The Rural Voice, 2002-06, Page 66BRUCE
Email: brace@ofa.on.ca
website: www.ofa.on.ca/bruce
County Federation of Agriculture NEWSLETTER
446 10th St., Hanover, Ontario N4N 1P9
519-364-3050 or 1-800-275-9551
• The Rural Voice is provided to Bruce
County Farmers by the BCFA.
The changing insurance marketplace
By Bruce McDonald
Excerpts reprinted with
permission from his newsletter
Staying in Touch
The views presented are not
necessarily the views of the Bruce
County Federation of Agriculture
and are offered as information only.
Most consumers will be seeing
noticeable premium increases
compared to last year. We feel it's
important that you understand why
this is happening.
First, insurance companies have
two major sources of revenue. They
receive money from the premiums
you pay and they earn investment
income on that money. Through the
'80s and early '90s, investment
returns were high, allowing insurers
to place less emphasis on premiums.
Over the last few years, investment
revenues have declined dramatically.
As a result, premiums must now rise
to ensure the viability of the
insurance market.
Second, the insurance industry's
revenue shortfall has been magnified
by increased claim costs. Both the
number of claims and their dollar
value.have risen faster than the
industry anticipated.
Even before the September 11th
tragedy, premiums were in the
process of being increased.
At times like these, it is important
to understand the principle of
insurance. Namely, the premiums of
many pay for the losses of a few. It's
unfortunate that even people who
have not made any claims will see
their premiums rise.
Although the insurance industry is
made up of many large companies,
individually they actually operate
much like you and me. They buy
insurance to protect themselves from
large losses. They calculate how
much they can afford to lose on one
accident or one occurrence and then
purchase additional insurance to
cover losses above those amounts.
This is called "reinsurance".
The September 1 lth tragedy
62 THE RURAL VOICE
affected all who insured the World
Trade Center and the buildings
around it. The losses were larger than
insurers had ever expected and
reinsurers were forced to pay huge
sums of money. For the resinsurers,
this loss was far beyond their worst
expectations.. We are aware of one
insurer whose direct loss from the
September 11th disaster is over $900
million and of this, a staggering $730
million was paid by its reinsurers.
There are far fewer reinsurers in
the world than insurance companies.
The losses of September 1 lth took
away one third of their available
capital. It is expected that a number
of small reinsurers will have
difficulty staying in business. What
this means is there will be fewer
sellers of reinsurance — with less
resources — to reinsure a world that
wants the same insurance as before.
So how does this affect you?
Insurance rates will go up!
Insurance companies are seeing
dramatic increases. in their cost of
reinsurance. The combination of
previous poor experience, the drop in
investment income and the disaster of
September 11 that reduced surpluses
in the reinsurance market, will force
many insurance companies to
implement changes. These could
include premium increases of 15 to
20 per cent or more, increased
deductibles and reduced or excluded
coverage for terrorism.
To sustain their financial stability
and deliver on the promise of
insurancie, that is, many paying for
the losses. of a few — increases are
necessary. Insurers do not foresee a
major catastrophe in 2002, however,
BRUCE COUNTY FEDERATION OF
AGRICULTURE
DIRECTORS' MEETING
MONDAY, JUNE 24, 2002
8:00 P, M.
Sprucedale Agromart
R.R. #2, Walkerton
25th sideroad Brant (north off of former
Hwy.#4 - east of Walkerton)
MEMBERS ARE WELCOME TO ATTEND
the surplus must be re -built while
regular claims continue to increase.
How to lower your property
insurance
There are numerous discounts
available from insurance companies.
Some are automatically applied to
your policy, while others are not.
Examine your policy to see if you
presently receive any discounts. If
you don't, ask what special offers
may be available to you. Claims Free
discount: Generally allowed if you
have had no claim in the past three
years. New Home Discount:
Generally allowed for homes between
0 and 10 years of age. Some may go
as high as 15 years. Non -Smokers
Discount: All residents must be non-
smokers. Mature Property Owner:
The qualifying age varies with
different companies. Alarm Discount:
Generally allowed for local or
centrally monitored systems.
Mortgage Free Discount: You may
receive a discount if you have no
mortgage on your home. Loyalty
Discount: Many companies
automatically include a discount if
you have been insured with the same
company for a period of three to five
years. Package Discount: If you
insurance your automobiles and home
with the same company, you may
qualify for a discount on one or both
policies.0
— Submitted by Bob Bregman
AGRICULTURAL
ENVIRONMENTAL
STEWARDSHIP
INITIATIVE (AESI)
Funding assistance to farmers in
the sub -watersheds of: 1)
Deer/Pearl Creek; 2) Otter
Creek in the Municipality of
South Bruce; 3) Areas of the
Teeswater River that include Alps
Creek, Kinlough Creek, Formosa
Creek, and Greenock Creek.
Contact:
Tony Morris Co-ordinator
519-367-2136 or 1-866-466-8729