By: Luke Jones, Published on September 20, 2016 06:25 PM, Last Update on September 21, 2016 08:29 AM
The Canadian car insurance market is likely to see premium rate hikes due to an “unprecedented” rise in auto claims. Customers are being warned that premiums may rise because of this higher frequency, something that will not be taken well by policyholders.
According to data from the General Insurance Statistical Agency (GSIA), there has been a dramatic increase in claims. Indeed, claims are at their highest level in 14 years in New Brunswick and it is a similar story across the nation. Manitoba Public Insurance reports that it had a 68% rise in comprehensive claims last year.
However, insurance companies have been trying to match expectations to keep premiums down. The result has been a poor year for insurance providers. At some point, it will start to push back on consumers with higher premiums.
And while the volume of policyholders’ claims has been rising, premium rates have been squeezed - resulting in a poor year overall for insurers.
“Hail claims were the big driver in this increase, coming in $50 million over our projected forecast,” said Dan Guimond, president and chief executive officer of Manitoba Public Insurance. “Last year’s payout for comprehensive was $125 million, compared to the previous five-year average of $74 million.”
“Higher claims costs and a negative financial climate resulted in the Corporation seeking a small overall rate increase for next year,” said Guimond. Manitoba has requested a 2% increase in premiums and other provinces are following suit with similar requests.
“Manitoba Public Insurance collects premiums to reflect projected claim costs, and we are addressing the business reality that claims costs are continuing to rise.”