Auto insurance rates have been increasing in 2019 across Canada, particularly in Ontario, Alberta and Atlantic Canada. Yet, Alberta residents took the hit the hardest, with the provincial government lifting a 5% cap on insurance rates in early November of this year. This decision left Alberta residents facing high auto insurance premiums, with the potential of the premiums increasing up to 20-30% next year. With the increase in auto insurance rates in Alberta, will Ontario follow suit with more auto insurance increases? Keep reading below to find out!
Rising Insurance Rates
In the first quarter of 2019, 2 large insurers, Esurance and AIG, decided to exit the Ontario insurance market. As a result, Ontarians witnessed an increase of 9.06% in auto insurance rates. Insurers have been battling high loss ratios and paying more money in claims than they are receiving from their premiums. Thus, their departure was due to the pricing caps placed in Ontario, which caused financial pressures for numerous insurance companies. The decrease in competition exacerbated an increase in auto insurance premiums in Ontario.
Insurance premiums continued to increase into the second and third quarters of the year. According to the Financial Services Regulatory Authority of Ontario (FSRA), there was a 1.99% increase in the second quarter and a 2.60% increase in the third quarter of this year. Yet, it’s important to note that the 2.6% increase is an average rate increase and some Ontario drivers received an increase as high as 15.47%. Thus, auto insurance rates in Ontario have been steadily increasing throughout 2019.
Why Are Prices Increasing?
The question on every Canadian’s mind: why are insurance premiums increasing? The FSRA identifies a few causes, one being the rising repair costs for hi-tech and smart vehicles. The FSRA also cited distracted driving as another potential cause for the rise in auto insurance rates in Ontario.
The rise of insurance fraud has also played a key role in the rise of auto insurance rates in Ontario in 2019. Planned collisions and inflated auto repairs have become more common, leading to more financial pressure on insurers. As a result, Ontario drivers have been impacted by the rise in insurance fraud, which has also further exacerbated the insurance premium surge in 2019.
Ontario’s Auto Insurance Reforms
In April of 2019, the Ford government announced a plan, referred to as the “Putting Drivers First” plan. The plan is aiming to tackle the high auto insurance rates in Ontario and could save drivers up to $4 billion a year. The reforms in Ontario’s auto insurance system includes offering more insurance options and improving the claims process.
The reform also aims to increase competition by bringing in more insurance providers into the Ontario market. To further increase competition, the Ford government is offering insurers more flexibility in their pricing options and coverage plans. This means that insurance companies in Ontario will have an opportunity to offer unique coverage options and services to compete with other insurance providers. To further tackle the rising auto insurance rates, the plan is also aiming to put an end to “postal code discrimination”. Insurers will no longer be able to increase insurance premiums based on an individual’s address. To combat insurance fraud, the “Putting Drivers First” plan will implement changes to the medical assessment process of injury claims evaluations.
The Bottom Line
In today’s climate, financial pressures are mounting for Canadians, who are struggling to keep up with the rising auto insurance prices. However, there are ways that you can save on auto insurance! Be sure to read our blog, “How To Save On Auto Insurance”, to help you find ways to decrease your auto premiums. Looking for an auto insurance plan that’s best for you? Our trusted team can help you find the right coverage at the right price! Get in touch with us and we’d be happy to help.