Why is the Cost of Insurance Increasing?

Posted on:   November 30, 2018

It is without a doubt that insurance consumers in Canada (across every province) have seen dramatic price increases within the last year. These insurance price increases, have made the headlines in each and every province during this time.

For example;

• British Columbia who has government run insurance and in the first 9 months of operation in 2018 it lost $935,000,000.
• Saskatchewan who has government run insurance had a deficit of over $300,000,0000.
• Ontario. The Ontario Government controls the price increases and decreases for insurance companies in Ontario. Ontario insurance Premiums will be increasing over the next year or two.

In 2017 the Insurance Bureau of Canada compiled the annual cost consumers pay for car insurance. The most expensive province for car insurance is:

British Colombia $1680 followed by Ontario $1445. The cheapest province to buy insurance is Quebec $661.

Why will insurance prices continue to rise in Ontario?

1. Distracted driving – insurance companies are paying a increased amount of claims due to distracted driving. Distracted driving includes people on their cell phones, eating while driving, playing with features of the vehicle eg. radio etc. Across Canada approximately 8 out of 10 accidents are due to distracted driving
2. Collisions are becoming more violent – date collected across North America shows fewer accidents with skid marks leading to where vehicles collided. This suggests braking did not occur until too late. This could be a direct result of drivers being distracted.
3. Cost of claims are rising – the cost for bodily injuries and physical damage to vehicles have been on the increase. Cars are becoming more sophisticated and more expensive to repair due to sensors, cameras and other smart technology.
4. Fraud – Fraud costs in Ontario are estimated at $500,000,000 on an annual basis. $2 billion across Canada. Insurance premiums are inflated due to Fraud. If you know of a consumer committing fraud please call the local police and your provincial Government Insurance contact.

In previous years when insurance prices have increased, provincial governments have come up with band aid solutions. For example in Ontario in 2016 Auto Reform accident benefit coverages were reduced leaving consumers with potential gaps in coverage. Since then, the prices in Ontario have continued to increase but consumers still have the gaps in coverage unless they paid extra for it.

If you are looking to save more on your car insurance in Ontario, give us a call at 1-877-941-2266 today. A licensed broker can help you navigate the potential for savings without jeopardizing car insurance coverages.

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