Auto insurance rates continue to rise in Ontario, across Canada
Summer is that time of the year where Canadians, together with their families, travel to explore other parts of the country—even stretching down south into the United States. However, the struggle to provide affordable car insurance rages on as Ontario auto insurance rates rose for the third straight quarter, according to LowestRates.Ca.
The online comparison site, published its Q2 2019 Auto Insurance Price Index, revealing that auto insurance rates rose significantly in multiple Canadian provinces in the second quarter of this year. The alarming report was collated using proprietary data to track the average cost of car insurance in Canada each quarter.
Across Ontario, Alberta, and Atlantic Canada, insurance rates increased with drivers in Alberta witnessing the highest increase at 16.20% in comparison to the same time last year. In Atlantic Canada, the rates grew the lowest at 13.29%, while Ontario had an average auto insurance cost increase of 13.85%.
“Insurance companies across Canada are fighting high loss ratios,” explained Justin Thouin, CEO and co-Founder of LowestRates.ca in a report. “We’ve been hearing from many of our partners that in some areas, they’re paying out more money in claims than they are taking in from premiums. This has led some companies to stop offering new insurance policies, which has led to a drop in competition and higher prices for Canadians.”
The Financial Services Commission of Ontario (FSCO) are responsible for regulating insurance rates in Canada and have attributed the increase in claim values nationwide to a number of factors. The commission noted that lack of concentration while driving and the high cost of fixing modern, tech-rich cars are one of the reasons why the country’s insurance rates are climbing.
Insurance rates in Canada are regulated by the Financial Services Commission of Ontario (FSCO). The commission has attributed the increase in claim values nationwide to several factors, including distracted driving and the high costs associated with fixing modern, tech-heavy cars.
Additionally, some provincial government have placed limits on insurance pricing which has led to high loss ratios across the industry, particularly in Alberta.This has led to the Insurance Brokers Association of Alberta demanding an immediate intervention from the government in attenuating the growing rates, said Thouin.
“Our Alberta price index has now hit record highs for three straight quarters, and the Insurance Brokers Association of Alberta has publicly said that auto insurance in the province is in crisis. They want government intervention to address this unsustainable situation,” he said.
According to analysts, price increases are to be expected in the current weather for a number of reasons. Last year, major insurers including Ensurance and AIG exited Ontario and Alberta, two of the largest markets in Canada, citing increased costs of running their business.
Also, driving has been becoming increasingly expensive for Canadians for quite a number of reasons in previous years. With oil costs increasing in recent years, it has made running a car more expensive and in addition with the rise in insurance costs, driving has become a less likely choice—especially for younger Canadians who already have higher insurance costs than older drivers.
Janine White, vice-president of marketplaces and strategy at Kanetix.ca, said that many Canadian consumers are unaware of howthe automobile insurance market in Canada works.
“There is a common misconception among many consumers that you should go to just one source for all of your insurance,” she said.
There are typically three main channels for customers to purchase an auto-insurance; a broker, an agent or a direct writer, noted White.
“In fact, there are three main channels where consumers can go. One is a broker, who will shop the entire market, an agent who usually represents one company, or a direct writer such as TD insurance or Belair Direct insurance. It can really pay off to shop through all three channels,” she said.
With the increase in auto insurance rates, White notes reviewing your insurance every year is important, due to the little changes to your lifestyle or personal life that can affect your premiums.
According to a survey, it discovered that Canadians are increasingly purchasing their insurance policies online. About 59 per cent of respondents aged 18 to 25 are more likely to change insurers or shop online to save between $50 and $99 in comparison to 18 per cent over the age of 25.
“It's getting a lot easier to buy insurance online,” said White. “Consumers understand more and are taking it into their own hands. In Ontario, a big-ticket item like auto insurance can range from $1,800 to $2,200 or more, so it can pay to spend some time to shop the market.”