By: Luke Jones, Published on January 22, 2018 06:40 AM, Last Update on January 22, 2018 03:42 AM
Despite being the most expensive car insurance market in Canada, Ontario last week announced auto premiums on Ontario rose again last quarter. MSA Research president and CEO Joel Baker suggests increasing auto loss ratios and rising in-car technology are the main contributors to the increased rate.
“The industry is being challenged by elevated auto loss ratio across the country, including Ontario,” Baker told Canadian Underwriter. “While Ontario isn’t the worst behaved jurisdiction, the loss ratio remains too high for comfort.”
Citing MSA Research data, Baker says high loss ratios are chiefly caused by benefits for first party collisions, with a direct loss of 84.4% at 9M 217. Next is physical vehicle damage at 87.8% according to the MSA Q3-2017 quarterly outlook report.
“The myriad of technology and sensors embedded in vehicles these days makes repairs very expensive,” he said, while also pointing out repairs are now more complex, take longer, and are more expensive. Also, the cost of parts has also risen in recent years.
The Financial Services Commission of Ontario (FSCO) announced fourth quarter 2017 auto insurance rates two weeks ago. The regulators announced an average increase of 1.03% across the market, through 17 insurance providers covering around 40% of the market.
In 2013, the provincial government pledged to reduce auto rates by 15% by August 2015. That promise was broken and criticized as a vote grab from the Wynne liberal government. Premier Kathleen Wynne herself later described it as a “stretch goal”. Since the 2013 pledge, the province had worked to reduce rates by close to 10%.
However, incremental rises over the last two years means the average decrease in rates since the pledge sits at a lowly 5.5% and premiums continue to rise.