I help set rates for a Major Canadian Insurance Company! Some thoughts . . .

[NiteshadeTA]

Question. Why can't we cancel our insurance without penelty during the winter months?

There are two reasons for this.

1. People would insure their bike for the summer, but use the slip and ride in the off season when the weather suited them. Because of the amount of uninsured riders running around in November months, they made it mandatory for year round insurance.

2. The insurance companies want to make more money that way. Insurance pay outs drop drastically in the winter, yet the reap all the profits in monthly premium;s.

Nites

[omnivore]

This is all BS. I am 34, havent had a ticket in more than 8 yrs, have never ever made a claim in my life for any reason (not even a cracked windshield), and I have had my bike licence for 18 yrs. My insurance has NEVER EVER EVER gone down. Only up. Almost every yr, for no reason at all. This yr it went up another $80 again, even though my bike is older and my good record is getting longer and longer by the day.
Sure State Farm gives me better rates than most other companies out there, but that doesn't neccessarily mean that insurance company aren't bloodsucking vampires. All of them. Period.
There's a reason that year after year they continue to report record profits. Next year they will only prove to do even better than this year, and so on and so on.

[VifferFun]

This is all BS. I am 34, havent had a ticket in more than 8 yrs, have never ever made a claim in my life for any reason (not even a cracked windshield), and I have had my bike licence for 18 yrs. My insurance has NEVER EVER EVER gone down. Only up. Almost every yr, for no reason at all. This yr it went up another $80 again, even though my bike is older and my good record is getting longer and longer by the day.
Sure State Farm gives me better rates than most other companies out there, but that doesn't neccessarily mean that insurance company aren't bloodsucking vampires. All of them. Period.
There's a reason that year after year they continue to report record profits. Next year they will only prove to do even better than this year, and so on and so on.

Before you go making uninformed posts such as this, please at least take the time to read the content of the thread. As I have already explained, Insurance profitability goes in cycles of good profit to really bad profit (or loss). The Insurance Industry is just coming out of its "good cycle" of profit, and is entering into the bad cycle. Many insurance companies right now are being hammered with losses. If Insurance Companies are the blood-sucking vampires you speak of with astronomical profit margins, then why not invest your life savings in the Insurance Industry? I am sure that if the Insurance Industry is as profitable as you say it is, then the capital gains on your investment would pay for your car, home, bike insurance, and retirement fund. Why is it that Financial Consultants not recommend that everyone do this, if huge profits in the Insurance Industry are sure thing? Perhaps it is because this low-risk-high-profit insurance industry that you speak of simply doesn't exist?

In general, rates will increase over time unless there is a legislative change which caps or reduces claim payments. Why do rates increase? Well, the costs associated with the claims payouts increases year over year. How much do you think it would cost to buy a Goldwing in 1978? Now, how much do you think it would cost to buy a Goldwing in 2008? There is something called inflation, which is an increase in the cost of goods and services year over year. Since you wouldn't expect to be able to buy a brand-new Goldwing in 2008 for the same price you could have bought one in 1978, why should your insurance premium be any different? Aside from regular inflation of around 3%, many payouts actually increase at a pace faster than inflation, especially claims related to bodily injuries.

In addition, even though your company might take a rate decrease, this does not necessarily mean that *your* individual premium will go down; it is up to the company (subject to the approval of the regulators) to allocate which groups will experience the rate decrease. For example, if there is an overall rate reduction of 3%, the company may decide to reduce the rates of 50+ drivers by 10% and leave all other rates untouched, thus resulting in an overall rate decrease of 3%.

If you have any other questions, I would be more than happy to answer them; however, let's maintain a civil tone. I haven't been short with any of you, and expect the same courtesy.

Cheers!

