Get ready to pay more as auto insurance rates are expected to increase right across Canada this year. Earlier in the year FSCO reported that rates could increase by 5% on average, however the reality is that Ontario drivers could see an even greater increase as the claims costs in Ontario are some of the highest in the country.
What is causing the rates to go up?
Whether you believe it or not, there is not a lot of money being made by insurance companies on auto insurance. In 2017 many insurers paid out more in claims than they collected in premium. So for every dollar they received they had to pay out more than a dollar to administer and pay out claim requests. Because of this many insurance companies have had to not only request rate increases but have also had to remove or lower discounts and tighten their underwriting rules in order to limit, or minimize, the number of drivers they cover.
So what has caused this increase in claims costs for insurance companies? It looks like it has a few causes:
Fraud: Fraud is a big reason for increased insurance costs. The Insurance Bureau of Canada estimates that each driver in Ontario pays $236 in premium towards paying claims that end up being fraudulent. Whether from fees for heath services never received, towing charges that never happened, to repairs that were inflated or never took place, insurance fraud is all too common. This fraud is a big business in and of itself, which is why earlier this year the province introduced the Serious Fraud Office which would actively investigate and go after those involved in insurance fraud.
New technology is expensive to repair: New auto technology is great, until it needs to be fixed. Bumpers are no longer simply bumpers and your side view mirrors are more than mirrors which means that the cost to repair or replace them is increasing. Sensors and cameras which assist with safety systems like Blind Spot Monitoring, Rear Cross Traffic Alert, Forward Collision Warning Systems, back-up cameras, adaptive cruise control, and even automatic emergency braking are typically located in areas that are susceptible to damage. Even a minor fender bender can result is tens of thousands of dollars in repairs due to all these expensive technologies.
Distracted Driving: Even with all the latest safety technology, accidents are still going to happen when the driver is distracted. The frequency of collisions is increasing and some blame distracted driving. Reports show that distracted driving is now the number one risk on Canadian roads contributing to 8 out of 10 collisions.
While you are likely to see increases in your auto rates this year there are a few things you can do. The most important of these is to talk to your broker; give Absolute Insurance Brokers a call to review your policy or get a quote. We will make sure that you are getting all available discounts and that the company you are with is giving you the best possible price.
