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

[mxs]

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The people that you can thank for the rising rates are the people driving up the cost of claims. It's not so much that more accidents are occurring than they have in the past, but rather that people are being awarded much larger settlements. As settlements increase, then premiums must also increase.

Many times the insurance industry makes it look like it's really easy to milk the system in court and get nice payout ..... when you say people drive up the cost, you should rather say ...medical providers, judges, lawyers ..... people on their own should not be able to easily milk the system. In that sense, to me, the insurance industry has messed up big time, because if it was really true that raising rates is not your primary interest, you as an industry would collectively do something about it, as any lobying group who protects their business motto etc. (you collectively do have enough power, don't say you do not ...)

 

[VifferFun]

Many times the insurance industry makes it look like it's really easy to milk the system in court and get nice payout ..... when you say people drive up the cost, you should rather say ...medical providers, judges, lawyers ..... people on their own should not be able to easily milk the system. In that sense, to me, the insurance industry has messed up big time, because if it was really true that raising rates is not your primary interest, you as an industry would collectively do something about it, as any lobying group who protects their business motto etc. (you collectively do have enough power, don't say you do not ...)

I never said it was the claimants, but the "people", which keeps it quite general. You are correct that a lot of the time it is not the claimant, but the benefit provider who is costing the system dearly. However, the mindset of the average claimant is also becoming much more litigious than it was in the past (especially in the GTA). We have all seen the many commercials for personal injury lawyers.

 

[08CBR1000]

Sorry for being off track but why is it so cheap to buy insurance (motorcycle) in the USA and there are law suits after law suits and people are receiving hundreds of thousands of dollars, but in Canada our insurance policies are through the roof and very few people have law suits.
I guess my question is how come the insurance business in the states can run a profitable business and not rape the consumer but insurance companies in Canada continually cry about how they don't make money! (********). I pay for insurance just incase I have an accident. God help you if you do because your insurance rate will triple, or don't get a speeding ticket, 15 km over is 3 points once again your getting it up the wazooo!
Just for example my friend lived in Ohio and had a black bird and it cost him two hundred something a year (full coverage). when he moved here he had to sell the bike because the insurance was almost two grand!
Please tell me why insurance in Canada is so expensive? In some state they don't even have to wear a helmet!

Thanks

 

[VifferFun]

Sorry for being off track but why is it so cheap to buy insurance (motorcycle) in the USA and there are law suits after law suits and people are receiving hundreds of thousands of dollars, but in Canada our insurance policies are through the roof and very few people have law suits.
I guess my question is how come the insurance business in the states can run a profitable business and not rape the consumer but insurance companies in Canada continually cry about how they don't make money! (********). I pay for insurance just incase I have an accident. God help you if you do because your insurance rate will triple, or don't get a speeding ticket, 15 km over is 3 points once again your getting it up the wazooo!
Just for example my friend lived in Ohio and had a black bird and it cost him two hundred something a year (full coverage). when he moved here he had to sell the bike because the insurance was almost two grand!
Please tell me why insurance in Canada is so expensive? In some state they don't even have to wear a helmet!

Thanks

This has already been discussed in this thread as well as others.

 

[Ristow]

Hi I am a 53 year old rider , riding since 1976, starting riding again 3 years ago, I have an FZ1 and want to trade to a sport bike, R1 or zx 12 etc, where can I get a decent rate liability only? Please email me privately bart.ristow@cibc.com

 

[VifferFun]

Hi I am a 53 year old rider , riding since 1976, starting riding again 3 years ago, I have an FZ1 and want to trade to a sport bike, R1 or zx 12 etc, where can I get a decent rate liability only? Please email me privately bart.ristow@cibc.com

Hi Bart,

Your best bet with that SS bike will either be State Farm or TD/Meloche Monnex/Primmum. You might find this sticky thread useful:

http://www.gtamotorcycle.com/vbforu...-Insurance-Company-will-give-me-the-best-rate

Welcome back

 

[Gummiente]

I must admit, I am very impressed with your maintaining a professional composure throughout this and all the other related threads. But despite reading through all of them (okay, skimming through most of them) you will never be able to convince me that the rates I pay for my two bikes (taking into account my years of experience, area of residence and spotless record) are anywhere remotely near "fair". Also, as a former employee of the industry myself (albeit over on the life insurance and investment side), you will never be able to convince me that insurance companies are not gouging consumers in any and every way they can in order to continue making record profits.

But know that I do not hold you personally responsible for these beliefs and that IMO you do not deserve any of the flack that has been thrown your way. Actuarial Analysts are nowhere near the front lines of policy making and management, but it seems that some people on here can't figure that out on their own and simply lock you in their sights as they vent their rage against the machine. My opinion only here, but please don't stop doing what you are doing. You are providing a valuable resource to this site and its members.

