What’s in store when it’s time to renew your auto insurance policy.
Ask drivers how much they pay for their Ontario auto insurance and they’ll likely tell you “too much”. These are costs that always seem to be inching higher. But can you expect more of the same? Maybe, if the last few years are any indication. How long has it been since the price dropped, and even then only a little.
Two Full Years of Ontario Car Insurance Rate Increases
In Ontario, every insurance company must have auto insurance rate changes approved by the Ontario Financial Services Regulatory Authority (FSRA) and quarterly, the FSRA issues these rate changes. The last time, in October 2019, it was reported that 26 insurance companies representing 81% of the market (by premium volume) had agreed to rate changes achieving an average increase of 2.6%. In the previous quarter the results were almost the same, only this time 18 insurance companies were given the green light to increase their rates by an average of 1.99%.
The story hasn’t changed much over the last few years. You’ll have to go back to Q3 2017 for any signs of a downturn, but really it’s more about rates maintaining the status quo. By that time, 15 insurers representing about a third of the market had agreed to a 0.1% rate reduction on average. Not much to get excited about, really.
Highlights of Approved Ontario Car Insurance Rate Changes since 2014
For nearly five full years, approved rate changes have mostly increased, a little here and there every quarter with a few exceptions. Overall, it adds up over the years.
What Drives Ontario Car Insurance Rates to Increase?
It’s complicated, but basically the financial statements of many insurance companies show that, in essence, they are paying more for car insurance claims than drivers paying premiums. The response to this situation is of a higher level, but what is really going on? Most say that for the following three reasons:
- Increased Repair Costs
Bumpers are no longer just bumpers and your mirrors are more than mirrors, which means the cost of repairing or replacing them increases even though the prospects for claims are less. Sensors and cameras to support car safety technology are usually located in these places and, as a result, are susceptible to damage. Even a small fender dent can fetch tens of thousands of dollars in repairs because of the expensive technology incorporated in a new vehicle.
- Driving with Distraction
Despite the safety technology in new cars nowadays, the frequency of collisions has not decreased as expected and some blame driver distraction. Audible or visual warnings are ineffective if the driver is too distracted to heed the warning in time to minimize damage; they brake too late to reduce their speed on impact.
- Car Insurance Scams
Then there is the issue of auto insurance fraud. Reports show that auto insurance fraud costs Canadians $2 billion a year. The Canadian Bureau of Insurance (IBC) estimates the special Ontario driver fraud costs $236 each in premiums.
“Auto insurance fraud is big organized business, largely unknown to consumers, that siphons resources from our health care system, ties up our emergency services and courts, and drives up insurance costs,” said Dan Servis, National Director of Investigative Services at IBC.
To combat Ontario’s high auto insurance rates, part of the province’s relatively new Serious Fraud Office mandate includes investigating and pursuing those involved in auto insurance fraud. The initiative was officially launched in the summer of 2019.
How to Fight Rise and Reduce Your Car Insurance Rates
As a driver, there are many things you can do to save money on your auto insurance, despite the prospect of increased rates.
- Compare quotes—We list these first because they are the easiest way to save. Compare auto insurance rates from over 30 trusted Canadian providers in one step using InsuranceHotline.com. Last year, drivers saved an average of $427 off their auto insurance premiums after comparing auto insurance deals with ours.
- Get discounts—Discounts are a great way to lower your auto insurance rates, and every insurance company offers them. Ask for their list of discounts as there may be discounts you don’t know about, or your provider doesn’t know to offer, which can help you save money. For example, does your provider know you have winter tires or are on a roadside assistance program? A quick chat with your insurance company can help ensure you get all the discounts you’re entitled to.
- Consider Usage-Based Insurance—If you are willing to install a UBI device in your vehicle, you can save up to 25% on your premium.
With possibly higher insurance rates on the horizon, make sure you compare offers with InsuranceHotline.com. Avoid those pesky hikes and find out how much you can save when you lock in your auto insurance rates for the year.
