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Navigating The Hard Market & Increasing Insurance Rates

Posted Feb 14th, 2020 in Media, General, Insurance Tips, Home Insurance, Did You Know?, In the News

Considering it’s a new year and there doesn’t seem to be any change or relief with increasing rates, we wanted to provide further explanation and insight on the impact of the hard market and how it influences the cost of insurance.  

Navigating A Hard Market & Increasing Insurance Rates, Youngs Insurance, Ontario

Last year, we explained that insurance rates were increasing due to our industry experiencing a ‘hard market.’ A hard market is a period of time when insurance rates rise, and Insurance Carriers implement additional restrictions and stricter practices that impact insurability.

But before we explain that, as a client of Youngs Insurance, it’s important you understand what exactly our role is within the insurance industry.

How does Youngs Insurance fit into this equation?

Youngs Insurance is a privately-owned Insurance Brokerage, that employs provincially licenced insurance brokers who then sell you insurance. We work alongside Insurance Carriers (a.k.a. Insurance Companies) to provide you with purchase options. Insurance brokers work for you, not the Insurance Carrier, which means they offer unbiased recommendations on what coverage is best for you. Basically, we act as a ‘middleman’ between you and the Insurance Carrier.

As an Insurance Brokerage, we do not have control over the cost of insurance prices - the rates and rules are defined by Insurance Carriers. 

Auto rates are further controlled by our governing body, Financial Services Regulatory Authority of Ontario.

What caused this to happen?

There are numerous reasons why we’re experiencing this challenging time. While some of them may be within your control (like traffic violations or at-fault accidents), others are industry-wide problems.

Factors that impact rates:
Hard Market Diagram, Youngs Insurance
  • Overall rise in claims
  • Cost associated with repairing vehicles have increased
  • New technology in vehicles makes them more expensive to repair
  • Rise in frequency and severity of car accidents due to road conditions/distracted driving
  • Health care costs related to injured persons continue to surge
  • Rehabilitating those who sustain injuries have risen exorbitantly
  • Higher reports of insurance fraud
  • Increase in extreme weather events such as heavy rainfall and ice storms
  • The likelihood of property water damage has increased substantially
  • Increased building costs and aging infrastructure

What you can do to help your rates.

Now more than ever, you should ensure you’re doing everything possible to keep good standing with your insurance provider. This includes (but is not limited to) never missing a payment, having complete disclosure with your broker regarding updates or changes, understanding the impact of water damage on your property and avoiding traffic violations (in particular new distracted driving laws).

Did you know, non-payment could result in immediate cancellation and you being labeled “high-risk” moving forward, which impacts your insurability significantly?

Additional ways to potentially lower rates:
  • Increase your deductible
  • Combine home and auto insurance with the same Insurance Carrier
  • Install backwater valves or power back-up systems in your home
  • Participate in Insurance Carrier telematics program
  • Keep your driving record clean
  • Speak to your broker about potential insurance discounts available for both property and auto policies 

At the end of the day, the only way we’ll move out of this ‘hard market’ is when Insurance Carriers have significantly reduced their claim exposure. By doing so, they’ll have adequate reserves.

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