Are insurers united on which cars are at high risk for theft?

Auto theft lists are not consistent among insurers, potentially causing consumers to wonder why one auto insurer may view their car as a high-theft risk, while another may not.

Car thefts across the country have skyrocketed, costing the P&C industry an estimated $1 billion in 2022. That’s led insurers to raise premiums and add surcharges to vehicles at high risk of theft. Many insurers have started to offer discounts to or negate surcharges for clients who agree to install anti-theft tagging devices, intended to make it easier to locate stolen vehicles.

For the most part, insurers agree on which cars are most-stolen. But the application of surcharges and discounts will vary, brokers observe. 

“Each carrier has its own [auto theft] list. They are usually very similar, but they also all have high-risk areas that are unique to their company and may include vehicles that have high theft rates in those specific areas,” Cassie Gilroy, retention manager at Mitch Insurance tells Canadian Underwriter.  

“For the most part, they’re following the Top 10 stolen vehicles list,” she says. “There are still some changes, but they are trying to align, I believe, as much as possible while still kind of following the trends that they’re seeing individually.” 

Essentially, a vehicle in a certain postal code might get a surcharge while in another postal code may not, depending on the insurers’ concentration of risk in a given area.  

“Part of that is probably due to their own loss history in those areas,” Gilroy explains. “It could potentially be that they’ve had a higher loss ratio in that area, because they haven’t been rate-adequate.” 

It’s possible for brokers and their clients to benefit from insurers’ unique auto theft lists. For example, brokers can shop clients around and see if other carriers are applying high-theft surcharges, or what their rates would be with or without the surcharge attached. 

“Our value proposition to clients is we provide advice, and we provide choice,” Gilroy says. “If every company — both direct [to consumer] and broker channel — had all the same rules for all the same companies, we lose a lot of our value proposition to our clients.” 

That said, hypothetically, brokers could place clients with a new company that decides to add a new surcharge the following year, leaving clients in the same situation in which they began.  

Brokers can help them navigate this.  

“Price increases are never a fun discussion for brokers and clients. The other thing is that claims volume has increased,” Gilroy says. “On a more frequent basis, we’re shopping for clients who are upset with what their company may have done and the approach they may be taking [to combat auto theft]. 

“[It’s] a double-edged sword; [it’s] a bit more difficult conversation. But it also allows us to show clients what value we provide as a broker.” 

Could insurers with different lists be anti-selected against, meaning they are left holding the bag on insuring auto with high theft rates, while others with different lists shed their unprofitable business? If so, what does that mean for the take-all-comers rule? 

To date, that doesn’t seem to be an issue. The P&C industry’s insurer of last resort, Facility Association, notes it hasn’t seen an increase in business from cars that are at high-risk of theft.  

“The recent rise in auto thefts is certainly an issue that is on FA’s radar as well as the entire industry,” the association told CU. “FA does have some of those vehicles identified on the top-10 list within the FARM book, but we have not seen an unusual increase in the number of those vehicles coming to FA. We will continue to monitor this issue closely.”  

It’s possible one insurer might end up taking more of the highest risk vehicles, but “we haven’t seen it happen yet,” Gilroy observes.  “Even with the surcharge, the company that [clients are] with is still, pricing-wise, the best option for them, which has been a bit surprising for me.” 

Feature image by iStock.com/Stockernumber2