Auto insurance rates dropping in Ontario, but increasing in Alberta: LowestRates.ca

A newly launched Auto Insurance Price Index from comparison site LowestRates.ca has found that auto insurance rates are dropping in Ontario, but rising in Alberta.

Released on Monday, the index report tracks the average cost of consumer auto insurance on a quarterly basis using proprietary data from “the hundreds of thousands of Canadians who get quotes from LowestRates.ca, where consumers come to compare rates and make the best possible decision on their car insurance,” the company said in a press release. The report found that the cost of premiums in Ontario fell an average of 11% in the third quarter of 2017 ending Sept. 30 versus the prior year, while they were up 3.9% in Alberta.

According to the report, the average quarterly premium in Ontario was $1,458. By comparison, the average for all other provinces and territories in Canada is $930. This makes Ontario’s average price 44% higher than the rest of Canada, the report said, quoting David Marshall’s Fair Benefits, Fairly Delivered report. “The good news is there has been a downtrend based on quotes on our website in the past few quarters,” the report said. “Auto insurance premiums fell 5.8% in the third quarter compared with the second quarter of 2017, and are down 11.0% year-over-year.”

In Alberta, auto insurance rates have risen in the most recent quarter, up 3.9% from Q3 2016. The average premium in the province is $1,179, making Alberta, on average, 23.6% more expensive for car insurance than the Canadian average. As well, in the third quarter, the average Albertan paid 1.7% more for car insurance than they did in the second quarter of 2017, the report noted.

“It’s simply a reflection of what insurers are willing to charge, based on the factors that affect their pricing,” such as claims costs, Justin Thouin, co-founder and CEO of LowestRates.ca, suggested to Canadian Underwriter.

Earlier in the month, the Financial Services Commission of Ontario (FSCO) reported that approved private passenger auto rates “decreased on average by 0.1% when applied across the total market. This compares to an increase of 0.76% on average for the second quarter of 2017.” Fifteen insurers representing 34.52% of the market based on premium volume had rates approved in the quarter, FSCO reported.

When asked about the difference between the FSCO and LowestRates.ca findings, Thouin told Canadian Underwriter that “FSCO pricing is calculated on industry average versus ours, which is consumer-based and average of quotes being provided.”

“Historically, it’s been very difficult for Canadians to find easy-to-understand information about whether car insurance rates are going up or down,” Thouin said in the release. “So we decided to create our Auto Insurance Price Index to make it easy for consumers to see whether, on average, car insurance premiums are moving up or down. It’s really important you compare your car insurance every year as premiums change all the time.”

Insurance companies determine rates based on their costs; if claims rise in a given quarter, premiums can go up, even if some insurers lower their prices. By comparison, the index tracks the percentage change in the average quote requested for car insurance by individual drivers residing in Ontario and Alberta, insuring only one vehicle.

Thouin told Canadian Underwriter that there are also plans to have the index include information from other jurisdictions in Canada. “We have just started tracking for Quebec and will be adding more provinces as we capture more data,” he said.

When asked where he sees premiums moving in the future, Thouin said “it’s impossible to say with certainty. There are developments on the horizon that may push down premiums in the future. These include the development of self-driving vehicles, which could help lower accidents and thus claims costs for insurers,” he suggested. “Growing awareness of rate comparison websites may also drive premiums lower, since consumers will have easy access to the lowest quotes they can get.”

Data from the index will be published on the website monthly, while a report will be produced quarterly to provide insights into auto insurance price moves. The index opening value was set to 100 in the second quarter of 2017. In Ontario, the index fell to 94 in Q3, but rose to 102 in Alberta.