Canada sees nationwide auto insurance premium increase

Published: April 29, 2019

Updated: May 1, 2019

Author: Luke Jones

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If your auto insurance policy has increased, then at least you’re not alone as there is a trend of rising premiums across Canada. Just why this is happening across provinces is varied and specific to each region, but for the average motorist it means paying more money.

J.D. Power’s 2019 Canada Auto Insurance Satisfaction Study shows the average premium increase across the country is $298. Alberta has seen the highest rise in auto insurance rates at $326, with Ontario coming second with $311. Atlantic Canada is next with a rate increase of $286, followed by Quebec at $213.

What does this do for Canadians’ opinion on auto insurance companies? Well, it’s not good as customers are becoming increasingly dissatisfied with their providers. 40 percent of customers who participated in the study said they received an increase in their auto insurance premium, despite making no claims or changes to their policies.

“What we found is that price, while it’s always been a part of our surveying process, really was called out by customers this year as having a major influence on their overall satisfaction,” said Tom Super, Director of the Insurance Practice at J.D. Power, who led the study. “We’re finding that customer satisfaction related to price is being impacted by two major factors. One is the frequency of rate actions. Every time you open up your bill, you find that your rate has gone up once again. The second is the severity of the increase taken.”

“There’s a level of frustration that basically says, I’m a good customer, I’ve been loyal to you, and you’re still getting me with increases in my premium. They don’t understand really why.”

Insurance industry representative, the Insurance Bureau of Canada (IBC), there are varying factors contributing to the national premium increase.

“As we all know, claims drive premiums,” says Amanda Dean, Vice-president of the Atlantic region for IBC. “It’s really to be expected that we would be seeing some pressure with premiums since we’re seeing some pressure on the claim side.”

Alberta saw the biggest increase in premiums. Celyeste Power, Vice-president of the Western Region, doubled down on IBC’s position on a mandated premium rate cap of 5%.

“It’s making a very unsustainable situation for the insurers. They’re operating at a combined loss ratio of 130 percent. That means for every $1.00 they take in, they’re paying out $1.30. It’s starting to make it difficult for consumers, and that will continue to just worsen, unfortunately.”

In Ontario, Pete Karageorgos, Director of Consumer Industry Relations for IBC, says the province’s broken auto insurance system is to blame. Specifically, insurance companies are losing money in Ontario. He also defended the private insurance market against comparisons with public insurance provinces.

“British Columbia has the most expensive car insurance across Canada, and they’re a government-owned insurance system there,” says Karageorgos. “Despite the fact that we have challenges in provinces that have private insurers operating, even those government-run insurance provinces are seeing similar types of trends.”