What is going on with personal insurance?

By Debbie Arnold of Sound Insurance
February 6, 2020

“I’ve been licensed over 20 years, I have no accidents or tickets, my car is a year older and my rates have gone through the roof!”

“I’ve never put in a property claim but my property insurance increased by 20%!”

If I had a dollar for every time I’ve heard these statements in the last six months, I could retire. My reaction to this is always the same. The rolling in my stomach, the pounding headache that has been present since early fall brought on by ever increasing automobile and property insurance rates.

Being a broker for over 30 years in Ontario doesn’t make this any easier. When a client has had tickets or accidents or property claims, the explanation is easy. However, when perfectly clean policyholders face unprecedented rate increases or, even better, having to a complete a whole new application prior to a renewal being offered, the explanation is often complex.

So why are we seeing increases across the country?

With automobile insurance, whether in a government run or privately run province, the answer is the same:

  • Ever prevalent fraud that is not limited to staged collisions but include unnecessary or exaggerated medical claims
  • Increased physical damage repair costs due to significant technological vehicle enhancements. A bumper 5 years ago was about $750 to repair, its now $3000
  • Frivolous, unwarranted and unmerited lawsuits launched by personal injury lawyers in a scheme to get as much out of insurance companies as possible coupled by insurance carriers “settling” these unmerited lawsuits to make them go away
  • Severe weather. Floods, hail, and windstorm have caused a significant rise in physical damage claims

For property insurance, severe weather is the culprit behind increasing rates. You may not have had a claim but your neighbour probably has, and the neighbour next and the neighbour next.

In the final analysis it comes down to insurance is the spread of risk of the few among the many. When the “few” become many, rates increase and the market hardens with diminished capacity and stricter underwriting guidelines making it difficult to place perfectly clean risks at competitive prices.

All is not lost however! If your insurer took a large increase, another may have had a more modest increase and your can still save premium dollars by shopping around.

As always, your best insurance is an insurance broker!

Debbie Arnold, R.I.B. (ON)
Group Business Development Manager
Sound Insurance Services Inc.











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