The Price of Everything heads Skyward and it’s not just the Necessities of Life

It Appears we Must Save the World from Global Warming by paying more for financial services!

Having just received my home insurance renewal policy I noted the monthly premium had jumped 11.6% and I wondered why as It wasn’t due to a claim made by our household? The cover letter stated:

“The increased cost of repairs and increased occurrence of severe weather and natural disasters in Ontario have affected your premium. Due to inflation, the cost of building materials has increased, meaning that the cost to repair and rebuild your home in the event of a claim has increased. Significant weather events such as ice storms, high winds and heavy rainfall, as well as the increase in frequency and severity of natural disasters such as fires and floods have affected the cost of home insurance in Ontario”

Having been in the Province with almost continual lock-downs for the past year, due to the pandemic, I obviously missed all the implied “disasters” and the “occurrence of severe weather” the letter alluded to! The same insurance company owned by the TD Bank also recently renewed our automobile insurance but the rate only increased 3.2% perhaps because they recognized we weren’t allowed to travel except for “essential” goods!  The TD Bank also had sent a notice they increased some banking charges on my account so for any of the services I obtain from them the costs went up but not what they pay in interest for funds I might occasionally have on deposit.

If one had a benevolent thought about the foregoing increases it would be; perhaps the banks and insurance companies have suffered from the lockdowns so these increased costs will ensure they retain their employees while experiencing similar harm as the rest of the population.

But then Thursday May 27, 2021 arrived and the press reported: “Three of Canada’s top lenders reported better-than-expected quarterly profits on Thursday. The three were RBC, CIBC and TD.  While earnings climbed for RBC and CIBC they actually fell for TD. The article noted, at TD, earnings excluding the impact of provisions and taxes fell 16.8 per cent, compared with increases of 14 per cent and 11 per cent at CIBC and RBC respectively. In other words, had the prior provisions for loan losses at TD not resulted in a substantial recovery of $373 million of funds set aside to cover bad loans and those lower taxes, their results would not have been nearly as impressive.

TD “Quarterly Results Presentation” at 36 pages contained lots of information and there on page 9 it stated; “Insurance claims were down 34% YoY (year over year) and down 43% QoQ (quarter over quarter” yet both of our insurance premiums increased.  On page 4 of the presentation describing their “Proven Business Model” they listed six short descriptors and one of them was: “Continued strong Wealth, Insurance and Wholesale earnings”.  So, despite the “strong” earnings from their Insurance business they want more.  That explains why our premiums went up and it had nothing to do with what they tell their customers in the cover letter sent with the policy renewal.

If one ventures into TD’s CEO Bharat Masrani’s remarks about certain achievements it leads to bragging about issues that, in the past, had nothing to do with what one would consider “normal” financial institution management issues. As one example the TD is committed to ESG (environment, social, governance) and Masrani includes references to two reports where his remarks note the recovery from the pandemic: “was a core message of our 2020 ESG and TCFD* (Task Force on Climate–related Financial Disclosures) reports, which we released this quarter.” 

Mr. Masrani went on to say; “I invite you to read them and learn more about what we are doing to build a more inclusive and sustainable future. That includes our approach to achieving the goals of our climate action plan, as the first Canadian bank to set a net-zero target by 2050. We are accelerating our efforts, have mobilized leaders and experts across the bank. And are working closely with clients in multiple sectors to support their transition plans and create positive change.”  Later in his message, Masrani said: “TD Insurance continued to take market share rising to the number three position for home and auto general insurance.” If rates keep rising as ours** did, he shouldn’t count on that continuing!

 So, one has to wonder did TD’s endorsement of ESG along with it’s push to join up with the Michael Bloomberg creation; “Task Force on Climate–related FinancialDisclosures” play a role on TD’s less than stellar performance in the latest Quarter.

From the foregoing one should shutter at the thought that, not only will the increasing “carbon tax” and “clean fuel standards” (imposed by the Justin Trudeau Government) increase our cost of living but beyond that we will be impacted by all other institutions raising their prices for services in a similar fashion to that being exhibited by the TD Bank. 

Higher prices for everything we need in our day to day living are heading skyward!

*TCFD is a Michael Bloomberg creation and our former Governor of the Bank of Canada, Mark Carney is one of the key individuals in its founding and focus.

**Full disclosure! I was a former employee of the TD Bank and own shares in them so speak with a prejudicial bias but am upset at their endorsement of ESG and the TFCD.