Knowledge is the first step in managing risk.
We recommend that our insureds consider carrying at least $5 million in coverage for personal liability on automobiles, boats, recreational vehicles and all owned properties. Higher limits are available.
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Client Newsletter
Q: Why are insurance rates rising?
A: After 4 years of relatively stable insurance rates, 2009 will see rates creeping upwards. Although there are many factors, the main reasons boil down to these:
- The cost of claims continues to rise - from more technical methods of mould eradication after water damage in buildings, to the cost of repairing late-model vehicles, to increasing economic values for serious bodily injuries – claims are simply costing more to settle.
- Replenishing solvency capital – Although we are not sheltered from the negative global financial trends, Canada has largely been spared the meltdown in the financial sector seen in other countries so far; this is due to stringent regulatory solvency requirements. Insurers that prudently maintain and replenish capital, are the ones with the ability to follow through on their promises to policyholders. I’m reminded of a quotation attributed to Warren Buffet: “any insurance policy is a promise, and as everyone knows, promises vary enormously in their quality”.
- Falling investment income – Every insurance company generates revenue by investing the pools of money entrusted to them by their policyholders; this investment income is used to help pay claims. When investment returns decline, rates must rise to compensate. It is critical to their policyholders that insurers retain financial health to pay claims, some of which occur now but will not be settled for years to come.
It may be more true of insurance purchases than almost anything else:It is unwise to pay too much; it is much worse to pay too little.
WE WORRY ABOUT INSURANCE SO YOU DON'T HAVE TO.
KNOX INSURANCE BROKERS LTD.
705 CASSELLS STREET, NORTH BAY, ONTARIO P1B 4A3
P. 705.474.4000