Ratehub.ca's predictions for 2024: Auto insurance edition
As auto insurance premiums continue to rise across Canada, be sure take matters into your own hands and shop the market – compare personalized car insurance quotes with us today.
Jessica Ho
What goes up must come down – unless we’re talking about Canadian auto insurance premiums. Read on to learn more about our predictions for 2024, accompanied by insights from Ratehub.ca’s very own insurance experts.
Key takeaways on auto insurance predictions for 2024
- It doesn't look like auto insurance premiums will be getting much cheaper for Canadians next year. Drivers can expect to pay increased rates due to ongoing market factors, such as stolen vehicle trends, auto insurance fraud, and high claims costs.
- Some Canadian provinces, including Alberta and Ontario, have announced legislative changes in order to combat the ongoing inflation of auto insurance premiums. Certain Alberta drivers will soon qualify for a rate increase cap while Ontario drivers will be given the option to opt out of a currently mandatory coverage (DCPD).
- To prepare for the rise in auto insurance premiums yourself, be sure to shop the market. Insurers quote you differently based on your individualized risk factors, and you won't know which one offers the best rate until you compare them all.
The inflation of auto insurance in 2023
Before diving into auto insurance trends for 2024, let’s take a look back at what happened this year. In our previous article on 2023 insurance predictions, we claimed that auto insurance wouldn’t be immune to the ongoing effects of inflation. And sure enough, rates didn’t get any lower for Canadians – below is a table outlining the rate of inflation for auto insurance premiums in 2023.
Source: All numbers are from the Transportation Consumer Price Index from Statistics Canada – representative of passenger vehicle insurance premium increases from 2023 when compared to data from 2022.
Auto insurance premiums will continue to rise in 2024
While inflation rates have been slowing down in some industries, we aren’t expecting the cost of car insurance to get cheaper for most Canadians in 2024. Looking at industry ongoing trends from the past, here are a few reasons you could see your monthly bill go up in the near future.
Stolen vehicle trends
Équité Association recently released an updated version of their report on Canada’s top 10 stolen vehicles – looking at data from the previous year, the not-for-profit claims that auto theft in the country reached a historical high in 2022. Theft rates in Ontario went up by 48% while Quebec saw an even more alarming increase of 50%. With these numbers in mind, it’s no surprise if stolen vehicle trends continue to persist next year.
Matt Hands, VP of Insurance at Ratehub.ca:
“Increases in comprehensive claims, such as auto theft, each year can negatively affect both insurance companies and drivers, making it overall difficult for consumers to have choices and options for the best rates.”
Some insurance companies have taken matters into their own hands, introducing incentives and penalties to combat the effects of stolen vehicles on the industry. Aviva, for instance, offered free installations for Tag – an anti-theft tracking system – to select customers in Ontario earlier this year. Plus, the insurer introduced a rate reduction of 20% on comprehensive coverage for all vehicles equipped with the device. Drivers of high-risk vehicles living in theft hotspots without the installation, however, were promised an annual surcharge of $500.
Morgan Roberts, Director of RH Insurance:
“We’re expecting more insurance companies to adopt the Tag method as car theft continues to be a big issue in Canada. As fewer vehicles are stolen and more are recovered, Tag devices could potentially help lower insurance premiums in the long run.”
Auto insurance fraud
Vehicle theft isn’t the only crime contributing to the rise in your premium – auto insurance fraud is another ongoing issue, and the negative impact it has on consumers is expected to last. In an earlier report commissioned by the Financial Services Regulatory Authority of Ontario (FSRA), over 40% of respondents from the province were worried they would fall victim to auto insurance fraud.
While fraud can consist of many different acts, some of the more common examples include staged car accidents, inflated repair claims, and insurance agent scams. Consumers should educate themselves and report suspicions to help limit the negative impacts of fraud on the insurance industry.
Matt Hands, VP of Insurance at Ratehub.ca:
“It goes without saying that fraud in the auto insurance industry hurts insurers, first and foremost, as they’re the ones footing the bill. But eventually, this trickles right down to customers – in the form of a rate hike.”
High repair and replacement costs
Another industry trend that continually contributes to the increase in auto insurance premiums is the inflated costs of paying out a claim – specifically, for vehicle repairs and replacements. According to the Transportation Consumer Price Index for the month of October, the cost of passenger vehicle parts, maintenance, and repairs has increased 5.6% from 2023 to 2022. As insurers are the ones to pay out these claims, consumers can, once again, expect a reflection of this in their future auto insurance premiums.
