A “hardening insurance market” is to blame for a substantial increase to insurance premiums at the Sunshine Coast Regional District (SCRD) heading into 2021.
Staff estimated the premium owed to the Municipal Insurance Association will increase by about 46 per cent to $120,000, while the premium paid to Aon Reed Stenhouse Inc. has risen by about 10 per cent to $230,000.
“Volatile market conditions” and economic disruptions caused by the pandemic “has intensified the hardening insurance market as a whole, resulting in dramatic premium increases” in Canada’s insurance industry, according to a Nov. 26 corporate and administrative services committee meeting staff report.
Staff recommended directors approve the payment increases, which they did.
Insurance markets are considered “hard” when premiums go up but the coverage supply is down.
The hardening market started at the end of 2018. Claims of increased frequency and severity with higher payouts, years of premium reductions and heavy losses are making companies unprofitable, while the pandemic and financial crisis have “virtually eliminated interest gains from stock bonds,” said purchasing and risk manager Valerie Cropp.
“We will see across all insurance … that there has been a substantial increase and it will continue to grow next year as a result, especially because of COVID and environmental changes,” she said.
Last year, $1.3 billion was spent on natural disaster recovery from claims in Canada, said Cropp. “Unfortunately this will be a trend.”
Updated numbers are expected during 2021 budget deliberations.
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