Have you noticed your premiums/rates increasing? But why is that? You haven’t had a claim? You haven’t done anything differently since last year, but it still seems to be happening?
These changes are being driven by the new ‘hard market’, characterized by a high demand for coverage and a reduced supply, which the Canadian insurance industry has been moving towards since 2018.
We want to help you understand this subject. Eyton-Jones Assurance is in a unique position to help you navigate the challenges of a hard market. Our strong relationships with a wide variety of insurance providers gives you more choice when it comes to insurance products, and our brokers can help you find the best rates for your situation.
What is a ‘hard market’?
In the insurance industry, a ‘hard market’ is a time when insurers are paying out more in insurance claims than would be typical, forcing the industry as a whole to raise insurance rates. This is done to ensure they can stay profitable in order to support clients and payout claims going forward. It may also lead to restricted coverage on select policies and more stringent underwriting practices.
The following are some of the factors driving the market and causing the shift into a “hard market”:
- Increased frequency and severity of weather events such as floods, hurricanes, and earthquakes.
- Fraudulent claims – One study showed that almost $250 out of every driver’s auto insurance premiums was going towards paying for the illegal activity of fraudsters.
- Cost of Auto Repairs – Auto repairs are becoming more expensive, for both vehicle owners and insurers, due to the extent of technology installed in newer vehicles.
- High Housing Costs which typically leads to an increase in the size of the insurance claim when something is damaged.
- Distracted Driving – From 2016 to 2018, the number of distracted driving-related accidents across Canada increased by 23%
When this happens, Insurance Companies become choosier with what risks they take. A company that wrote motorcycles last year, may decide that they are no longer comfortable writing this class of risk the next. Where in 2018 we had 20 options, in 2019 there may only be 3 companies writing that business, and with only 3 competitors instead of 20, prices tend to increase.
It also means that risks that are renewed, will renew at higher premiums. When an Insurance Company writes policies for cheap, but then pays out for several claims, they need to recoup their losses in order to maintain afloat in order to continue to pay claims on the risks they remain on. As frustrating as this may seem, it is important so that they don’t go out of business, and clients don’t land up uninsured.
The good news is hard markets don’t tend to last as long as soft markets. While we enjoyed 10+ years of a soft market, the hard market is only expected to last a few years before companies are back to competing for your business.
How we can help in a ‘hard market’
As insurance brokers, Eyton-Jones Assurance is in a unique position to help customers navigate the challenges of a hard market. Here’s how we can help you:
We Offer You More Choice
Our team works hard to build relationships with different providers across the province, so we understand the unique benefits of each provider and the nuances of their various policies. With so many options to choose from, it becomes easier for us to match you with the policy that will provide the best value for your current situation.
We Ensure That You Are Getting The Best Rates
Insurance rates today are based on a larger number of variables than in the past, which means that information has become key. Remember that, as a broker, we work for you — not the insurance providers.
It’s important for you to keep us up to date on your situation – even a small change in your employment, your vehicle, or your living situation may lead to savings in insurance premiums.
If you want to ensure that you are getting the best insurance rates for your situation, talk to one of our brokers today.