The gap between Canada’s wealthy and poor is growing – even if not at the rate some might have expected.
According to a Fraser Institute report, the difference in standards of living is largely the same as it was 40 years ago but the gap in terms of consumption of food, housing and other goods has increased by 3%. The findings appear to contradict wider media reports about a sharply growing gap and economic polarization in the country – but nevertheless indicate that the gap
is growing.
So, how does that reflect on insurance? If the poor are indeed “getting poorer” then insurance could be seen as something they could cast aside in order to save cash.
However, speaking to
Insurance Business, Gavin Brown-Jowett, vice-president of national product, pricing and underwriting at
Economical Insurance, explained that insurers shouldn’t be thinking about wealth gaps.
“From a pricing perspective, our goal is to keep premiums affordable for the majority and stable,” he said. “We do not use wealth indicators to assess if the consumer is wealthy or not. We do cap changes in premiums, particularly in personal lines to between 5% and 10%.
“To keep premiums affordable and stable, it’s a balance between good rate making and the insurance principle of the many paying for the losses of a few. If we don’t apply the insurance principle in our rate making and impose high premiums for some and low premiums for others, insurance ultimately fails.”
His words were backed by Pamela Derksen, vice-president of operations at Economical Insurance who believes there is one key area where customers are potentially missing out on vital cover that is generally affordable.
“One area where there is a misunderstanding is around tenant insurance,” she explained. “Many tenants wrongly believe that their landlord’s property insurance will cover their contents. It won’t. Tenant insurance is cheap, easy to buy and is highly recommended for all renters to cover the contents of their rented accommodation.”
Brown-Jowett explains that the key for insurers and brokers is to help their customers save money without sacrificing their cover – and highlights a number of ways in which this can be done.
“For example, there are three ways a consumer can achieve savings on their personal insurance for their vehicles and homes,” he explains. “Bundling auto and home policies with the same carrier will generate discounts; providing complete information will help the consumer gain access to a carrier’s discounts; and deductibles: the higher the deductible the lower the premium, but this has a negative effect of lowering coverage in the event of an insured peril.”
Related links:
Economical Insurance reinvents brand, rolls out new website
Economical insurance donates $100,000 to youth education program
