Rush hour traffic travels south on Jarvis St. in Toronto towards the Gardiner Expressway, on Jan 17, 2023.Fred Lum/the Globe and Mail
Drivers may experience larger increases to their insurance premiums in 2024 as record levels of auto theft, persistent inflation and the increasing cost of replacing tech-heavy car parts take a toll.
Daniel Ivans, an insurance expert at Ratesdotca, said the Financial Services Regulatory Authority (FSRA) of Ontario has already approved insurers to increase their rates by up to 25 per cent in some cases for the first quarter of 2024. It’s a steeper increase from 2023 when FSRA approved up to 15 per cent in rate increases.
The latest data from FSRA shows the average Ontario premium in October, 2023, already had hit $1,796, compared to 2019′s annual average of $1,633.
“Rates are now surpassing 2019 levels, as opposed to previous rate increases bringing things to parity,” said Mr. Ivans, referring to large drops in insurance rates during the pandemic when people were driving less.
In Alberta, Ratehub.ca vice-president of insurance Matt Hands said drivers could also see large increases after years of the province mandating that insurers could not increase rates.
Experts say there is little end in sight to larger year-over-year increases in the average cost of auto insurance premiums. While overall inflation is starting to ease after historic highs, Mr. Hands said the most persistent reasons that rates are increasing are record levels of auto theft and the increasing cost of replacing parts that used to be much cheaper. Those factors may prove to be much harder to control.
“It does feel like, at least from my experience, that we’re in an unprecedented time,” Mr. Hands said.
“Replacing a windshield back in the day cost around 300 bucks, but these days windshields have a heads-up display” or other technology that can increase the cost to more than $2,000, he said.
However, Mr. Ivans said consumers in Canada are relatively lucky compared to those in Britain and some jurisdictions of the United States, where rates have risen between 50 per cent to 70 per cent in some cases.
“What we’re seeing in Canada is that it’s catching up to rate increases globally,” said Mr. Ivans, who added that not all consumers will experience rate increases equally, and that some may still see their rates decrease over time.
In other jurisdictions such as British Columbia, consumers will be shielded from rate increases in the short term. The provincial government put a freeze on insurance rates in 2022 until 2025. Insurance Corporation of British Columbia, a Crown corporation, is the only auto insurance provider in B.C.
Meanwhile in Alberta, Mr. Hands said, new legislation from the government will allow only inflationary increases to insurance rates for drivers with a good record (a term that he noted was somewhat ambiguous), while drivers with a bad record could face much higher rate increases above the level of inflation.
In Ontario, FSRA said it is planning to reform how it regulates auto insurance rates and underwriting in the province. It plans to release new guidelines in the coming months.
“This work has begun, but defining fair outcomes for consumers requires rigorous data collection and broad consultation,” said FSRA spokesperson Russ Courtney.
Mr. Ivans said consumers have some power to take matters into their own hands and lower their insurance premiums, such as installing apps that track driving data to determine whether you drive safely and are eligible for discounts. If your vehicle is on a list of models that are at high risk of being stolen, you could also install a steering wheel lock or a TAG anti-theft system.
Some insurers have already started charging up to $500 surcharges for drivers who don’t have TAG systems on their high-risk vehicles.
While most drivers expect their insurance premiums to decrease over time if they maintain a clean record, Mr. Hands said that norm might no longer hold true in some cases.
He said it’s more important for consumers to shop around, even if they are simply renewing their annual policy with their current provider, to ensure they get the best rate.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.