FAQs

insurance-faqsWe’ve got the answers!

  1. How does my auto policy change effective September 1, 2010?
  2. Why do car insurance premiums go up?
  3. Do premiums ever go down?
  4. How do insurers decide what the premiums will be?
  5. Can insurance companies set whatever price they like?
  6. How will I know that Im getting the best price?
  7. Why do insurance companies invest premiums? Don’t they need them to pay claims?
  8. How does reinsurance affect premiums?
  9. Are insurance companies in danger of going under?
  10. Do I have any choice when buying insurance?
  11. How do I contact a privacy officer?
  1. How does my auto policy change effective September 1, 2010?

    CALL US @ 519-579-3330.

  2. Why do car insurance premiums go up?

    Premiums change in response to a number of factors including alterations in your personal driving situation or in response to cost pressures experienced by insurance companies.

    Other cost pressures affecting insurers include:

      • Decreasing return on investments. Investing premiums, until recently, helped insurance companies make a modest profit in times when they lose money by paying out more in claims than they collect in premiums.
      • High tax burden. The home, car and business insurance industry is the most heavily taxed industry in Canada’s financial services sector. The industry’s tax bill is more than 3 times that of Canada’s other financial services.
      • High cost of insurance fraud. The Canadian Coalition Against Insurance Fraud found that more than one quarter of all personal injury claims contain elements of fraud — costing the industry $500 million per year.
    • Cost of repairing cars. In the past 10 years, the cost of repairing cars has risen almost 8% while the cost of replacing vehicles damaged in car accidents is up by more than 30%.
  3. Do premiums ever go down?

    Yes. The insurance industry is highly competitive, so when costs go down premiums may also go down in an effort to attract new business.

  4. How do insurers decide what the premiums will be?

    Many factors are involved in calculating insurance premiums. Each insurance company takes into account the number of policyholders it expects to have, how many claims it expects will be filed in the year and the projected cost of those claims such as the costs of repairing vehicles, health care, rehabilitation and replacing salaries of those who are injured in collisions and therefore unable to work. Anticipated investment income is also taken into account.

  5. Can insurance companies set whatever price they like?

    No. In Ontario, an insurance company wishing to change premiums must file that change with the provincial insurance rate regulator. It’s the job of that government body to review the reasons for the change, consider a number of different factors and decide whether the rate change is appropriate.

  6. How Will I know that I’m Getting the Best Price?

    Your Lackner McLennan Insurance Professional is here to ensure you get the best value in insurance coverage. Many times we will recommend the lowest priced insurance product. Other times, based on your specific needs and level of risk we may recommend a combination of coverages that cost a little more, but offer far greater protection and peace of mind.

  7. Why do insurance companies invest premiums? Don’t they need them to pay claims?

    Insurance companies generate income by investing premiums. Recently, premiums alone have been insufficient to cover claims and related operating expenses. Investment income has enabled the industry to make up for the shortfall in premiums and to earn an overall net profit.

    However, with the downturn in the financial markets and the lower return on investments, this approach is not sustainable unless supplemented by increases in premiums.

  8. How does reinsurance affect premiums?

    In recent years, reinsurers have been helping insurance companies to pay the claims that resulted from several major natural disasters, including the 1998 ice storm. Reinsurers are generally international organizations that spread their risk by insuring “primary” insurers in several countries and in many regions around the world. Insurance companies pay premiums to reinsurers to have a proportion of their claims paid for them, particularly in the event of a major loss or catastrophe. As a consequence of these events, insurance companies have to pay higher prices for reinsurance.

  9. Are insurance companies in danger of going under?

    No. The industry is strong and competitive. Still, in the unlikely event that a company did fail, the Property and Casualty Insurance Compensation Corporation (PACICC) would step in. Formed in 1988, it provides a means for the industry to offer a reasonable level of recovery for policyholders and claimants under most policies issued by the general insurance companies in Canada.

  10. Do I have any choice when buying insurance?

    Canada’s private insurance industry is highly competitive. Each company offers a different approach while providing the automobile insurance policy required by government. You might find a different “claim forgiveness” approach from company to company or extra services such as roadside assistance. There also may be different discounts for several vehicles on the same policy, safety features, and anti-theft deterrents. Your Lackner McLennan Insurance professional will review the products and rates of several companies before presenting the alternatives to you along with their recommendation. As to which option you select the choice is always yours.

  11. How do I contact a privacy officer?

    We are conforming to PEPIDA – if you wish to contact our privacy officer, address enquiries to:

    Privacy Officer, Lackner McLennan Insurance
    423 King Street North
    Waterloo ON
    N2J 2Z5

    Or email at privacyofficer@lmicanada.com