Have insurance rates increased substantially?

[rotator]

I was going to float this by my friends, but I would think there would be a broader coverage of this by the people on TGN.

I just received my renewal offers for my auto and house.

Considering my age, status, insurace history etc. I was shockd to see a substantial increase. The car is a year older, the house is the same and it was assessed by the insurer before the coverage last year. No driving accidents or violations forever. No claims forever also.

It seems to me the home went up over 100% and the auto about 30%.

I'm going to check around with other insurers, but was wondering if the rates have just generally gone up in the industry in general.

[The Troll]

Both my cars went down substantially on the bill I just got a few weeks back. They seem to be looking for reasons to jack up my house ins.

Trollie

I was going to float this by my friends


And we're the hired help? :D

[wonderboy]

The company I work for has changed their territory's in Ontario. Some people saw their rates go way up, others saw them go way down, it's based on whatever the actuaries find. This is for both our home and auto products.

All you can do is shop around and try to find somewhere where you'll be happy with the service and coverages provided. There's no need to call your agent or broker and get upset with them, THEY didn't raise your rates, and they could make a perfectly good argument that based on loss ratios etc they have undercharged you the past few years and now they have re-evaluated your situation and now your rates have gone up.

Right now the industry is pretty stable, nothing like the massive bleeding the industry experienced 4-5 years ago which lead to drastic increases which lead to public outrage which lead to profitability again which lead to decreases in rates... etc... it's a nasty cycle and it always happens. I would imagine in a few years from now we'll see some fairly big rate hikes.

[golfinseb]

Haha, there is no perfectly good reason to raise someones rates, unless they made a claim. Don't give us that bs. It's also not a cycle when there is constant profit. Also is it not true that premium go into investments, and claims come from the return on investment? Something like how municipality invest taxes and operate from return on investment. The loss or profit margin is an easily adjusted number, unless the primary value of invetments decreases, or claims run in excess and capital must be consumed, there is no legitimate reason for rate increases.

[Big Shooter]

I got my best Auto rates ever at PC Financial 3 years ago, and they have gone DOWN every year.:)

[wonderboy]

Haha, there is no perfectly good reason to raise someones rates, unless they made a claim. Don't give us that bs. It's also not a cycle when there is constant profit. Also is it not true that premium go into investments, and claims come from the return on investment? Something like how municipality invest taxes and operate from return on investment. The loss or profit margin is an easily adjusted number, unless the primary value of invetments decreases, or claims run in excess and capital must be consumed, there is no legitimate reason for rate increases.

Ahh... ignorance is bliss.

You need to go check the books of most companies operating 5 years ago, only a handful of companies were actually making a profit in their property and casualty business.

You also demonstrate that you have zero knowledge as to how rates are formed. If *YOU* don't make any claims then your rates should never go up? Try talking to an actuary some day. You do realize that you are subsidizing the losses of everyone else (that's how all insurance works). You should also understand that for auto insurance particuarly, the LEAST profitiable clients are those with 6 star driving records who never have at-fault losses, they are contributing so little into the pot that companies need to balance it out in order to generate money.

But you're right, you're some kind of driving god that isn't subject to market forces and there is no cycle (ha...). Seriously, you're way out in left feild if you really think that's how it should work.

[nearace]

have not payed a bill in 25 years i will ask the wife she would know lol:)

[rotator]

Well, I talked to a client service person.

As some have addressed in their replies, it seems that it is the actuaries who are the movers. It seems that the ratings for my make and model of car have one of the higher risks for claims and thefts. So, I said to the person, I'm being penalized for the other jerks, while I have a 6 star rating and have had for 50 years? He said that's it. So I asked if that's the reason one of my friends who drive a same year Buick Allure pays substantially less. He laughed and said if you were going to steal a car, would you steal a Buick Allure? (OK, no comebacks from pissed off Buick owners on this, please). I had to admit to him I've seen a lot of SUV's being driven aggressively by all manners of people.

For your info, I drive a Honda 2006 CRV. I have always been a 4-wheel drive person, going back to my days when I was working in remote Northern areas. I've had jeeps, AMC Eagle, Pathfinders. I've looked, but I can't switch.

Oh, re the big disparity in the home insurance premium was due to a misunderstanding and after discussion, I ended up getting a lesser premium. Re the home insurance, I was informed last year that my new area statistically has more claims and crime than the previous area I lived in. I don't see that on a day to day basis, but that's what the stats show. This is another illustration of the actuaries setting the bar.

