Insurance premiums are based on what insurance companies calculate they’ll need to pay out in claims. Different companies have their own way of trying to predict future claims, but ultimately, more claims lead to higher rates, and that applies across the industry.
To continue providing security for clients, insurance companies have to adjust rates in response to increasing claims costs. It‘s unwelcome news for clients, but here’s an explanation of why it’s happening and what you can do to manage costs.
Extreme weather is on the rise
Every year, the Insurance Bureau of Canada (IBC) publishes a “Facts” book about issues and trends in the Canadian insurance industry. It’s
available online for anyone to read.
In 2017, the
IBC stated "Our changing climate is creating more weather extremes - more rain, more heat, more drought, more wind... In Canada and around the world, climate change is not a future threat but a present danger.”
With this trend, we’ve seen significant increases in catastrophic losses across Canada, which have reached an average of over $1 billion per year, according to the IBC. Unfortunately, this costly trend is expected to continue, and the resulting rate increases will likely be industry-wide.
Catastrophic losses in Canada in $000,000,000, 1983 to 2017
1 .0 0
Loss + Loss Adjustment Expenses in 2017 dollars
Facts 2018 Estimated Trend Line
Source: IBC, PCS, CatIQ, Swiss re, Munich Re, Deloitte
Insured losses for a given disaster are deemed catastrophic when they total $25 million or more.
Working toward change
In the past decade, insured losses from natural disasters have more than doubled. As an insurer, we believe we share the responsibility to educate, prepare and equip Canadians to adapt to climate change.
Until 2015, Canada was the only G7 country without residential insurance protection for overland flooding. With our
Comprehensive Water product, we’re making this coverage available for all homeowners, even those most at risk of flooding. Managing your premium costs
We continue to ensure the rates we charge are based on the actual risks we insure. To continue to protect you from life’s uncertainties, we’ve changed how we calculate rates to more precisely reflect a specific property and the risks it faces. But there are some things you can do to help manage your insurance costs, depending on the specific risks affecting your property.
Update your information – tell us if you’ve updated your home’s plumbing, wiring or roofing. It could help lower your premium.
Review your coverage – schedule a complimentary Client Review. Together, you and your Financial Advisor can go over your coverage.
Adjust your deductible(s) – in some cases, increasing your deductible may help lower your premiums. Contact us to see if making a change will help you.
Bundle your coverage – consider us for all your insurance needs to maximize discounts.
Talk to us about your specific risks – we can tell you the biggest risks facing your property and suggest additional actions to protect your home and reduce your premium. Wind or hail risk
Replace older roof or siding with weather-resistant products
Increase your deductible
If practical, replace wood heating (other than a fireplace) with another heat source like propane
Install a fire sprinkler and/or central monitored fire alarm or heat detector system
Replace older plumbing
Install an automatic water shut-off system and/or central monitored water sensor system
Increase your deductible
Install a central monitored alarm system