Insurance Companies Disappearing

There seems to be a trend in the last few years for Canadian insurance companies to buy other insurance companies. As a result of a recent acquisition, State Farm policies in Ontario will be renewed using Desjardins rules & prices. Sometimes there will be a short term cap or limit on premium increases. Eventually the cap will be removed as policyholders transition to the normal rates offered by the new insurance company. This could result in a substantial increase in your rates. This may not affect all of their policyholders, but if its your policy it’s important.

Each insurance company offers their own set of discounts. Desjardins has a program called Ajusto which is a telematics device installed in your car which monitors your driving behaviour. If you agree to install this device than you will be entitled to a discount. Not everyone is comfortable with technology that allows their vehicle to be tracked by their insurance company.

Direct writers/direct insurance companies deal directly with the public through their employees or employee agents and do not offer their products through brokers. They only sell for their one insurance company. So if your price goes up drastically after a takeover , you may not be offered any alternatives. But if you are using an insurance broker, when one of their insurance companies is bought by another company that deals with brokers, there are usually more options available for the consumer. Brokers can check rates with other companies they deal with to make sure that the consumer is getting the best value. This is not an option in the case of direct writers.

Another obvious problem with insurance companies buying each other is that competition is decreased. Each time that a company acquires another there is one less option for the consumer. The consumption of insurance companies also changes the landscape of the insurance industry. Other recent Canadian insurance amalgamations include Aviva Canada buying RBC General Insurance Company, and Intact buying AXA Canada.

Even if you consider yourself a great driver you may find that your premium has increased dramatically when your insurance company has been bought up by another company. All companies have different appetites and ideal clients – one may see a certain type of clientele as ideal and offered the best rates whereas another may have a different target market. One company may be very forgiving when you have a speeding ticket and another may increase your premiums by hundreds of dollars.

So the best advice is to review your policy carefully and make sure you are still getting the best value.