Sonnet explains Nova Scotia auto insurance rate increase
Published: January 11, 2020
Updated: January 15, 2020
Author: Luke Jones
CATEGORY: Car Insurance
Sonnet, the online direct insurance company operated by Economical Insurance, can increase auto insurance premiums by around 50% across its customers in Nova Scotia. The increases arrives following approval this week and Sonnet is now explaining why it needs to raise prices.
According to the company, motorists with less than 20 years’ experience have been undercharged in Nova Scotia. Sonnet wanted the rate increase to correct the situation. In its explanation, the company said it handles more inexperienced drivers compared to parent company, Economical Insurance.
This was confirmed by Roberta Clarke of the Nova Scotia Utility and Review Board (NSURB), who said drivers with under 20 years are overrepresented on Sonnet’s book.
“Sonnet’s competitive analysis shows that the company is underpriced for drivers licensed for 20 years or less, and especially so for drivers licensed less than 10 years. The opposite applies to drivers licensed 21 years or more.”
Sonnet had been using an independent rate filing from Economical but requested to use the same criteria as Economical Insurance. The request was approved by NSURB. Customers will start seeing the increased rates January 23, 2020 for new business and March 1, 2020 for renewing policies.
In August last year, Economical Insurance revealed Sonnet has been a success since it launched three years ago. Indeed, the company pointed out the direct insurer has doubled in size. During the second quarter of 2019, Sonnet saw a 96.3% jump in gross written premiums year-on-year.
“We are getting a broader base of customers. It’s not just millennials,” Rowan Saunders, president and CEO of Ont.-based Economical, said at the time in a statement to Canadian Underwriter. “Clearly, Canadians are resonating with Sonnet, and we have been very focused on scaling the business but doing so profitably.”