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Insurance industry defended

Insurance Bureau of Canada rep says increased premiums are tied to increased costs for providers.

FREDERICTON – The recent rise of home insurance premiums isn’t a knee-jerk reaction to a few severe storms, but the inevitable outcome of a long-term trend, says Bill Adams, the Atlantic vice-president of the Insurance Bureau of Canada.
“I don’t think there’s any doubt that a number of New Brunswick homeowners have seen increased premiums over the last couple of years,” he says, but there are many contributing factors.

“Some have characterized this as a cause and effect, that we had successive December storms and now all of a sudden insurance companies are jacking up rates. Nothing could be further from the truth. The insurance industry doesn’t work that quickly.”

Instead, Adams points to the trend of increased claims over a period of several years, which have added to insurance providers’ costs.
“The reality is that extreme weather events are happening with greater frequency right across the globe,” he says, with the massive flooding and storm surges of December only the most recent examples.

“Claims are what drive insurance rates, by and large, and we can’t control Mother Nature.

“If there’s going to be a storm that’s going to overwhelm a certain area and cause water damage, then the likelihood is that you’re going to be in the midst of that.”
While such events can’t be controlled, Adams says it’s important to do what can be, including customers installing back-flow valves to prevent damage from sewer back-ups and to ensure outside water is ushered away from buildings to keep it outside.
He also calls on municipalities to ensure infrastructure, such as sewer and drainage systems, have been upgraded to keep pace with the demands of dramatic weather.
But he agrees the increases, combined with the auto insurance crisis of a decade ago, have affected the public perception of the industry.

“There is a high degree of mistrust by New Brunswickers to the insurance industry and that saddens me, but it is the history and it is what many New Brunswickers feel,” he says.

“We can’t control the weather more than anyone else can. We’re not making this up. In some senses I think our industry is a canary in the coal mine when it comes to the real impacts of extreme weather.”

Last week, Adams met with officials from the Department of Justice and Consumer Affairs, Godin and other interested parties on the topic of rising home insurance costs.
Marie-Claude Blais, the minister of justice and consumer affairs, organized the meeting to discuss possible solutions to the recent trend.

“We want to make industry aware that our intention is to protect New Brunswickers and if there’s cause for concern by the advocate, then it needs to be addressed,” she said after the meeting.

“I think they want to do business in New Brunswick. I think they understand our needs to make sure the market stays affordable and accessible.”

The concerns were initially brought to light in the annual report from Ronald Godin, the consumer advocate for insurance, released earlier this month.

He calls the meeting a “positive first step,” to ensuring home insurance costs don’t get out of control.

“If this is going to get worse, then there is real cause for concern, but as I said, we’re not in a crisis but the way things are lining up, we could be,” he says, urging policy holders to be proactive.

“People only look at their policy after the disaster, after the flood, after the fire. Then they find out they didn’t have sewer back-up insurance. Then they find out they didn’t have snow-collapse protection for their roofs.”

by Greg Weston,
Moncton Times & Transcript
Published Saturday April 23rd, 2011

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