[Biggsy]

Before you go making uninformed posts such as this, please at least take the time to read the content of the thread. As I have already explained, Insurance profitability goes in cycles of good profit to really bad profit (or loss). The Insurance Industry is just coming out of its "good cycle" of profit, and is entering into the bad cycle. Many insurance companies right now are being hammered with losses. If Insurance Companies are the blood-sucking vampires you speak of with astronomical profit margins, then why not invest your life savings in the Insurance Industry? I am sure that if the Insurance Industry is as profitable as you say it is, then the capital gains on your investment would pay for your car, home, bike insurance, and retirement fund. Why is it that Financial Consultants not recommend that everyone do this, if huge profits in the Insurance Industry are sure thing? Perhaps it is because this low-risk-high-profit insurance industry that you speak of simply doesn't exist?

For insurance to be a good investment the wealth would have to be distributed to shareholders. There is a lot of money going in, but to be sure there is also a lot blown on rediculous salaries and boondoogle projects.

If you want to get rich investing in insurance become a consultant.

That said, 11.7% profit (looking at ManuLife - Canada's biggest insurer) in a mature industry is HUGE. In '07 they had 28.91 Billion Revenue 3.41 Billion Profit. This is a mature industry, with as you suggest 'lots of competition'. If that where true, profitability with competition should approach nil.

In a truly free market your company would be crushed under it's own weight.
From where I sit, no offense, insurers (Ontario style) are part of a problem (one of many) that suck on the teet of the consumer - hurting our economy and in turn taking away from all of us.

Give me true free market, or just federalize the whole system. The inbetween is a swampy breeding ground for leeches.

[VifferFun]

For insurance to be a good investment the wealth would have to be distributed to shareholders. There is a lot of money going in, but to be sure there is also a lot blown on rediculous salaries and boondoogle projects.

If you want to get rich investing in insurance become a consultant.

That said, 11.7% profit (looking at ManuLife - Canada's biggest insurer) in a mature industry is HUGE. In '07 they had 28.91 Billion Revenue 3.41 Billion Profit. This is a mature industry, with as you suggest 'lots of competition'. If that where true, profitability with competition should approach nil.

In a truly free market your company would be crushed under it's own weight.
From where I sit, no offense, insurers (Ontario style) are part of a problem (one of many) that suck on the teet of the consumer - hurting our economy and in turn taking away from all of us.

Give me true free market, or just federalize the whole system. The inbetween is a swampy breeding ground for leeches.

I'm sorry, but your example is irrelevant; Manulife is a company that provides LIFE insurance financial services (such as annuities, motrgages, etc.) and has absolutely nothing to do with the Ontario roadways. Yes, Life Insurance is well established and does quite well. Guess what? Life Insurance is not regulated, nor is it mandatory in Canada. People purchase Life Insurance because they choose to. And I would not hesititate to say that there are plenty of Life Insurance companies out there competing for your business. Also, profitability will not approach nil in a competitive marketplace. If you were to take an introductory economics course, you would know that it would be irrational for a company to invest money and not expect at least the risk-free rate in return. The additional 5-7% that Manulife has made is payment for the risk it has endured for operating its business, and for just smart business tactics in general.

[VifferFun]

This yr it went up another $80 again, even though my bike is older and my good record is getting longer and longer by the day.

By the way, when companies are determining your premium, most only look at the last six years of your claims experience (although some use ten years). For minor convictions, they only look at three years of data. For criminal convictions, I think it might stay on your record for six years.

Since you already achieved your *perfect* driving status some time ago, your driving status cannot get any better as far as your insurance company is concerned.

Cheers!

[Diesel]

There are a few reasons that I think insurance is a scam, and bear in mind that I haven't read every post in this thread, so some might be repeats.

1. They punish you if you use what you paid for. You pay extra for collision insurance, but God forbid you ever use what you paid for they will up your premium. The only way to get a good rate is to never use what you pay for. Even then if you decide to use your coverage, how hard is it to collect what is owed? How many have had a vehicle written off and been given far less than the vehicle should have been worth?

