RATESDOTCA’s 2024 outlook for the auto insurance industry has revealed how the market is expected to fare following approved rate increases as well as the implementation of legislative reforms to prevent car theft.
The Financial Services Regulatory Authority of Canada (FSRA) had notably approved rate increases for auto insurance companies to keep up with inflation as well as the conditions of the market. This is set to take effect this year.
With the rate freeze implemented at the beginning of 2023, Alberta has introduced a plan that will cap rates at 3.7% for good drivers, which will follow the inflation rate and restrict further premium increases. However, the payouts of high claims while the caps on rates continue may lead to fewer insurers in the market and fewer options for consumers.
Meanwhile, the Canadian Federation of Independent Business (CFIB) and the Insurance Bureau of Canada (IBC) have called on the provincial government to remove the additional 4% tax on the annual driver insurance policies.
Ontario has allowed consumers to opt out of the Direct Compensation- Property Damage (DCPD) coverage, which was previously mandatory. This means that drivers who will be involved in a collision that was not caused by them will no longer be able to be reimbursed for vehicle repairs, loss of a vehicle or its contents, or a replacement vehicle.
The continued prevalence of auto theft instances has now made it a national crisis, and approaches are being made to resolve it.
The Ontario government has added $18 million to help police services prevent auto theft. This was in addition to the $51 million pledged last May 2023.
With comprehensive insurance premiums for stolen vehicles increasing between 25% and 50% in the last two years following the increase in thefts, Ontarians were estimated to pay more than $1.9 billion to cover auto theft costs, according to IBC.
Insurance companies have introduced a $500 surcharge on vehicles at high risk of theft. This can be removed only if a consumer has installed an anti-theft device on their vehicle.
Auto insurance premiums were also set to continue being affected by supply chain disruptions, causing vehicle part shortages and repair delays. High repair and maintenance costs and complex repairs for newer car models will also impact consumers.
If inflation eases within the year, auto insurance premiums may decrease and allow insurers to regain some of their physical damage losses, according to RATESDOTCA, a rate comparison site for financial products.
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