Storms likely to hike insurance premiums
TORONTO — Homeowners should prepare to pay more for property insurance as the severe weather trend that has battered the country during the past year is expected to continue.
“There are more and more storms happening, and we’re seeing extreme weather events that happened once every 40 years … that can now be expected to happen once every six years,” said Pete Karageorgos, manager of consumer and industry relations at the Insurance Bureau of Canada.
“Trends for the last few years have been that we’re seeing storms occur with greater regularity, so the amount of claims that have been presented have been averaging about a billion dollars a year over the last three years or so.”
While the industry group doesn’t comment on specific premiums, Karageorgos said costs will drive prices in the insurance industry.
“When your costs go up, the prices are going to follow. It’s like that for a cup of coffee and insurance is the same,” he said.
Intact Financial Corp., one of Canada’s largest property and casualty insurers, raised premiums by 15 to 20 per cent during the past few months as catastrophic losses and weather-related claims have risen.
The company has also introduced peril-based pricing and changes in the products, and is increasing its push to educate customers on how to limit the impact of storms. Deductibles have also been increased in most provinces, with a base deductible of $1,000 instead of $500.
“From water to wind, the impacts of climate change coupled with urban growth, aging municipal infrastructure and the greater prevalence of finished basements are posing new challenges to the industry,” said Intact spokesman Gilles Gratton.
“The insurance product must evolve and adapt to reflect emerging climatechange risks and ensure the home insurance product is sustainable, to ensure its availability and affordability across the country for the long term.”
According to the Insurance Bureau of Canada, the amount of insured damage resulting from extreme weather in Canada grew from less than $200 million in 2006 to $1.2 billion in 2012.