2. Our rates here are much higher than some neighbouring States (and maybe provinces as well). Viffer claims that this is because we have a higher average claim. I find this hard to believe as in the States they don't have health coverage, and they love to sue - with mammoth payouts. I also don't buy that Americans won't try to suck off the benefit-tit as much as Canadians either.

Personally I think that our society as a whole has been over-sold this whole idea of insurance. I would much prefer to not have any insurance at all and just deal with problems when they arise - just like I did when I lived overseas for many years. Consider how much money you have paid into insurance, and then consider how much you have ever received. For the vast majority it will be much paid in, nothing taken out. It is like gambling - in this case betting that something will go wrong.

[Avi Singh]

There are a few reasons that I think insurance is a scam, and bear in mind that I haven't read every post in this thread, so some might be repeats.

1. They punish you if you use what you paid for. You pay extra for collision insurance, but God forbid you ever use what you paid for they will up your premium. The only way to get a good rate is to never use what you pay for. Even then if you decide to use your coverage, how hard is it to collect what is owed? How many have had a vehicle written off and been given far less than the vehicle should have been worth?

2. Our rates here are much higher than some neighbouring States (and maybe provinces as well). Viffer claims that this is because we have a higher average claim. I find this hard to believe as in the States they don't have health coverage, and they love to sue - with mammoth payouts. I also don't buy that Americans won't try to suck off the benefit-tit as much as Canadians either.

Personally I think that our society as a whole has been over-sold this whole idea of insurance. I would much prefer to not have any insurance at all and just deal with problems when they arise - just like I did when I lived overseas for many years. Consider how much money you have paid into insurance, and then consider how much you have ever received. For the vast majority it will be much paid in, nothing taken out. It is like gambling - in this case betting that something will go wrong.

Might I suggest reading the thread for starters. Viffer has explained most of this already (and very well).

1. Write offs are settled on an actual cash value basis. Meaning they determine what the vehicle is worth and pay it. They can't afford to lowball you, and drag a claim on for months. It's cheaper for them to pay you and close the file and move on. It's a cost of doing business. I had a vehicle written off, and they told me, find 3 vehicles for sale with similar mileage or more and take the average asking price of the 3. If it's higher, then they'll change their offer. I learned something - my car wasn't really worth what I thought.

2. Neighbouring States have several million more people than we do contributing to the premium pool. Furthermore they have little to no liability coverage 20-40,000. So the lawsuit coverage is virtually nil in the US. In Canada many provinces have gov't run insurance programs which is basically subsidized by tax dollars. It's not just claim size and fraud that inflate our costs, but we have very high coverage limits along with no one helping us to pay our premiums, the consumer shoulders the full cost.

You're right going with no insurance is like gambling, except for in this case you're not playing with $20. You're playing with your entire life's work. I have a case right now where a guy's girlfriend fell off the back of his bike and is suing him!

Can you afford to pay a lawsuit out of pocket? Can you afford it better than you could the premium to transfer the risk? I think not.

[Diesel]

Are you saying that Michigan at 10 million has significantly more contributors than Ontario at 12 million people?

I'll never be one that believes in insurance. I think having insurance is pessimistic and betting that the worst will happen.

16 years now of paying insurance and not a single claim. If I didn't have insurance I probably would have between $30 to $50k more (not including interest) if I include life insurance, property insurance, car and bike insurance.

If I didn't have insurance and I got in an at-fault accident (unlikely), someone sued, what would it cost me? The answer is very little. I would sell what I have and give the money to someone I trust, then declare bankruptcy when hit with a large lawsuit. In that case it would cost me about $1k to declare bankruptcy and 7 or 8 years of not having to pay any interest to greedy banks or credit card companies. If that failed to work I would just live overseas for a few more years....

Maybe one day if I own a house out-right ... no mortgage.. and it is considered valuable, then maybe I would insure it for fire... other than that insurance is a waste of money.

