Board officials considering industry wide changes in that country.
According to the Insurance Board of Canada, recent extreme weather events have caused damage leading to millions of dollars in auto and homeowners insurance claims this summer, alone.
An industry analyst pointed out that this is a significant change in the insurance market.
According to industry relations analyst Pete Karageorgos from the board, the most common homeowners insurance claims used to be related to fire and theft. He explained that “The majority of events back then were fires and theft and nowadays we as an industry are seeing the majority of the claims payouts are related to severe weather and water damage.”
These homeowners insurance claims have been especially high in Ontario.
The board has stated that homeowners insurance companies have already processed hundreds of millions of dollars in claims within that province during the last few months. Though flooding is not covered by the standard policy, damage from falling trees, hail, wind, and blowing water are. Karageorgos pointed out that “We have situations where there are sewer backups occurring in areas, hail damage to vehicles and property, and so it is a challenging situation for everyone.”
This type of change in the types of claims that are being seen are forcing the industry to rethink its predictive models and many other issues relating to the claims that they can expect. Karageorgos pointed out that it would have been very rare to receive an insurance claim for a roof blowing off a building in the 1990’s, but today it is considered to be commonplace.
Severe weather that used to occur twice in a century are now becoming regular storm events. This is causing homeowners insurance costs to climb. These increased premiums are directly related to the growing number of claims that the insurers are receiving and the payments they must make on them.
This type of situation is being faced by homeowners insurance and other sectors around the world, as climate changes and weather events become more severe and damaging. It can be expected that rates will be rising on a worldwide basis as claims and payments continue to increase.