/article/782513) Why Car Insurance Rates Can Give You Whiplash (http://www.wheels.ca/reviews/article/782242) The Insurance Brokers Association of Ontario has been lobbying the Ontario government for auto insurance reforms to keep premiums affordable for consumers.
Some success has been met, although that changes won't likely be implemented unitl the summer of 2010 - we'll report more on these changes in a future article. What can you do in the mean time? Your broker can usually check a variety of insurance companies to ensure you are getting good value and the coverage you need. If you deal directly with an insurance company or a bank, you'll have to check around yourself to determine if you're getting proper value.
Keep in mind that changing insurance companies solely for a lower premium may only be a short term gain - you may not be getting the coverage you think you are and premium increases will eventually catch up with you. Ensure the company you deal with has a reputation for fairness, working for their customers, and will be accountable to you at the time of a claim.