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Why insurance premiums are increasing

Why insurance premiums are increasing

Why insurance premiums are increasing

We all work very hard to meet the needs of our families and the list of monthly fixed costs is often very long: mortgage, taxes, electricity, Internet, cell phone, credit cards, car loan and, obviously,  insurance…

Therefore when we are told about an increase, we often react very badly. Our frustration is often linked to not understanding the reasons for this increase.


The total number of claims and their cost have an impact on the premiums of each insured

When you purchase an auto, home or RV insurance, for example, your premium is added to those of all policyholders and it is this “portfolio” that is used to compensate people who, during the year, experience a loss: accident, total loss, fire, water damage, etc.

More frequent and violent natural disasters have an impact on the premium of each insured

If natural disasters occur and result in significant losses affecting the insurance company with which you are insured, this will undoubtedly influence your insurance premium in the future.

Ove the past 10 years, the average cost of these natural disasters to insurers has been reported to have exceeded $ 1 billion per year in Canada.

Your own insurance record has an impact on your insurance premium

Third, your own insurance record also has an impact on what it will cost you in insurance.   If you have claimed or made additions to your home, for example.


Since 2020, we have been living in completely new situations and this has, in a way, influenced the insurance market.

For example, in the automobile sector, teleworking, which is still very prevalent, means less travel. However, at the home level, this same teleworking also means more time at home; therefore, more risk of fire if you forget that you are cooking…

Over the past year, home prices have also drastically increased and so have the cost of materials and labor. According to Economical, we are talking about 12.85% in one year in Canada.

Will this affect home insurance premiums? If the value of the goods to be insured increases and the cost of replacing or repairing them also increases, we can already predict an increase in the future.

It is also important to remember that a motor vehicle is now more expensive to repair because of all the electronics that compose it and which require a more skilled workforce for repairs.

In closing, if our confidence in our insurer is rattled by a premium increase, it is important to remember this is usually related to the number of claims that our insurer has had to compensate.

An insurer who has been in the business longer also has a larger portfolio of insureds, but also more experience in settling claims. You must therefore not forget the reason why you chose to insure your property;  to be well protected.  Quite often, we all realize this the day we have to make a claim.

With this in mind, we invite you to contact your insurance broker if you have any questions regarding your insurance record and your premium.

In the meantime, some suggestions to help reduce the cost of your insurance:

  • Insure several products (auto, home) with the same insurer.
  • Increase your deductible.
  • Make sure you keep a good credit history.
  • Install an alarm system or a water damage detector (home).
  • Etc.

Jackie Beaudoin, Leclerc Insurance and Financial Services
Source :  Infoassurance