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To: orkrious who wrote (233053)	4/2/2003 8:57:44 PM
From: Giordano Bruno	Respond to of 436258

As insurance costs zoom upwards, small businesses fear for future SANDRA CORDON Canadian Press Wednesday, April 02, 2003 OTTAWA (CP) - Soaring insurance costs, driven by factors from terrorist attacks to rocky financial markets, are reaching levels that threaten the future of some small businesses, a new survey shows. Insurance premiums have jumped by an average 30 per cent in the last year for businesses surveyed and some say they can no longer afford complete coverage, says the Canadian Federation of Independent Business. That's making it very tough for some to operate. "It has a huge potential to have a very negative impact on the economy. . .definitely some business are threatened," CFIB president Catherine Swift said in an interview. In one case, an Ottawa cabinet-maker has been warned his insurance bill of $20,000 last year will jump to at least $60,000 and possibly as high as $85,000 starting in May. And that's with less coverage for the business and its 26 employees than in the past. In another example, a lumber company owner in southwestern New Brunswick has seen his $16,000 insurance bill jump to $32,000. He, too, has opted for less coverage. "Given its significant impact on the Canadian economy, we believe there is great merit in having a public examination. . .of the problem and to focus on potential solutions," Swift said in a letter to cabinet ministers and MPs that's to be made public Thursday. The federation, representing more than 105,000 small- and mid-sized business, is demanding the Commons finance committee hold hearings into the issue. A national survey by the small business group found business insurance costs had jumped an average of 30 per cent, with individual cases ranging from a one per cent increase to as high as 49 per cent. The problems really started last year but it seems to be getting worse, Swift said in an interview. "Last year was a big gulp," she said. "People faced increases typically between 20 and 30 per cent. . .but that's not the end of it. We're getting even more feedback this year," about continuing increases. Similar complaints about rising insurance costs and reduced coverage have been coming from home and auto owners. Larger businesses are also feeling the pinch. Last month Montreal-based Logistec Corp., a bulk cargo handler in eastern Canadian and U.S. ports, said its quarterly and annual profits declined in the face of "a difficult business environment" that included higher insurance costs. Even the Bank of Canada has noted that the higher insurance prices have become a major factor in a climbing cost of living for Canadians. That, in turn, is adding to pressure for higher interest rates to keep a lid on inflation, which hit 4.6 per cent in February. Part of the issue stems from the huge costs faced by insurers following the Sept. 11, 2001 terrorist attacks on the United States. But that only worsened underlying problems arising from higher payouts by insurers for pain and suffering on the auto insurance side. To make matters worse, the global economic downturn that has slammed financial markets has also had an impact as insurance companies generate lower returns - or produce losses - on money invested in the markets. Meanwhile, big global reinsurers - companies that insure insurance providers to spread around the risk - are charging higher premiums or not covering some kinds of business at all. "Rates are absolutely on the increase. . .so it is uncomfortable," said Jane Voll, assistant chief economist with the Insurance Bureau of Canada, which represents property and causualty insurers. And with a continued poor outlook for financial markets, insurers will have to rely on premiums to stay in business. That means the picture won't be brightening soon for insure consumers. © Copyright 2003 The Canadian Press canada.com