A Vancouver Island couple facing a bill of more than double last yearB次元官网网址檚 to insure their farm is not alone in their struggle.
Neil Turner and Arzeena Hamir of the Comox ValleyB次元官网网址檚 Amara Farm have been scrambling to find about $7,000 to pay for farm and rural insurance this year after paying $3,200 last year.
B次元官网网址淚B次元官网网址檓 almost double, regardless of getting through this,B次元官网网址� said Turner. B次元官网网址淔or a lot of small farmers, three or four thousand bucks, on top of what you paid before, it could be your profit for the year.B次元官网网址�
Alan Fletcher, who owns 25 acres on Hornby Island, was looking at a $7,500 insurance increase from last year. After some back-and-forth with an agent, he agreed to add a home security system to cover fire and entry, which dropped the price from about $11,000 to $5,500.
B次元官网网址淪till a lot of money, plus I have to pay for a security system ($1,000) and a monthly monitor of $40,B次元官网网址� Fletcher said.
The B.C. Financial Services Authority says a B次元官网网址渉ardeningB次元官网网址� (period of higher rates and reduced underwriting capacity) in the Canadian and global commercial insurance markets is causing a spike in premiums. The hardening is related to losses from a prolonged underpriced market, reinsurance requirements and catastrophe losses.
For B.C., the authority said new research indicates higher potential losses from earthquakes.
B次元官网网址淎ll these factors have created a situation where commercial insurers have repriced premiums higher to return to profitability,B次元官网网址� the BCFSA said in a statement.
Commercial insurance, particularly in B.C., has been experiencing B次元官网网址渟ome really significant market pressures,B次元官网网址� said Rob de Pruis, director consumer and industry relations at the Insurance Bureau of Canada (IBC).
The pressures are due in part to an increase in property and liability claims, and to severe weather claims. He also notes macro-economic conditions, whereby insurance companies obtain capital either from premiums of policy holders (underwriting income), or from investment income.
B次元官网网址淔or many years, the insurance industry has not had sufficient underwriting income to pay all the claims,B次元官网网址� de Pruis said. B次元官网网址淥ver a number of years, weB次元官网网址檝e seen really low returns on investment, on average, for the insurance industryB次元官网网址tB次元官网网址檚 a common supply and demand issue.B次元官网网址�
Another factor is the pandemic, which has affected every business and organization in Canada.
B次元官网网址淭he insurance industry is no different,B次元官网网址� de Pruis said. B次元官网网址淎cross the country, thereB次元官网网址檚 tens of thousands of businesses that are going out of business (and cancelling their insurance).B次元官网网址�
The B.C. Finance Ministry notes that government does not set insurance rates or regulate pricing.
B次元官网网址淗owever, we continue to monitor the issue and will consider what steps may be taken,B次元官网网址� the ministry said. B次元官网网址淭he pricing of insurance is a business decision undertaken by insurers, based on analysis to anticipate the expected frequency and severity of future claims.B次元官网网址�
Various factors come into play to calculate premiums, especially in the commercial insurance marketplace. de Pruis said policies generally fall into two categories: contents (machinery and equipment) and liability. Farm operations, for example, are exposed to various liability exposures, such as business interruption losses.
B次元官网网址淩eally, itB次元官网网址檚 about the type of policy that you choose and the limits you have,B次元官网网址� he said.
Another factor is replacement cost of a property, which typically increases yearly, based on inflation.
de Pruis said government has a role to play by strengthening building codes and improving land use planning. Insurance companies can help by making products available at an affordable cost. Business owners also need to consider what they can do to reduce their chance of loss or damage.
de Pruis advises residents to regularly review their policy and coverages with their insurance rep.
B次元官网网址淜now your risks, and understand what you can be doing to reduce some of these risks and lower your premium,B次元官网网址� he said.
The IBC has created a National Commercial Insurance Task Force to better understand issues driving increased costs in commercial insurance. View an IBC-commissioned report .
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