Unprecedented wildfires may drive insurance premium hikes – Desjardins CEO
Unprecedented wildfires may drive insurance premium hikes – Desjardins CEO | Insurance Business Canada
Insurance News
Unprecedented wildfires may drive insurance premium hikes – Desjardins CEO
He expressed concern over escalating costs from catastrophes
Insurance News
By
Mika Pangilinan
This year’s unprecedented wildfire season may lead to insurance premium hikes, according to Desjardins CEO Guy Cormier.
In an interview with the Montreal Gazette, Cormier expressed concern over the escalating costs associated with insuring against catastrophic events. He noted that unusually active forest fires impacting Quebec, Ontario, and the Maritime provinces have “hit all the insurers.”
“Canada doesn’t have 75 insurers,” he said. “There are maybe 15 to 20 insurers, and the risk is spread among these players.”
Despite the escalating threat, Cormier maintained that Desjardins does not plan to emulate US insurers Allstate and State Farm, which recently halted the sale of new homeowners’ insurance policies in wildfire-prone California.
“We’re not in a frame of mind to stop insuring,” Cormier told the Montreal Gazette. “State Farm took a decision in California that was linked to specific issues of legislation, regulations, and risk.”
Persistently high inflation has been blamed for insurers’ rising costs. But the incorporation of new technologies in vehicles has also driven up expenses, according to Cormier.
“With the new technologies, repairing a car today is a lot costlier than it was a few years ago,” he said. A sideview mirror now “has a camera, a defroster and a movement sensor” that costs “as much as 10 times what it cost five or 10 years ago.”
As claims continue to rise, Cormier also warned that Canadian insurers may face stricter conditions imposed by their reinsurers. Further insurance rate increases may come as reinsurers either hike the premiums charged to primary insurers or introduce new conditions that exclude coverage for certain types of risk, he explained.
While the situation remains challenging, the Desjardins CEO said a more probable outcome is an overall increase in premiums rather than a complete cessation of insuring specific properties.
“Are we going to take on these risks completely, or will we stop insuring certain properties? I don’t feel we’re there yet,” he said.
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