Motorists in Canada get a tough deal. Auto insurance rates have spiralled across multiple provinces in recent years and the rapid inflation of rates don’t look like disappearing any time soon.
Claims costs are soaring for a few key reasons. The first is that new tech-heavy cars are becoming more and more expensive to repair. The second is the continued escalation of injury costs. A third significant issue is the global phenomenon of distracted driving, which seems to have extreme poignance in North America.
“I think distracted driving has become the new drunk driving,” said Maurice Tulloch, CEO, Aviva International Insurance. “It’s just as deadly but it hasn’t quite gotten the same negative social ramifications yet. While many drivers are aware of the pitfalls of texting or being distracted by their smartphones, they’re also aware it’s not as yet deemed as socially unacceptable as drunk driving. I believe distracted driving needs to become just as socially unacceptable.”
Alberta and Ontario are two particularly tricky provinces when it comes to auto insurance. Ontario’s exorbitant system is highly vulnerable to fraud and abuse, which “ultimately comes back to bite consumers,” according to Tulloch.
“In Canada, the price of motor insurance in several provinces is nearing $2,000 per year, which is around 5% of the average Canadian household’s disposable income,” Tulloch told Insurance Business. “Politicians have to work for the betterment of their constituents, and if insurance is something that’s placing burden on the family budget, then that’s something that needs to be fixed. At Aviva Canada, we want to work with the government to get the right outcome for consumers.
“We’ve been saying for a few years that we think Canadian consumers are paying too much for auto insurance. When close to half of the indemnity payments are going into report writing and admin fees as opposed to claimant treatment, then you know there’s a problem with the system. We would rather see that money going to the claimant and their wellbeing.”
To fix this problem, Aviva Canada has taken a leaf out of its UK sister company’s book and is focusing all future efforts on the consumer. The UK has struggled with similar auto insurance inflation problems in recent years, largely fueled by whiplash claims and poor affordability.
Aviva in the UK ran a simple auto insurance slogan of ‘Care not Cash,’ which highlighted the insurer’s intent to prioritize claimant care over processing a quick check without organizing appropriate care. The ‘quick check – little care’ approach “has the unfortunate side-effect of creating an environment where insurance fraud can become more prevalent,” Tulloch explained. “At Aviva Canada, we’re focusing all our efforts on finding a win for our consumers.”