 

[VifferFun]

I must admit, I am very impressed with your maintaining a professional composure throughout this and all the other related threads. But despite reading through all of them (okay, skimming through most of them) you will never be able to convince me that the rates I pay for my two bikes (taking into account my years of experience, area of residence and spotless record) are anywhere remotely near "fair". Also, as a former employee of the industry myself (albeit over on the life insurance and investment side), you will never be able to convince me that insurance companies are not gouging consumers in any and every way they can in order to continue making record profits.

But know that I do not hold you personally responsible for these beliefs and that IMO you do not deserve any of the flack that has been thrown your way. Actuarial Analysts are nowhere near the front lines of policy making and management, but it seems that some people on here can't figure that out on their own and simply lock you in their sights as they vent their rage against the machine. My opinion only here, but please don't stop doing what you are doing. You are providing a valuable resource to this site and its members.

If you have two bikes and a single rider, then I agree that the premium you are paying is not fair since you can only operate one at a time; however, this has already been discussed in other threads and I would love to find a viable solution if possible.

Auto insurance is regulated, and I haven't seen any price gouging in my experience. We must report our premiums and losses, and if the regulator thinks we're making too much money, they will force us to reduce rates. On the contrary, if the regulator believes we're charging inadequate premiums, they will force us to increase rates. Believe it or not, but my employer has no interest in gouging the consumer -- in fact, I think that my employer goes too easy on the consumer. Even when our analysis shows that rates in a certain segment (for example, residents in the postal code M1R ___) need to increase by 40% to remain adequate, my employer often decides to increase by only 5% a year to avoid shocking the consumer. With that being said, not all insurers operate in this fashion and some will take the full 40% at once if allowed by the regulator. Not all insurance companies are the same.

What I find funny is that the people who think insurance companies are scammers can't fathom the idea of taking insurance off their house once the mortgage is fully paid. Homeowners insurance is completely optional in Ontario, with the exception that lending institutions will not write your mortgage unless your house is insured (for obvious reasons). Homeowners insurance is written by the same insurance companies that provide Auto and Bike insurance. Even better yet, Homeowners insurance isn't even regulated, so insurers are free to charge whatever they deem fit. Since the market is competitive, the economic laws automatically keep the house premiums at a reasonable level.

I understood that I would receive a lot of negativity when I first started this post, but I'm OK with that. Prior to learning more about the rate-making process, I was an "insurance-sucks" person myself, so I completely understand the frustration. But thank you for the kind words.

 

[Gummiente]

What I find funny is that the people who think insurance companies are scammers can't fathom the idea of taking insurance off their house once the mortgage is fully paid.

I think you are confusing homeowners insurance with mortgage insurance here, two very different products.

 

[VifferFun]

I think you are confusing homeowners insurance with mortgage insurance here, two very different products.

No -- I meant Homeowners/House insurance.

Mortgage insurance protects the lending institution if the borrower defaults, and is mandatory by law when the downpayment is less than 20%.

Homeowners/House insurance covers physical damage to the house (by Fire, Wind, Vandalism, etc.) and is not mandatory by law; however, most banks will require that you have Homeowners insurance to protect the house/asset which is collateral on the loan. When your mortgage is paid, there is nothing stopping you from cancelling your Homeowners policy, but very few people do.

 

[Gummiente]

When your mortgage is paid, there is nothing stopping you from cancelling your Homeowners policy, but very few people do.

Then what, pray tell, covers the loss of the house through fire, wind, vandalism once the policy is canceled?

 

[turbodish]

Then what, pray tell, covers the loss of the house through fire, wind, vandalism once the policy is canceled?

Nothing. If you have no property insurance, you'll have to cover any losses out of your own pocket.

Also, it's not just property damage and such you have to worry about, but also liability coverage for when the mailman or junk ad flyer delivery guy sues you after slipping and hurting himself on your property. Without that homeowner's policy, you would be on the hook for that too.

Yet some people are willing to take that chance. You'll occasionally read about them in the paper after their house burns down and friends try to raise funds for the family that has lost everything.

 

[Gummiente]

Nothing. If you have no property insurance, you'll have to cover any losses out of your own pocket.

Exactly. So why is it that Mr VifferFun is suggesting that it should be removed? Or am I reading this wrong - "What I find funny is that the people who think insurance companies are scammers can't fathom the idea of taking insurance off their house once the mortgage is fully paid."

 

[turbodish]

Exactly. So why is it that Mr VifferFun is suggesting that it should be removed? Or am I reading this wrong - "What I find funny is that the people who think insurance companies are scammers can't fathom the idea of taking insurance off their house once the mortgage is fully paid."

I don't think he is suggesting it should be removed once the mortgage is paid.

