July 28, 2021 by Jason Contant
Personal property premiums were a mixed bag in the first quarter of 2021, with insurance for condo owners continuing to rise, but home insurance rates trending down, according to a new report from LowestRates.ca released Tuesday.
Year-over-year, home insurance premiums (other than condo) quoted on the rate comparison site were down 12% in British Columbia, 6% in Alberta and 1% in Ontario, said the Home Insurance Price Index Report for Q1 2021. However, the rising costs of material like lumber, lumber shortages, the demand for renovations as well as more frequent and severe environmental catastrophes could drive rates higher, LowestRates.ca warned.
On the condo side, “there’s no reprieve for condo owners, who face rising rates due to aging infrastructure, increasing deductibles and a lack of competition in the marketplace,” said the report, which tracks hundreds of thousands of insurance rate quotes each year on LowestRates.ca (but doesn’t factor in inflation).
In British Columbia, condo insurance rates quoted on the comparison site jumped a whopping 27% in Q1 2021 compared to the same period last year. In Alberta and Ontario, the increase was 16% and 9%, respectively.
“We’re seeing insurance rates skyrocket nearly 30% year-over-year for some condo owners, but drop double-digits for homeowners like we’re seeing in British Columbia,” said Justin Thouin, co-founder and CEO of LowestRates.ca. “There are competing conditions at-play — regulatory changes and competition are improving, but environmental impact is a real threat to rate premiums.”
The B.C. government announced a number of regulatory changes last year aimed at bring more insurance providers (and therefore more competition) back into the province’s strata market. “But the insurance industry doesn’t move quickly, and tends to work in cycles of 12-18 months,” LowestRates.ca said. “At the end of 2020, the BC Financial Services Authority predicted in a report that ‘it will take time to bring the market back to a healthy state, possibly years.’ Unfortunately for condo owners, there hasn’t been much movement on this front.”
The “good” news is that home insurance rates are down, and the larger number of Canadians working from home due to the COVID-19 pandemic has had an interesting side effect on home insurance: there are fewer opportunities for damage to occur from fire, flooding or theft.
“A lot of losses happen when people aren’t home,” Thouin said. “Fire or water damage happens when people aren’t home, or the damage is more extensive when they aren’t there. There’s fewer of those losses.”
Looking to the future, Thouin said property insurance could continue to see downward pressure on rates. “The question is, how aggressive do [insurers] get with it?”
After riding out a challenging year, the Property and Casualty Insurance Compensation Corporation (PACICC) reported in June that the industry is showing signs of recovery: claims are lower across the P&C industry and investments are up. PACICC said that 87.5% of insurers reported profits in the first quarter of 2021, “the most widespread profitability seen in the P&C insurance industry since 2007.
“And even in a hard market, Alberta and B.C. residents are finding lower home insurance premiums on LowestRates.ca thanks to a broader offering of home insurance carriers on our site,” the rate comparison site said.
Feature image by iStock.com/crazycroat