Why Are Insurance Premiums Going Up in 2023?
In 2023, many consumers are experiencing rising costs across various sectors, including insurance premiums. We want to help you understand the reasons behind these increases and how to mitigate their impact with strategies to manage your risk factors, while ensuring that your current policies are charged at appropriate rates.
To help you navigate these challenges, The Ostic Group offers a unique advantage. Our strong partnerships with top insurance providers enable us to provide a wider range of insurance products and competitive rates — and our friendly and professional brokers can assist you in finding the best rates for your situation.
What is causing insurance premiums to rise?
Insurance premiums are currently being driven up in Ontario by a variety of factors including labour shortages, part shortages and supply chain issues for vehicles, the higher cost of construction materials, inflation, and climate change.
Labour Shortage and Supply Chain Issues
The most significant cause of higher auto insurance rates in 2023 is the increasing cost for repairs, due to a labour shortage and supply chain issues.
It’s taking much longer for vehicles to be repaired because body shops are waiting extended times for parts. Due to car parts being in demand, the overall cost of each item required to repair a vehicle after a loss is increasing. You will also likely have a rental car for a longer period of time if your vehicle is in the shop for repair, which will add to your total costs. To top it all off, you’ll be charged additional storage fees while your vehicle sits in limbo waiting to be repaired or written off.
Fraudulent claims are a major factor in the rising cost of car insurance premiums.
Insurance fraud is a serious problem in the industry and can take many forms, such as staged auto collisions, fake claim details, and exaggerated injuries for additional health benefits. Inflated costs by vendors to the insurance industry, including some body shops, tow trucks, storage facilities, and healthcare practitioners who overstate submissions for payment from insurers, are also common.
This fraudulent activity has been on the rise in recent years and, according to the Insurance Bureau of Canada (IBC), is now costing Canada billions of dollars annually. In Ontario, insurance fraud has contributed to an average increase of over $200 in auto insurance premiums. While battling fraud can be challenging, the regulatory associations, government, and law enforcement agencies in Canada and Ontario are taking steps to reduce this type of criminal activity. By working together, we can continue to combat insurance fraud and protect consumers from the financial impact of these crimes.
Severe Weather Events
Extreme weather can cause costly damage to properties, prompting insurers to increase premiums to cover the costs of future claims.
As we’ve seen over the past few years, climate change has significantly increased the frequency of severe weather events, such as floods, wildfires, ice storms, windstorms, and more. According to the IBC, weather-related events account for roughly $2 billion in property claims every year.
While we cannot control natural disasters, we can take steps to protect our homes from water damage. Installing a water backup system, ensuring sump pumps are in good working order, and maintaining watertight walls and grading in your yard are just a few ways to mitigate or prevent water from entering your home.
It’s essential to note that not all insurance policies cover water damage equally. Coverage can vary widely between insurance providers, so it’s important to speak with your broker at The Ostic Group to ensure that you have the proper coverage for your needs. By working with a trusted insurance broker, you can have peace of mind knowing you are adequately protected against the unpredictable forces of Mother Nature.
High Rebuilding Costs
When the cost of rebuilding a damaged property goes up, the size of the insurance claim typically increases as well.
If you’ve completed any projects around your home in the last few years, you will know that the costs of building materials have risen significantly. Along with the shortages of tradespeople and labour, material pricing will contribute to higher costs and lengthier claims periods in 2023.
Many Canadians are currently impacted by this concerning issue.
If you own a property, your insurance policy’s dwelling amount (the cost of rebuilding your home if it’s entirely destroyed) will increase each year due to inflation. We are also at a time when the inflation rate is very high, which means that dwelling values are increasing more significantly than in recent years. The inflation on the rebuilding cost of homes can be as high as 9% in Ontario in 2023. The higher the property’s rebuilding cost, the higher your property insurance premium.
How can we help?
As insurance brokers, The Ostic Group is in a unique position to assist Ontarians in dealing with the increasing cost of insurance. We understand the complexities of the insurance industry and are well-equipped to help our clients find the most cost-effective and comprehensive coverage.
We Offer You More Choices
At The Ostic Group, we work with a broad selection of insurance providers, which allows us to search for the ideal coverage for your requirements, while keeping rates competitive.
We are dedicated to establishing strong relationships with a wide range of insurance companies, both big and small, throughout the province. This gives us the opportunity to learn about the specific advantages of each provider and the intricacies of their different policies and coverage limits. With a plethora of options available to us, we can pair you with the policy that will offer the most value for your unique circumstances.
We Match Rate To Risk
Insurance costs today are based on many factors. We will work with you to ensure that you are being charged the appropriate rate to align with your level of risk. Even small changes like commuting and driving habits, the age of your roof, and mitigation measures such as a sump pump can help reduce your rates.
We are familiar with all the discounts that each insurance company provides, which allows us to find ways to lower your insurance premiums. We are always happy to have conversations with you to ensure that you are being charged the appropriate price for your insurance needs.
If you want to get the best insurance rates for your situation, talk to one of our brokers today.