It's going to be a bumpy road this year for drivers as auto insurance rates are likely going to increase.
Brace yourself. Auto insurance rates are expected to increase this year, Canada-wide, and this is bad news for Ontario drivers who already pay more for coverage, on average, than any other province. Early reports suggest that premiums will be increasing in the neighbourhood of five per cent; however, the reality is that many Ontario drivers could see an even greater increase as claim costs in Ontario are some of the highest in the country.
To date, Intact, Aviva Canada, Economical Insurance and RSA Canada have all suggested that rate increases are expected to occur in 2018.
What's driving the increase in rates?
Believe it or not, there's not a lot of money being made by insurers from auto insurance. In fact, many insurers in 2017 saw combined ratios that exceeded 100 per cent. What this means is that for every dollar received in premium, more than a dollar was spent to administer and fulfill claim requests. This is why many insurers are looking to not only increase rates in the coming year but may also tighten their underwriting criteria to limit, or minimize, the number of drivers they cover.
From a business perspective, that's the dollars and cents of it all, but what is happening on the streets that's causing this situation? By many accounts, it's not one reason, but several, that together are driving rates higher.