My BIL told me an interesting story at Christmas. He had the record score in an advanced Statistics course in his accounting class. His professor was totally impressed. Towards graduation, his professor must have directed the interest of the principals of a large insurance company re his proficiency and they approached him with an eyepopping offer, with all kinds of unbelievable perks to train as their prospective elite actuarian. He turned it down, because he was still young and sassy, and thought it would be boring to be tied all day dealing with figures and unglamorous stats. I guess these guys make the difference in the plus/minus company results, depending on a micro percentage here and there.

I suppose in the big picture, we are all paying in some ways for Katrina, 9-11, the Toronto floods last year, Vancouver floods this year. The insurance companies will never lose money in the long run, if they lose somewhere, they just raise the rates, and still build their new oppulent head office building.

Thanks for the replies and help.

[The Troll]

I suppose in the big picture, we are all paying in some ways for 9-11,

Don't let anyone ever tell you we didn't pay massively for 9-11 in the following year. That irks me too....I think it is totally wrong to hit Cdn businesses and auto drivers for totally unrelated insurance losses.

I'm an accountant and I can tell you that every client of mine got creamed on both business and auto insurance in the two years post 9-11. That was no cycle but, rather, a failure to push the loss to the insurance company shareholders where it belonged.

[wonderboy]

So I asked if that's the reason one of my friends who drive a same year Buick Allure pays substantially less. He laughed and said if you were going to steal a car, would you steal a Buick Allure? (OK, no comebacks from pissed off Buick owners on this, please). I had to admit to him I've seen a lot of SUV's being driven aggressively by all manners of people.

It's true, mid-size domestics tend to have the best comprehensive rate groups. A Japanese AWD/4WD will be among the more expensive simply because they are higher theft targets and simple body & mechanical work tends to cost A LOT more since things like body panels cost twice as much for no good reason. These statistics actually come from the government and their CLEAR ratings. Most insurance companies subscribe to them (in fact I think it's regulated in such a way that every company must use them). This is why your 2002 Pathfinder might suddenly go up in premium next renewal, nothing to do with the insurance company but if the loss ratios are increasing, the CLEAR ratings increase and voila.. higher premium. It also works in the opposite direction just as often. This also ties into the myth that the older a car gets the cheaper it should be to insure... this is true only to a certain degree. Only in the case of a total loss would a 2007 Civic cost more to replace then a 2001 Civic, but since most losses aren't total losses they will usually cost about the same to fix or repair body and mechanical work.

Don't let anyone ever tell you we didn't pay massively for 9-11 in the following year. That irks me too....I think it is totally wrong to hit Cdn businesses and auto drivers for totally unrelated insurance losses.

I'm an accountant and I can tell you that every client of mine got creamed on both business and auto insurance in the two years post 9-11. That was no cycle but, rather, a failure to push the loss to the insurance company shareholders where it belonged.

You seriously need to examine the 10 years prior to 2001. September 11 had ZERO to do with the massive rate increases experienced after that event. It was in fact the nastiest part of the same cycle that's been hitting the insurance industry for the last 40 years. I was an insurance agent at that time dealing directly with clients and whenever a client would ask us if their rates had anything to do with September 11 we always had to point out that the loss ratios and massive bleeding (our company was operating at a 12% net loss at the time) all occurred prior to the "terror" strike.

I seriously hope you are not spewing this nonsense out to your clients. It's amazing how people are quick to rag on the insurance companies with little to zero knowledge as to how the industry operates.

[The Troll]

I seriously hope you are not spewing this nonsense out to your clients. It's amazing how people are quick to rag on the insurance companies with little to zero knowledge as to how the industry operates.

What you are spewing is called spin.

Just a coincidence that there was a cycle issue after 9-11 huh? :D

Frankly I think this was well reporting in the papers at the time.

[Chambokl]

WB,

You quoted:

"There's no need to call your agent or broker and get upset with them, THEY didn't raise your rates,"

Rotator:

"the big disparity in the home insurance premium was due to a misunderstanding and after discussion, I ended up getting a lesser premium"

I have heard that one before. They charge you as much as they can and if you shop around suddenly they have a better deal. Is this BS or what. Why didn't you get the BEST price in the first part. Probably everybody on this site has a similar story. Is agent making mistake a the norm.

