Auto Insurance Rates for the Fourth Quarter of 2018

This notice provides an overview of the private passenger automobile insurance rate changes approved by the Financial Services Commission of Ontario (FSCO) for filings reviewed in the fourth quarter of 2018. The number of filings reviewed by FSCO and the overall average rate change for the Ontario market may vary from quarter to quarter, based on updated information about claims costs, market conditions, financial factors and the resulting impact that these factors have on the adequacy of an insurance company’s current rates.

 

Average Rate Changes

 

Twenty-three insurers, representing approximately 51 per cent of the market based on premium volume, had rates approved in the quarter. Approved rates will increase on average by 3.35 per cent when applied across the total market. Rate changes approved for each insurer this quarter and effective dates of the rate changes are shown in Table 1.

 

This compares to an increase of 2.06 per cent on average for rate changes approved in the third quarter of 2018.

 

Individual Rates

 

The rate change shown for each insurance company is the average for that company, based on all the drivers it insures.

 

However, an individual policyholder may experience a rate change that is either higher or lower than the industry-wide average rate change, or the average rate change for a particular insurer, depending on several factors, such as:

 

  • the vehicle insured;
  • where he or she lives;
  • driving experience;
  • at-fault accident and conviction history of drivers;
  • whether the vehicle is used for pleasure or commuting; and
  • choices made by the policyholder on coverages purchased and deductible or liability limits.

Also, as most policyholders purchase annual policies, any changes approved for the insurer and effective prior to the policy renewal date, or changes in the policyholder’s circumstances since their last renewal (e.g., at-fault accidents, driving convictions), will impact the policyholder’s rate at renewal.

 

Consumers are urged to shop around for auto insurance. Ontario has a very competitive marketplace. Rates for the same coverage vary based on each insurer’s claims costs and the insurer’s rating system.

 

FSCO has several resources to help consumers better understand auto insurance, including an Understanding Rates Interactive Tool and tips on shopping around and saving on auto insurance.

 

FSCO’s Rate Approval Process

 

Insurers must submit proposed changes to their rates to FSCO for approval along with supporting actuarial data.

 

FSCO and its actuaries review this data and insurers’ assumptions regarding claims costs, expenses and investment income to ensure that, as required by law, the proposed rates are:

 

  • just and reasonable;
  • not excessive; and
  • not going to impair a company’s financial solvency.

As a result of FSCO’s review, an insurance company may be required to amend its proposed rates before they are approved.

 

Most premium dollars collected by insurers go towards paying for claims for people injured in car accidents. Insured persons who are injured can make a claim for Accident Benefits (AB), regardless of fault.

 

In some cases, seriously injured parties can also make a claim by launching a lawsuit against the at-fault driver. These claims are paid under the Third Party Liability – Bodily Injury (TPL) coverage of an automobile insurance policy.

 

The AB and TPL coverages accounted for 52.4 per cent of claims costs in 2017, as shown in Graph 1.

 

When an insurance company adjusts its rates for a particular coverage, it means that the company has experienced a change in the claims costs for that coverage. For example, an increase in rates for TPL coverage would indicate that an insurer has experienced a higher number or higher average cost of bodily injury claims. A company must provide claims costs data to FSCO when proposing a rate change for any coverage.

 

It is important to understand the coverages available to consumers under an automobile insurance policy in Ontario. FSCO has a number of consumer-friendly descriptions of these coverages available on its website.

 

FSCO continues to monitor two evolving trends that may be affecting auto insurance rates in Ontario. First, insurance companies are reporting an increase in claims costs for repairing vehicles. Second, FSCO notes the growing concern related to distracted driving. As the number of accidents due to inattentive driving increases, so too do the claims costs. FSCO will continue to monitor any impact these trends have on insurance rates.

 

Table 1

Ontario Private Passenger Automobile

Insurance Rate Filings Approved/Ordered

Filings reviewed October 1, 2018 – December 31, 2018

 

Insurer

2017 Market Share (%)

Effective New Business Date

Effective Renewal Business Date

Approved Average Rate Change (%)

Allstate Insurance Company of Canada

5.57

1-Jan-2019

1-Mar-2019

4.50

Aviva General Insurance Company

5.34

20-Mar-2019

20-Mar-2019

16.80

Aviva Insurance Company of Canada

6.60

1-Feb-2019

1-Feb-2019

8.63

Belair Insurance Company Inc. (2)

5.19

24-Jan-2019

22-Mar-2019

0.00

CAA Insurance Company

1.38

1-Jan-2019

15-Feb-2019

1.65

Certas Direct Insurance Company

2.80

11-Jan-2019

12-Mar-2019

14.57

Coachman Insurance Company

0.46

15-Dec-2018

15-Jan-2019

16.02

COSECO Insurance Company

1.29

1-May-2019

1-Jun-2019

5.03

Economical Mutual Insurance Company (1)

6.29

28-Jan-2019

28-Jan-2019

0.00

Farm Mutual Reinsurance Plan Inc. (on behalf of Ontario Mutuals) (2)

1.75

1-Apr-2019

1-Apr-2019

0.00

Guarantee Company of North America, The

0.60

1-Jan-2019

1-Jan-2019

6.66

Hartford Fire Insurance Company

0.00

1-Jan-2019

1-Apr-2019

34.87

Heartland Farm Mutual Inc.

0.33

1-Feb-2019

1-Feb-2019

6.98

Northbridge General Insurance Company (2)

0.65

15-Dec-2018

15-Jan-2019

0.00

Pafco Insurance Company

0.38

1-Jan-2019

1-Mar-2019

6.00

Pembridge Insurance Company

1.48

1-Jan-2019

1-Mar-2019

7.95

Personal Insurance Company, The

4.08

11-Jan-2019

12-Mar-2019

10.05

S & Y Insurance Company

0.06

20-Mar-2019

20-Mar-2019

9.48

Scottish & York Insurance Co. Limited

1.15

1-Feb-2019

1-Feb-2019

5.84

Sonnet Insurance Company (1)

0.51

28-Jan-2019

28-Jan-2019

0.00

Sonnet Insurance Company

0.51

1-Nov-2018

15-Dec-2018

14.55

Traders General Insurance Company

1.63

1-Feb-2019

1-Feb-2019

8.64

Unifund Assurance Company

2.97

1-Feb-2019

1-Apr-2019

4.04

Zenith Insurance Company

0.44

15-Jan-2019

15-Feb-2019

10.12

Total average market impact based on approved rates and market share

+3.35%

  1. Implementation of Canadian Loss Experience Automobile Rating (CLEAR) update.  CLEAR is the system used by the industry to assign private passenger vehicle rate groups to be used in rating, based on the estimated loss costs of different make, model and model year vehicles.
  2. Rate changes with no overall impact.

Graph 1

Auto Insurance Rates for the Third Quarter of 2018
 

2017 GISA Automobile Statistical Plan AUTO1005

Private Passenger excluding Farmers Actual Loss Ratio Exhibit

 

NOTE: The above numbers may not add up to 100 per cent due to rounding.

 

Accessible Description of Graph 1:  

Accident Benefits 32.9 per cent, Third Party Liability - Bodily Injury 19.5 per cent, Direct Compensation and Property Damage 19.7 per cent, Collision 20.1 per cent, Comprehensive 6.3 per cent, Uninsured Automobile 0.9 per cent, OPCF 44R - Family Protection Coverage 0.7 per cent.


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