An unprecedented rise in auto insurance claims could mean a shock for policyholders as the industry mulls over premium rises.
New statistics from Canada’s General Insurance Statistical Agency (GISA) reveal a surge in claims, including the highest level of costs in 14 years for insurers in New Brunswick in 2015 - a 30% increase since 2012, amounting to $304.8m worth of claims.
And while the volume of policyholders’ claims has been rising, premium rates have been squeezed - resulting in a poor year overall for insurers.
Manitoba Public Insurance said it saw a 68% rise in comprehensive (non-collision) claim costs last year, describing the surge as “unprecedented”.
“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.”
And it seems that the rising costs for the industry will be felt by consumers in next year’s premium rates.
“Higher claims costs and a negative financial climate resulted in the Corporation seeking a small overall rate increase for next year,” said Guimond, addressing the insurer’s request to the Public Utilities Board for a 2% increase to Basic Autopac rates for next year.
“Manitoba Public Insurance collects premiums to reflect projected claim costs, and we are addressing the business reality that claims costs are continuing to rise.”
If approved, the increase - which will be only the third overall rate increase in the last 10 years - will result in the average passenger vehicle owner paying about $17 more in premiums.
Amanda Dean, the Insurance Bureau of Canada’s vice-president for the Atlantic region, said it is difficult to predict what the industry will do overall with premiums following the recent rise in claims.
She suggested that last year’s surge may not be an indication of a continuing trend, explaining: “It’s hard to say, 2015 may be an anomaly because of the weather. But certainly time will tell.”
The value of brokers in the fight against junk policies
Canadian car insurance premiums deemed ‘excessively high’ as global stats revealed