If you are shopping for car or home insurance, chances are you may have heard that Ontario is now entering what industry veterans refer to as a ‘hard market’. It is a challenging cycle that comes about every six to eight years that can lead to higher insurance premiums and stricter underwriting practices.

What causes a hard market

A hard market occurs when insurance companies take action to respond to challenging regulatory and environmental pressures that affect profitability. Factors such as years of record-breaking catastrophic weather losses and increased systemic fraud have taken their toll on insurers, and the numbers show it. In the first quarter of 2018, Canadian property and casualty insurers paid out $535 million more in auto claims in the first quarter of 2018 compared to 2017.¹

New technology has also impacted the cost of insurance claims. Although new technology in cars is useful and has made our daily commute easier, the cost of auto repairs has skyrocketed in the past 10 years. The complexity of computerized components comes with a high cost to repair or even replace. This also increases the average length of vehicle rentals during repairs, which has increased from 11.6 to 13.6 days from 2017 to 2018.²

Fraud is another factor affecting insurance premiums.  When a criminal deceives an insurance company for financial gain by providing false information, falsifying documents or submitting false insurance claims, all drivers eventually see an increase in rates. Audetex reports that fraud costs drivers an estimated $1.6 billion each year, meaning $236 of a driver’s auto insurance premium goes towards paying for the illegal activity of criminals.³

How a hard market affects consumers

During a hard market, consumers may notice higher premiums, and stricter underwriting rules and practices that affect their insurability. These rules are what insurance companies use to determine an applicant’s risk factor, coverage limitations and deductible levels. This may also come with changes to an existing policy and payment options.

We’re here to help

These changes can be overwhelming to some consumers but our brokers are here to help. With access to many insurance markets and specialty group insurance carriers, we will find the best price and coverage to meet your needs.

Contact us today by calling 1-888-892-4935 and let an OTIP broker help you.

1. Audatex
2. Aviva Insurance
3. Insurance Bureau of Canada