A Hard Market
Insurance rates are on the rise
The drastic change when it comes to obtaining auto insurance in Ontario at the moment and this has been caused by what is known as a Hard Market. If you have recently seen your insurance premiums spike, or you have been non-renewed due to new underwriting criteria set out by your insurance provider, here is a quick explanation of what is happening in the auto insurance sector.
What is a Hard Market?
A Hard Market happens when environmental or regulatory factors cause insurance companies to have to re-evaluate their rates and underwriting rules. Factors contributing to a Hard Market can include increased claims costs, vehicle technology, and fraud with collected premiums failing to cover losses. This means insurance companies have to either increase their costs or start putting in new underwriting rules, effectively stating what they will or won’t accept for new or current business, while they try to balance their books. The unfortunate knock-on effect sees consumers being non-renewed by their current insurance provider or facing less competitive rates.
How long does a Hard Market last?
Hard Market situations usually happen once every 8-10 years while insurance companies try to correct their rates in comparison to losses paid.
Unfortunately, this means there are fewer markets available offering competitive rates to consumers however once the market has readjusted, people will start to see things soften. This trend can last few either a few months or up to a year depending on how quickly insurance providers can get their rates adjusted and approved by the Financial Services Commission of Ontario (FSCO).
Is there a Soft Market?
Yes; A soft market is the opposite of what we are seeing now; insurance companies see profits meaning there is more competition between insurance companies to provide competitive rates for auto insurance in Ontario. Underwriting rules are also less strict and consumers can see lower premiums on renewal.
If you have seen your insurance premiums rise, know you are not alone. Although obtaining competitive insurance is tougher right now there are still insurance providers out there who can help. If you find yourself looking for better insurance rates and are interested in speaking with one of our licensed insurance brokers please give us a call today at 1-877-454-4476 or submit a quote request by clicking here. Whether it’s for your auto, home, commercial business or farm, we have markets to suit your needs.