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Why Are Ontario Car Insurance Rates Going Up?
February 06, 2018
You may have heard in the news that Ontario car insurance rates are going up again, and like most people you probably let out a groan and thought for a brief second “Do I really need my car?” The good news is that this rate increase is actually a good thing.
The Ontario car insurance market has never been more competitive. This means companies are fighting for your business and shopping around could save you money, better yet; having a broker shop for you can save you time and money.
So what drives rates up?
After three to four years of price stability, there are two trends that have been driving up rates in the last quarter. Technology and increase accident benefits claims are the two biggest reasons for rate increases.
Now, more than ever before cars are filled with technology. These high-tech cars are simply more expensive to repair. For example, a side view mirror used to be just that, a mirror that let you see what was in your blind spot. Now, many cars come with new technology. This can heat up to de-ice the mirror, assist in lane changes, back-up cameras and sensors. What used to be a small crack and quick mirror replacement is now an expensive repair of what are essentially computer parts. These high-tech cars are simply more expensive to repair so insurance companies have increased rates to compensate.
The second reason is the cost of accident benefits claims payments. In Ontario, 34.2 percent of what Ontarians pay in car insurance costs goes to paying out claims under the accident benefits coverage of an Ontario car insurance policy. This is a huge expense and again the insurance companies raise rates to compensate.
Can insurance companies really just raise the rates?
No. For an insurance company to increase or decrease their rates they must apply to the provincial government’s governing body for financial services. Their proposal must include financial results indicating and validating the need for increases or decrease.
The Financial Services Commission of Ontario (FSCO) must review the proposal, and refuse, accept or adjust the proposal. It is the FSCO’s job to balance the financial security of the company and ensuring that customers are paying a fair price for their coverage.
In the final two quarters of 2017, 32 insurance companies requested rate hikes and decreases in Ontario. These 32 companies represent over 50% of the market and include companies like Allstate (+3%), Gore Mutual (+9%), Unica (+6%) and Chubb (+5%). This doesn’t necessarily mean your rates will personally go up. The overall market average is an increase of 1.3%.
How can you take advantage of the competitive market?
First, you should speak to your broker and make sure they are monitoring your coverage and price. Your broker should review your car insurance policy annually since rate changes are made quarterly. Your broker can make sure that your coverage matches your lifestyle and your budget.
When there is pricing fluctuation in the marketing it’s a great time to shop around for savings. Not all insurance companies require rate increases, by shopping around you can find a company that has not asked for an increase or not yet received one.
Our team at Navigators can help combine market awareness with the volatility we are seeing now to ensure that you are getting the best value for your dollar. With so many options to consider, get a quote with us today to find out if we can save you money. Give us a call, or request a quote online today.
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