Drivers across the country can expect to see higher auto insurance premiums come renewal time. Early reports indicate that auto insurance rates are anticipated to increase by an average of 10-20% in 2018 and 2019.
This will come as a shock by many who have enjoyed stable rates with minimal increases since the early 2000’s
Numerous insurance companies thus far, including Aviva Canada, RSA , Intact , Economical Insurance, The Insurance Company of PEI and Northbridge Insurance have all indicated they will be increasing, or are looking to increase, their rates this year.
The cost of claims is greater than the premiums coming in
With combined ratios often exceeding 100 per cent, many insurance companies are reporting that essentially, they are paying out more to administer auto insurance claims than drivers are paying in premiums.
Drivers are right to ask how this can be; when despite provincial vows to lower premiums in provinces such as Ontario, many drivers have not received these benefits. There are numerous factors, however, that are driving rates up.
“As an industry we have been trying to hold back on price increases, but there comes a point where so much pressure builds up in the system that you have to respond,” said Martin Thompson, president and CEO of RSA Canada and reported by Canadian Underwriter.
With the response being higher rates, what exactly is going on? Almost uniformly, the answer lies in the following three reasons:
1. Increasing Cost of Repair
All the new car technology that is available is great however; the cost to repair or replace them is increasing despite the prospect of fewer claims. Sensors and cameras to support car safety technologies like Blind Spot Monitoring, Rear Cross Traffic Alert, Forward Collision Warning Systems, back-up cameras, and Adaptive Cruise Control are typically located in these areas that are susceptible to damage. Even a minor fender bender can result in tens of thousands of dollars in repairs due to the expensive technology incorporated in new vehicles.
2. Distracted Driving
Distracted driving is also said to have contributed to an increase in claims and growing payouts, despite the many deterrents in place to encourage drivers to remain focused when behind the wheel.
The industry is seeing an increase in the frequency of collisions which are attributed in large part to distracted driving.
3. Auto Insurance Fraud
Then there’s the issue of car insurance fraud. Reports indicate that auto insurance fraud costs Canadians a conservative $2 billion annually.
“Auto insurance fraud is an organized big business, largely unknown to consumers, that siphons resources away from our health care system, ties up our emergency services and courts, and drives up insurance costs,” said Dan Service, National Director of Investigative Services at the IBC.
How can you combat the hike and reduce your Insurance rates?
As a driver, there are many things you can do to save money on your auto insurance, despite the prospect of a rate hike.
• Go for discounts
Discounts are a great way to lower your auto insurance rate, and every insurer offers them. Ask yours for a list of their discounts as there may be opportunities to save money that you didn’t know existed, or that they didn’t know to offer you. A quick chat with your insurer can help ensure you’re getting all the discounts your eligible to receive.
Would you be willing to bundle your auto and home insurance policies? Bundling your policies with the same insurer usually results in discounts of up to 20 per cent.
Are you affiliated with a school, organization or employer who offers a group insurance program? With member discounts available through, your premiums could be even lower with the benefits offered through a group insurance policy.
• Usage Based Insurance
Usage based Insurance Programs are offered by some insurers and monitor your driving habits through a device in your vehicle or an app on your Smartphone. Many programs offer a 5% discount for just for signing up, with additional savings of up to 25 per cent for drivers with good driving practices.
• Review your Policy and Deductibles
Set aside a few moments to review your policy, there could be coverages you may not need as your vehicle ages, perhaps your commute and usage of your vehicle has changed, maybe you have not updated your deductibles- the higher the deductible the lower the premium!