Alberta floods cause spike in insurance rates
Homeowners in Alberta, Canada, are preparing to see higher insurance rates as insurers begin to feel the financial impact caused by recent floods. The Insurance Bureau of Canada notes that insurers have been weighing the impact of floods that struck Alberta in June of this year and many have found the need to raise rates in order to mitigate the financial blow of the disaster. Those that had fallen victim to flooding will likely see their homeowners insurance rates spike in the coming months.
Flood damage breaks records
Early summer floods sparked record breaking insured losses in Alberta, according to the Insurance Bureau of Canada. In the months following the floods, homeowners had been seeing their home insurance rates climb, but these rate hikes are not actually due to the floods themselves. The agency notes that recent rate hikes are actually the result of past natural disasters, some of which occurred in 2012. Rate hikes tend to be a slow process as it takes a significant amount of time for insurers to examine and quantify the actual impact of a natural disaster from a financial standpoint.
Insurers work to mitigate financial damage
Insured losses from the June floods have been calculated to be $1.7 billion, with an insured loss ratio of 140%. Typically, an insured loss ratio of at least 70% is considered to be an indicator of significant financial pressure being caused by claims. Claims generated by the floods are not the only financial issue that insurers have to contend with, of course. Reinsurance companies tend to raise their rates in the event of a natural disaster, which adds further financial pressure on insurance companies.
Higher rates expected in 2014
In order to mitigate the financial damage caused by natural disasters as well as rising reinsurance rates, insurers are expected to raise homeowners insurance rates in Alberta. Higher rates are not likely to be seen until later in 2014, however, as rate increases from past natural disasters are still being implemented and existing regulations serve to slow the rate hike process somewhat.