Car insurance premiums are on the rise

Some Ontario insurers have received approval for rate hikes as high as 15 per cent

THUNDER BAY — Many drivers can expect to experience sticker shock when their car insurance policies come up for renewal this year.

In Ontario, the Financial Services Regulatory Authority has already approved insurance companies’ applications for rate increases as high 11 to 15 per cent, while others have been granted smaller hikes.

“Insurance rates are going to go up in the near term, because we’ve already seen rate approvals at FSRA come in. An insurer operating in Ontario has to apply to FSRA if they want to raise rates. It will look at the application and say ‘Yes, that makes sense based on your numbers. Your costs have gone up,’ ” explained John Shmuel of rates.ca. 

In interviews with TBnewswatch, Shmuel and a spokesperson for the Insurance Bureau of Canada cited multiple reasons for the rise in premiums.

Some of the recent increases are “the biggest ones I’ve seen in a long time,” said Shmuel, managing editor of the website that allows consumers to compare rates for a variety of financial products.

“If nothing else changes in the next few months, most people who are renewing will probably see an increase from their car insurance company.”

This may come as a surprise to many drivers, as during the COVID-19 pandemic over the past three years, insurers were offering rebates or discounts on existing premiums because people weren’t driving as much and the frequency of collisions declined.

According to the Insurance Bureau of Canada, premiums in Ontario actually fell by an average of 4.5 per cent from July 2021 to July 2022.

“That’s changed in the past six months,” Shmuel said. “We’ve seen traffic come back to pre-pandemic levels and exceed them in some cities, so claims and accidents are going up.”

He said inflation is also working its way through the industry.

“If your car is in an accident and is in the shop needing repairs, the cost to fix it has gone up. The wait time has gone up, which means insurance companies have to give you a rental car for longer. All these costs are putting increased pressure on insurance pricing.”

Anne Marie Thomas, director of consumer and commercial relations with the Insurance Bureau of Canada, said supply chain issues and labour shortages are contributing factors.

“Claims costs are going up and up and up. A bumper that might have cost $1,000 to repair pre-pandemic may now cost $3,000. As claims costs escalate, so may insurance rates,” Thomas said.

She advises drivers to shop around before renewing a policy or taking out a new one.

“Not all companies charge the same rate for your driving profile. One company might have claims losses that are a few million dollars more than another. So their premiums might be a bit higher. The trick is to find the right company offering the lowest rate for your profile.” 

Thomas also said drivers can benefit by bundling their auto insurance with home insurance, letting the insurer know they use winter tires, and by asking about any other available discounts.

“There’s a lot of discounts that your broker or your insurance professional may not know you are eligible for because you haven’t mentioned it to them,” she said, pointing to the example of an alumni group discount for graduates of particular universities.

She added “Buy your insurance like you would shop for a TV set. We seem to spend more time looking for a smart TV than we would for our insurance. And insurance is often the larger purchase.”

Another option for reducing premiums is to increase the deductible, which is the amount a motorist would pay out-of-pocket in the event of an insurance claim.

 

  

 

Related Posts