[rukus]

If I didn't have insurance and I got in an at-fault accident (unlikely), someone sued, what would it cost me? The answer is very little. I would sell what I have and give the money to someone I trust, then declare bankruptcy when hit with a large lawsuit. In that case it would cost me about $1k to declare bankruptcy and 7 or 8 years of not having to pay any interest to greedy banks or credit card companies. If that failed to work I would just live overseas for a few more years....

they will then garnish your wages until you are dead. also go for anything you have, and then audit you. basically you are committing fraud

[yellowracer]

you need to ask yourself what the insurance is really covering
there owe jobs
I pay and pay and pay for what because its law thats why

17 years of driving not one claim not one ticket not one accident

and the cost just goes up and up
sometimes i just think about canceling it all and saying screw it

[kneedraggin101]

if you help set rates, why dont you set a special rate for gtam as being a group, like i recall premium did for certain motorcycle related associations.

Granted there needs to be a base guideline for all this, but with the insurance rates here in ontario, its getting way out of control, and honestly no one is willing to step up and do something about it.

Step up and make every rider out there believe that the insurance industry isnt a bunch of snakes....

[yellowracer]

so if all of this is approved by the gov
what department approves it and what elected official does that department fall under
Is it the minister of finance or who do we complain to in the gov
what elected official do we as tax payers blame

who in the gov approved the increase

off with their heads or at least we can remember at election time

[yellowracer]

The Financial Services Commission of Ontario (FSCO) regulates the insurance industry
Ministry for the Government of Ontario, the Ministry of Finance is responsible for managing the Province's regulatory affairs. One Commission they look after is FSCO.
The elected official that look after the Ministry of Finance are:
The Honourable Dwight Duncan
Minister of Finance, Minister of Revenue and Chair of Treasury Board/Management Board of Cabinet

Dwight Duncan, M.P.P.
(Windsor – Tecumseh)

salary 125,641.23

Wayne Arthurs
Parliamentary Assistant to the Minister of Finance

Wayne Arthurs, M.P.P.
(Pickering-Ajax-Uxbridge)
salary 100,918.92
Peter Wallace
Deputy Minister of Finance and Secretary of Treasury Board

I don't believe he was elected just appointed by Dalton McGuinty
Salary 234,744.53

[VifferFun]

if you help set rates, why dont you set a special rate for gtam as being a group, like i recall premium did for certain motorcycle related associations.

Because based on the posts in this forum, the "special rate" for GTAM members would have to be higher than the normal rate, because I think there might be more idiots on this board than there are in the general population.

[VifferFun]

you need to ask yourself what the insurance is really covering
there owe jobs
I pay and pay and pay for what because its law thats why

17 years of driving not one claim not one ticket not one accident

and the cost just goes up and up
sometimes i just think about canceling it all and saying screw it

Yup, insurance companies exist for the sole purpose of creating jobs. Come on now, we're not General Motors!

Your rate goes "up and up" due to rising claim costs and just inflation in general. Did you look at the 2008 insurance industry results that I posted?

And rates can increase even when insurance companies are making profit because we are pricing for expected *future* claims, not expected *past* claims. If a legislative change occurs that forces us to increase rates, we will do so.

And if you are concerned about rising rates, you are complaining to the wrong people. You need to complain to the courts who are awarding ridiculously-large settlements where they are not due.

[kneedraggin101]

well it should be the perks of joining a motorcycle club, if other insurance companies offer this sorta rate then the ppl on this fourm should get a special one as well, seeing that to everyone on this site, riding is a lifestyle which we would all like to keep

[stevie t]

So if the investment side is short and the ratios are high.....do you expect post claim underwriting to increase in this segment?

[invictus43]

So if the investment side is short and the ratios are high.....do you expect post claim underwriting to increase in this segment?

Of course.. As it should.

[VifferFun]

So if the investment side is short and the ratios are high.....do you expect post claim underwriting to increase in this segment?

I'm not really sure what you are asking; underwriting is the selection of risks.

Are you asking whether or not I expect claims to be investigated more for fraud and legitimacy?