Have you recently noticed an unanticipated increase in your insurance premiums? You’re not alone. Millions of Canadians are frustrated with the unexpected and continuous surge of insurance rate costs. Juggling your financial responsibilities can be tough, and rising insurance payments don’t make it any easier. All frustrations aside, it’s important to recognize the numerous external factors that come into play. Changes in the weather, technological advancements, and other factors have played a key role in the rise of insurance premiums in Canada over the last couple of years.
Why the Cost of Auto Insurance Premiums Are Increasing
Auto insurance rates have been incrementally increasing with no signs of slowing down. According to the Financial Services Commission of Ontario (FSCO), there have been six consecutive quarters of increases in insurance costs for the past two years. In the last year alone, we witnessed a significant rise in auto insurance premiums, with some insurance companies increasing their rates by 34.87 percent. More times than not, these spikes in insurance costs are due to external factors that are out of an insurance company’s control.
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Particularly prevalent in Ontario, fraud is one of the biggest issues Canada is tackling in relation to insurance. From staged vehicle collisions to fraudulent car repairs, insurance fraud is on the rise and Canadians are paying the price. A study conducted by Aviva discovered that Ontarians are paying a whopping $547 million a year to cover the cost of illicit car repairs. The widespread trend of insurance fraud has put a massive strain on insurance providers, who are scrambling for ways to combat the financial loss associated with the crime. The unfortunate consequence is a rise in insurance costs for everyone.
Distracted Driving Collisions
Aviva specifically mentioned distracted driving as one of the contributors in a surge in insurance rates and claims. They have noticed a significant increase in collisions that show fewer signs of skid marks, suggesting that drivers are not entirely focused on the road as they are not correcting their driving methods. Even more, the CAA reported that 80% of collisions were caused by some form of distracted driving. Consequently, a lack of focus on the road has also impacted the severity of collisions. Distracted driving related accidents are usually more fatal and auto damages are far worse. As a result, more costly insurance claims are filed, impacting insurance rates for all Canadians.
Innovations in the Auto Industry
The auto industry has been increasingly investing in technological advancements and innovatory materials, which has resulted in a major spike in the cost of car repairs. Today’s cars are equipped with sensors and advanced bodywork, which can be costly for insurance providers. Not only are these car materials more expensive, but insurers are paying more for labour since these repairs are taking longer.
Why Home Insurance Premiums Are Rising
Home insurance rates have been on the rise since 2015, and may continue to rise. Over the past year, home insurance premiums have risen by an average of 5.8%. The added stress of increased home insurance premiums, on top of mortgage payments and home maintenance fees, have left numerous Canadians increasingly frustrated financially.
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Homes Are Getting Costly
Similar to auto repairs, home damage is becoming increasingly expensive to repair for insurance companies due to the rising trend of smart homes, home technology, and expensive upgrades. Canadians are spending more money on their homes and opting for more sophisticated infrastructure and high-tech appliances. These upgrades hike up the cost of repairs when homeowners file for claims, causing an increase in insurance rates as well.
A change in Canada’s weather has resulted in an increased risk of flooding for Canadian homes. Canada’s current infrastructure and buildings are not manufactured to handle extreme weather conditions such as catastrophic flooding or high wind storms. Flooding has become the main factor in home and commercial building insurance losses and claims. In 2018, insurers had to pay the fourth highest amount of losses on record, a staggering $1.9 billion in Canada alone.
How We Can Help
When it comes to insurance rates, it’s always important to consider numerous packages and find the one that best suits your financial needs. If you’re shopping around for a great insurance deal, we’d love to chat with you on how we can provide the best insurance package for you. If you have any concerns about your current insurance rates, we are always happy to chat!