Car insurance premium increases, explained
You’ve probably noticed that insurance premiums are on the rise everywhere lately. Inevitably, this has affected the car insurance and house insurance sectors, since the rates that impact your insurance premiums are based on current market conditions.
So what’s affecting insurance rates?
1. Climate change
High winds, rain and hail storms, forest fires… Climate change has more than doubled insurance claims due to severe weather conditions over the past 5 to 10 years. This means insurance companies are reimbursing four times more claims related to natural disasters today than they did in the 1980s.
This is why, in the near future, insurance companies will need to implement premium increases for customers. These increases will allow insurers to keep pace with the mounting number of claims and thus continue to adequately protect policyholders.
2. Increased theft
In 2022, the number of car thefts may well be the highest we’ve seen since 2012. Most vehicles are stolen from shopping centre and supermarket parking lots—surprisingly, mainly during the daytime. Insurance companies have had no choice but to adapt to this frustrating reality, including by implementing insurance premium increases.
3. An increase in the price of parts and labour
Have you tried to hire a tradesperson lately to replace a part on your vehicle or home? If so, you’ve probably had to add significantly to your repair budget. Here’s why: inflation and a growing labour shortage.
Unfortunately, this has also affected the suppliers who perform claims work for insurance companies. We now pay more to obtain their services. For example, even though the number of claims only rose by 3.4% in 2020, repair work rose by 11.2%. It’s an increase that unfortunately leads to insurance premium increases.
4. Insurance rate hikes
At the start of the pandemic, some insurance companies—including belairdirect—adjusted rates to give customers some breathing room. But with things being largely back to “normal,” as well as all the factors listed above, these rates are being readjusted to reflect today’s new reality.
You may be wondering how this rate increase will affect your premium.
Remember that your insurance premium isn’t random, but rigorously calculated by an actuarial process and a host of other criteria. Take a look at our article on insurance premiums for a quick explanation of how information is used to calculate your car and home insurance.
Have questions about your insurance premium? We have answers. Just get in touch!