I think he's commenting on those who think insurance is a scam - if they truly think it is a scam, then why don't they carry through with the thought by cancelling their home insurance the moment they are able to? Or is it that despite their angry claims of scamming, they do in fact silently recognize the value of insurance, even if they won't say so out loud?

 

[Gummiente]

I don't think he is suggesting it should be removed once the mortgage is paid.

I think he's commenting on those who think insurance is a scam - if they truly think it is a scam, then why don't they carry through with the thought by cancelling their home insurance the moment they are able to? Or is it that despite their angry claims of scamming, they do in fact silently recognize the value of insurance, even if they won't say so out loud?

Ah, okay, that makes a lot more sense. Sometimes the internet removes all the subtle nuances from a post and the intended meaning can be misinterpreted on the receiving end.

 

[VifferFun]

I don't think he is suggesting it should be removed once the mortgage is paid.

I think he's commenting on those who think insurance is a scam - if they truly think it is a scam, then why don't they carry through with the thought by cancelling their home insurance the moment they are able to? Or is it that despite their angry claims of scamming, they do in fact silently recognize the value of insurance, even if they won't say so out loud?

That is precisely what I was saying. I think it's funny/ironic that people who bash insurance buy optional insurance coverages (eg. House/Condo/Tenant insurance, Collision, Comprehensive, Life, AD&D, etc.) Obviously I believe there is great value in these coverages, but if someone thinks insurance is a scam, why purchase policies that are optional? Some of these same insurance haters probably fall prey to the ridiculously exorbitant pricing of extended warranties through FutureShop and BestBuy as well (which I see very little value in).

 

[DOHC1]

First off Viffer, I want to thank you for your input to this site. I've always hated insurance with a passion, but its something that we cant live without, so might as well understand it and deal with it that way. The reason I think people dont take off home insurance, is because it's (usually) their biggest asset. Hell, if I crash my $3500 Integra today, I'll feel like *** for a few weeks, then move on. (I do realize that I can cause thousands more in damage with said car) However, when a 60 year old man's $400,000 house burns down, and he is left with nothing, its a whole different ballgame. Personally, I feel the costs of having car/bike insurance are a bit high in relation to the returns. Whereas a house is a huge asset, and paying some $$ monthly to keep is secure seems worthwhile.

I'm 18 years old, male, and driving a 2 Door Integra. Yes, I've got quite a few points that would raise my premiums. But driving for 2 years with a 100% clean record, driver training certificate, and under parents policy..yet still paying $300 a month is a slap in the face to me. I'm looking at getting my first CBR125 this coming spring, simply because insurance would rape me even on a 250 ninja. Done the research, and Jevco is my only option, yet every broker on their broker list decides to "give me a call back" as soon as they hear of a bike quote in the winter - they know I'm not buying right now. Insurance is just frustrating because I'm expecting to pay about $130 a month for the bike (hopefully), on top of $300 for a car. For someone who has taken both driver, and rider training courses, and NEVER had any accidents/tickets/claims..I'm sure you can agree that $480/month is very unreasonable.

 

[Gummiente]

I'm 18 years old, male

I'm guessing you haven't read any of VifferFun's explanations about how rates are calculated; you have two big strikes against you right there.

 

[Gummiente]

I think it's funny/ironic that people who bash insurance buy optional insurance coverages (eg. House/Condo/Tenant insurance, Collision, Comprehensive, Life, AD&D, etc.)

In most cases, particularly when dealing with mortgage insurance through banks, people are not simply made aware of their rights and are not told about how different insurance products work. It took me 3 months of company training and studying before writing just the life insurance and investment exams to get my licence, how the hell can you expect an average citizen to be fully in the know about all the ins and outs of the industry?

 

[daveyto]

I've worked in the past for the largest bank in Canada that also happened owned an insurance company ( i guess you have figured it out by now). 10% growth every year is actually a quite profitable sum for an organization worth hundreds of millions of dollars. If we made 10% of our salaries every year as bonuses compounded every year e.g 10,000 dollars +1000 every year, we would be doing quite well. Strong economies grow at 3%, yes 3%..So imagine 10% ? this is something like the growth of the Chinese economy. Its huge!!!

Also, you forget to mention that Insurance companies ARE Investment companies! And when rates go up it is NOT because of CLAIMS. More correctly it is because the INSURANCE companies got BAD RETURNS ON THEIR INVESTMENTS, by MAKING POOR INVESTMENT DECISIONS. What this means is that the Insurance company takes your premium money and invests it in stocks and makes profit when the stock goes up. Alternatively, when the stock goes bust they lose money and pass that loss onto their clients by way OF RATE HIKE!

Please stop perpetuating confusion, VIFFERFUN and please explain the whole truth to the members here. I respect your composure given the angry responses to your post but please tell everyone here the WHOLE TRUTH.

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