Since about 2003, insurance rates have been steadily decreasing as the insurance market entered the “soft” cycle (prices are down and competition is up). While some people’s insurance seems to go up (could be based on driving record), on the whole the trend has been down. You need to know that this is going to change.
The soft market is one of the best markets for a consumer to purchase insurance in. Companies are slashing premiums to get your business. While I see it more blatantly in the business insurance world, it is also happening with home and auto rates. I was looking over an article in Canadian Underwriter, (Sept 2007 issue) and it speaks of worry in the insurance world about increased clams costs over the past couple of years.
I think this is pretty understandable – it is costing more and more to fix minor damage on today’s car is going up, the costs of Rehabilitation have gone up. Just think – have you ever seen airbags deploy after just a minor “tap” Those things are expensive to fix!
So what does this means for us as consumers? The insurance companies will float various options around including, price increases, regulatory reforms and/or political reform.
Price increases are the easy one – but they come with allot of heat. Regulatory reform – basically it is allowing the insurance companies to price and create insurance products tailored to various needs…might be a good thing. Political action really ties into point 2 – it just means they need to play nice with the government.
In the end, a price increase will be coming over the next few years. The whole point of insurance is to spread the risk of a few amongst the many – as claim costs increase, our premiums will increase. Try to start saving now for the future…put at least $20 a month into a savings account as a rainy day fund…you will be grateful that it is there!