Advancements in car technology also contribute to higher repair and replacement costs, leading to higher insurance premiums. EVs, for one, are undoubtedly growing in popularity. And while electric car insurance isn’t always more expensive, it often can be – claims for these types of vehicles can get expensive quickly as batteries and parts aren’t cheap. Plus, specialized training may be needed to perform the repairs.
Morgan Roberts, Director of RH Insurance:
“As vehicles get more and more expensive to repair and replace due to advanced technology, we may see the impact of this on the insurance industry. On the bright side, they are getting cars fixed quicker now, and inventory is no longer as big of a concern.”
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What will provinces do in 2024 to combat the rise in premiums?
Some provinces have already announced legislation changes for 2024, in hopes of helping consumers with the seemingly never-ending rise in auto insurance premiums. Here are some changes coming to the Alberta auto insurance industry and the Ontario auto insurance industry – two systems that are currently facing some of the highest rates within Canada.
Alberta auto insurance
The Alberta government has announced a cap of 3.7% on rate increases for ‘good drivers’ – this includes specific individuals with limited at-fault accidents and conditions on record. However, the definition of a ‘good driver’ is arguably quite narrow, potentially leaving those who don’t qualify to bear an even bigger financial burden.
Logan Mendenhall, Director of RH Insurance:
“It’s a short-term answer for what is going to be a long-term problem. Yes, many drivers can benefit from the rate cap, but others may be left paying even higher premiums to help balance out the overall risk in the market.”
The province has also proposed giving more power to the Auto Insurance Rate Board (AIRB). If amended, the board would be able to direct insurance companies to return premiums from highly profitable years, back into the hands of policyholders. Along with that, the board would also be able to request a rate filing from an insurer at any time, allowing for reviews and mandates of potential rate decreases if deemed necessary.
Last but not least, Albertans will no longer need to pay their entire premium for the year upfront. While most insurers were already required to provide options for premium payments to their customers this year, this will be permanently adopted in 2024. That way, policyholders will have more flexibility when it comes to budgeting their finances.
Learn more: Alberta’s auto insurance reforms for 2024
Ontario auto insurance
Ontario has taken a different approach in an effort to lower car insurance premiums across the province. Starting January 2024, drivers will be able to add OPCF49 to their policy, opting out of direct compensation for property damage (DCPD) – a key element of Ontario’s no-fault auto insurance system.
If you aren't familiar with direct compensation for property damage, it's exactly what it sounds like – if your car is damaged in an accident, you'll recover the funds for a repair or replacement directly through your own insurer, regardless of fault. It works hand-in-hand with collision insurance (which is already optional in Ontario). If you’re at fault in an accident, collision insurance can cover your property damage claim. But if you’re not at fault, DCPD can step in, even if you never added collision coverage to your policy.
Learn more: What does optional DCPD mean for Ontario drivers?
While the idea behind this is that more choice can lead to lower premiums (for those who choose to opt-out, of course), many experts have warned against leveraging OPCF49 as a means to save money. The form essentially waives all your rights to compensation for the physical damage of your vehicle, including in instances where the accident was of no fault of your own.
Morgan Roberts, Director of RH Insurance:
“We will do everything we can to warn customers of the implications – people may not realize what they’re opting out of, and the savings just aren’t worth it. If you get rear-ended, you’ll be left paying for all the damages on your own.”
What can you do to prepare for the rise in premiums?
Provincial legislation only goes so far. It’s important to take matters into your own hands to ensure you’re combating the ongoing effects of auto insurance inflation. While bundling multiple policies, staying safe on the roads, and seeking loyalty discounts are all great ways to save, one of the best things you can do (if you live in a public auto insurance province) is shopping the market – with Ratehub.ca, you can compare car insurance quotes from top Canadian providers, all in one instance.
Matt Hands, VP of Insurance at Ratehub.ca:
“No two insurance companies will rate you the same – they may all look at similar pricing factors but weigh them differently in their rating calculations. Some insurers will be more willing to offer favourable insurance rates to you than others. So take some time to compare quotes from multiple insurers to ensure you’re getting the best price for your situation.”
The bottom line
We predict that 2024 will be another year of high auto insurance premiums for consumers across the country. From stolen vehicle trends and ongoing industry fraud to the increased costs of paying out a damage claim, it doesn’t look like Canadians will be catching a break anytime soon. And while some provinces have put plans in place to help ease the financial burden that comes with a car insurance policy, only time will tell as to whether these measures will actually bring relief. In the meantime, be sure to do your due diligence and seek out affordable car insurance on your own.