| Mike's Comments |
Jan 15, 2009We appear to be heading into a period of increasing insurance rates as we begin 2009. Final results for the Insurance industry for 2008 are not in yet, but it looks like the results will be less than stellar. Insurance Companies have strict regulatory requirements to adhere to and as a result virtually every company doing business in Ontario is expected to increase rates this year. Why do rates fluctuate instead of staying stable? Insurance is a product where pricing is a very uncertain process. Companies have to look at historical information, i.e., prior claims details including how often claims occur (frequency) and how expensive they are (severity). From this information, they have to charge a premium in today's dollars, to pay for claims in the future which are obviously totally unknown. If they get it right, they will make a profit large enough to keep their investors (stock holders in the case of a public company and policy holders in the case of mutuals) happy. Get it wrong, and they could be out of business (as has happened with a number of Insurer insolvencies in Canada). As a result, they must 'err on the side of caution' and this can result in increasing rates, even during times of recession. Remember that the Insurance marketplace is one of the most competitive out there. If a company routinely overcharged all their clients, they would simply be out of business in very short order. Despite this there can still be disparity in the price charged by one company versus the other. Our approach is to ensure that we keep a very close watch over your renewal rates to confirm that the rate you are charged is competitive AND that the coverage provided meets your requirements. Remeber, there are ways to save premium without having to switch companies - higher deductibles, especially on personal property policies, can save quite a bit of premium, but each persons situation is unique. Bundling your coverage (home and auto) together with one company can also save a significant amount. Please talk to us if you feel your rate is too high as there may be changes we can make to help you out, or we may be able to move your coverage to a different company. You can also do a quick check of your rate using the Quotecast section of our website to see if one of our companies might be a good fit for you, but remember that the quotes always need to be verified. No one likes to see an increase in their premium, but with our quality Insurance Companies and internal review processes, we are working hard to make sure your premiums are competitive. Michael Stuart, BBA, FCIP, CRM, CAIB Grant, Jones & Stuart Insurance Brokers |