The last 10 years I deal wiith the same agent and mostly because he is a nice guy and I hope he doesn't profit from me. Charge me what you are supposed and treat be nicely and I wil be happy.

Chambo...

PS: Things we shouldn't talk about : religion, politics, insurance, ....

[wonderboy]

What you are spewing is called spin.

Just a coincidence that there was a cycle issue after 9-11 huh? :D

Frankly I think this was well reporting in the papers at the time.

What you are spewing is pure ignorance. From 1999-2001 out of 100+ insurance companies in Ontario according to FSCO (the regulating body) then less 15% reported a profit, from 2004 on nearly everyone is making a profit again, hence the rate decreases.

Insurance is a business, if you can undercut the other guy and steal their profits, you would do that, but when everyone is losing money, you can't. What you are all suggesting is that over 100 companies have colluded together to keep the premiums high which is ridiculous. Every rate increase must be submitted to and approved by FSCO.

PC Financial has been able to buck the trend somewhat, only because they got permission to license agents in India and when you call them sometimes you get someone in Scarborough making $40k/year and contributing to our economy, and usually you get someone oversea's making a few dollars a day - yet their profit margins are slim (insurance companies must make all of this info publicly available). They are slashing overhead to keep premiums down - they could charge what everyone else does and put that extra money in their pockets, but they don't because they're trying to gain a competetive advantage. At the end of the day, it's no better or worse than any other business.

I have heard that one before. They charge you as much as they can and if you shop around suddenly they have a better deal. Is this BS or what. Why didn't you get the BEST price in the first part. Probably everybody on this site has a similar story. Is agent making mistake a the norm.

I highly doubt this is what happened. Rates are filed with FSCO and must be charged accordingly. If a company was intentionally engaging in this practice then they should be reported and would be fined substantially. More likely than not it was human error, a simple discount that wasn't applied (although the company may stand to profit from this, think of all the business they're losing from these mistakes).

If this is truly what happened, you have the right to demand they backdate this change to when the error first occured and refund you any overpaid premiums. If it only happened on the renewal then they should be doing it effective that date. Otherwise the company is leaving themselves open to some pretty harsh consqeunces. Of course The Star would be all over this type of thing, which is why aside from the odd shady broker here or there, no company engages in such a practice. Our books get audited frequently and if we're overcharging their can be massive fines.

I could speak of 101 things that are wrong with the insurance industry, but when you consider that as an industry, home and auto insurance (I can't speak to the other types of insurance) have much smaller profit margins then most other industries and operate in a way that they are exposed to massive losses there is nothing wrong with the way premiums are calculated and charged. It's highly regulated and most certainly fair.

It's also a free market, if you don't like your company, pick up the phone... Trying doing that in BC.

[BowmanvilleJim]

We all choke when we think of how much we pay for insurance but as it has been pointed out, the insurance companies are not reaping huge profits.

The companies that are truly raping us are the banks, telecom and cable.

The banks have more service charges than you can shake a stick at. Bell still charges us a fee for touch tone service (ask them if you can get rotary service instead - fat chance).

They have mysterious charges like "network access" etc. Rogers likes to play the shell game with tv stations. First you needed to have the Ultimate TV Pak to get the golf channel, then they move it to digital (which costs you more) plus you have to pay an additional fee to get TGC.

[Chambokl]

Taking from the headline with a search from Google.

Here are some of the headlines:

Insurers Saw Record Gains in Year of Catastrophic Loss
They say the profits are a fluke, but the industry has worked to shift risk to clients and the public. (April 5, 2006)

Guelph, ON, April 28, 2006 – Co-operators General Insurance Company today announced its financial results for the quarter ended March 31, 2006. For the first quarter, the company reported consolidated after-tax net income of $31.9 million, compared to the $36.5 million profit for the same period in 2005.

2006: Profitability Peak for the Property/Casualty Insurance Industry
The financial performance of the property/casualty insurance industry during the first nine months of 2006 was generally excellent. Profits (net income after taxes) increased by $15.1 billion, or 50.1 percent, to $44.9 billion in the first nine months, from $29.7 billion during the same period in 2005.

Canadian insurance companies make record profit
Last Updated: Tuesday, March 16, 2004 | 9:40 PM ET
CBC News
Canada's insurance companies are coming off a record year, with $2.63 billion in profit in 2003


That is what I read....

Yes the cable, bank and phone companies are probably the worst....

Chambo