How Hard is a Hard Market?
“I guess all the insurance
companies are raising their rates. I heard it on the news.”
It’s a true story. Rates are up
all over the place. If you wondered about this and called your insurance
provider to inquire, you may have heard that we are in what is called a “Hard
Market.” It’s called a Hard Market because it’s hard as heck to get a lower
rate.
Last year was a tough one for the
insurance industry in Canada. That whole Climate Change thing is doing a number
on actuarial data. It used to be that insurance companies’ actuaries could
determine with a bit of certainty, just how bad the damage from that storm or
flood or wildfire would be. But with climate change effects, there are more
storms, more floods and more wildfires, and there’s no telling how bad it will
be until it’s too late. So, all the insurance companies lost gobs of money last
year. Those losses obliterated loss reserves, and made it so that rates had to
go up, and new underwriting rules
were put in place to make it harder to even get insurance. Hard…see?
And the insurance market will
stay hard until the companies can recover from the mess that was last year. How
long will that be? No one knows for sure. If outside forces like climate change
and insurance fraud continue to challenge the industry in unexpected ways, it
could take the insurance industry a very long time to right itself. And until
then, things will remain HARD. And rates will continue to rise.
Comments
Post a Comment