Why Insurance is Expensive

OHIP

Like many things in life, car and home insurance is a necessity but how much it costs is always a prevalent factor when people considering buying insurance. You need it, but it costs so much!

But there are many reasons why rates seem so high as of late. But according to one major insurance company, the reasons are not entirely within the control of the average everyday consumer.

The notion that Canadians cannot control is the weather isn’t widely disputed. With climate change causing more severe weather events, the proverbial 100 year storm is now coming every five years or so. In 2018, insurance companies recorded a staggering $1.9 billion of insured losses due to severe weather events across Canada.

With regards to how this relates to insurance, according to the Insurance Bureau of Canada, some $5.2 billion per year on average have been claimed for home insurance in Canada between 2010 to 2013.

Another reason for high insurance rates is the amount of fraud occurring within the system. Some $30 billion are spent every year across the property and casualty industry to manage and respond to fraudulent activity. The same fraud issues happening in auto insurance has also been cited by the industry as a cause of high premiums.

While these huge numbers may be hard to comprehend for the average person, there are other statistics that hit closer to home. From 2010 to 2016, there has been a 60 percent steady increase in housing prices in large Canadian cities such as Toronto and Vancouver.

Automobile ownership also has not gotten any easier in terms of repairing vehicles in contrast with maintenance. Comparing 2007 and 2014, the average costs of maintenance and repair went up from $70 for a standard GMC vehicle to $520 per vehicle.

As a consumer, the best one can do is to shop around and compare insurance rates of various companies to find which one is offering a premium that best suits your personal lifestyle. To find a price that works for you, you can contact Pacific Insurance and speak to one of our experienced professionals at 416-494-1268.