How Inflation is Reshaping Business Insurance in Alberta

Rising inflation in Alberta continues to affect all sectors, especially insurance. It pinches consumers’ wallets and changes how businesses protect themselves. The surge in repair and replacement costs is affecting the automotive and construction sectors the most. The rising costs of building materials have a direct influence on property insurance expenses. And so on. 

Hence, inflation directly influences how insurance policies are made, modified, and interpreted by businesses and individuals. As a result, it affects day-to-day business operations as insurance companies face the constant challenge of adjusting insurance coverages, premiums, and payouts to fit the ongoing economic trends. Let’s understand how inflation affects business insurance in Alberta, and how insurers adequately adjust and deal with these changes. 

• Rising premium costs 

As replacement cost for homes, vehicles, and personal items increases, so does the amount insurers need to pay during a claim. These rising costs often lead to higher premiums for policyholders. While this adjustment is necessary, it can lead to client hostility sometimes, especially those who haven’t filed their claims but still see a rise in their costs.

Agencies need to be equipped to handle these situations and explain the need for these changes to their clients. Providing real-life examples and references can support their reasoning.

• Coverage gaps

One of the bigger challenges businesses have faced due to rising inflation has been the widening coverage gaps. Most insurance policies are made initially with a fixed coverage limit, which considers the costs of rebuilding, restocking, and repairing equipment at that moment in time. This rigid structure makes it harder for them to be insured or to cover their actual expenses in case of losses.

Without adequate protection and room for adjustments, businesses might not be able to match their former policies with the existing ones, which can risk them taking money out of their own pockets at the time of need.

• Risk exposure

One of the major ways in which clients can expose themselves to risk is underinsurance. Many assume that updating their policies won’t be needed, as their existing coverage is enough. But they are wrong. If the costs to rebuild an establishment or replace a vehicle rise significantly, their old policy might not be able to offer the same protection as before. 

This is specifically risky in incidents involving fires or major accidents. Insurance companies need to be proactive and help their clients keep pace with inflation and how it impacts their business, and guide them correctly to ensure their coverage is aligned.

To protect themselves, businesses need to take the right measures by adjusting their policies and preparing for future claims if needed. This is how it can be done.

• The first step is to talk to your business insurance broker in Alberta and have them assess your current policy. Accordingly, they can suggest changes to better your policy and protect it from inflation-related risks. You might have to increase your coverage limits or add coverage for specific risks.
• Working with multiple vendors can be a smart move. By associating with multiple suppliers, you can reduce the risk of supply chain disruptions and keep your costs in check.
• You need to always be one step ahead when it comes to policy renewal. Waiting until the last minute exposes you to risks that can highly affect your business operations. Review your policy regularly and seek the right assistance to change or modify it.
• Lastly, proper research helps you stay educated and informed on any policy changes or updates. Be constantly on the lookout for domestic alternatives for materials, so you can smartly avoid the high shipping costs associated with importing goods.

The key is to be on top of your research and take time understanding how inflation is directly affecting your business, to avoid financial shocks at a later stage.

Final thoughts

We have understood that inflation has significantly changed the landscape of commercial insurance in Alberta. But that need not be scary, because with the right support and guidance, you can navigate any change that affects your business.

At A-Kan, we help businesses stay informed, review, update, and optimise their coverage to keep up. Don’t wait until it’s too late. Contact us today to safeguard your insurance policies for a smarter future.