The inside scoop on insurance rate increases
Insurance Rate Increases
What’s the real inside scoop on the insurance rate increases? As your local insurance broker, we have some answers for you. We have been getting a lot of inquiries as to why the insurance cap has been removed, and why rates are increasing so substantially. Here’s the inside scoop!
Auto insurance has always been regulated in our province and the rate board monitors all requests for rate increases from insurance companies. When the former provincial government imposed the maximum 5% rate cap on increases it put insurers in a position where automobile policies became extremely unprofitable. Paying out anywhere from $1.25-$1.70 for every $1.0 premium dollar collected. Certainly, insurers are in a position to absorb some of this but over a period of 3 years, the insurance companies began to implement aggressive underwriting strategies, limiting payment plans, collision coverage, and other features that the majority of drivers rely upon.
There are a lot of reasons for the unprofitable atmosphere, but in general terms, claims are costing way more than they ever have with new technology in vehicles, a more litigious community, and higher medical costs. It is a classic example of government engaging in an industry without a full understanding of the unintended consequences, that ultimately get passed along to consumers in the market. Now we are seeing the cap expiry and larger rate increases being approved by the rate board. This will certainly impact most policy holders, but will allow insurance companies to actually underwrite and target high-risk clients with the most aggressive increases. The good news is that the market is slowly returning to a competitive atmosphere, and auto insurance now has a panel of professionals reviewing some of the mandated components to find efficiencies and cost savings. In general, the cap actually hurt the industry, consumers, and competition, so seeing it go is a good band-aid to rip off. Had the cap stayed in place we likely would’ve seen insurance companies leaving the province, canceling brokers, and positioning towards a traditionally more expensive provincial model like BC and Saskatchewan.
In a tough insurance market, we are proactive, prepared, and capable to offer competitive insurance solutions for your family and business. If you are a current Beyond client, you have already been benefiting from our proactive approach to insurance renewals. Each renewal is personally reviewed and we take great care in making sure your coverages and policy information is up to date and that your rates are competitive. We actively go to market for you when a policy has a large increase on renewal, and share the market results of numerous insurers. As we navigate the changing insurance marketplace together, you can rest assured our team is working diligently to provide the service you deserve for your insurance needs.