Car insurance costs to rise in 2024 thanks to inflation, rampant auto thefts: report
Rates could rise by as much as 25%, says Ratesdotca's insurance expert
Car insurance premiums are expected to keep climbing in 2024, with inflation and rampant auto theft driving the charge, according to a new report.
In its 2024 auto outlook, Ratesdotca noted that Ontario's regulator has already approved rate increases for about two dozen insurance providers in the first quarter of the year.
"We are seeing increases as high as 25 per cent," said Daniel Ivans, Ratesdotca's insurance expert — much faster than usual.
But whether your car insurance is going up or not depends, he says, on "how last year played out for each individual provider."
The average annual premium in the GTA is $2,391, according to the latest figures from the province's insurance regulator. A 25 per cent increase would bump up the average yearly cost by nearly $600.
The Financial Services Regulatory Authority of Ontario (FRSA) says its working to reform insurance rate regulation and underwriting to better protect consumers. A strategy should be made public later this year.
What's driving the increase?
Inflation is partly behind rising rates.
"With interest rates going up, with inflation getting higher, the average claim payout is a lot higher," Ivans said.
"With an increase in the cost of claims, obviously there's a need for more money to fund those claims down the road."
Experts predict inflation could start to cool this year, but that isn't the only factor affecting insurance rates.
The cost of servicing and replacing vehicle parts has gone up as technology itself has advanced, according to Ratesdotca's report, which notes supply chain disruptions have also led some companies to pause production.
Auto theft costing insurers big time
One of the biggest cost drivers, however, is auto theft. Canadian insurers paid out over $1 billion in claims for the first time in 2022, according to the Insurance Bureau of Canada (IBC). GTA claims alone accounted for half of that.
More than 80,000 cars were stolen in Canada last year, per IBC. In Toronto, 12,200 auto thefts were listed in 2023 on Toronto police's major crime indicator dashboard.
Provincewide, claims for stolen vehicles rose 329 per cent between 2018 and 2022, going from $160 million to $700 million. The IBC estimates car thefts cost every Ontario driver about $130 a year.
The province and federal government are spending millions of dollars to crack down on auto thefts, but that's not likely to impact your premiums in the near future.
What can car owners do?
Ivans recommends car owners contact their brokers to see what discounts are available.
Some companies are adding a $500 surcharge to premiums for cars listed as commonly stolen vehicles, he said, but some companies will waive that if the customer installs anti-theft technology in their vehicle.
Insuring multiple vehicles under one company, bundling different types of insurance, like home and auto, and opting to use apps that track drivers and reward safe habits, could save anywhere from 10 to 30 per cent on premiums, Ivans said.
He recommends contacting your provider to learn more.
Ivans cautioned against opting out of Direct Compensation Property Damage coverage though, which is no longer mandatory in Ontario, because in the event of an accident it could mean a big bill. It could also mean a higher premium in the future.
ABOUT THE AUTHOR
