July 14, 2009 by Canadian Underwriter
The impact of the current economic recession might explain why Ontario’s average lowest online auto quote decreased by 2.4% between 2009 Q2 and 2008 Q2, says Kanetix, an online marketplace for insurance quotes and mortgage rates.
The counterintuitive result is featured in Kanetix’s latest quarterly car insurance premium study.
The decrease is counterintuitive in the sense that Ontario’s insurance rate regulator, the Financial Services Commission of Ontario (FSCO), has generally reported premium rate increases over the past two financial quarters.
“While the [Kanetix] findings appear to run counter to industry trends that suggest car insurance is on the rise, the Kanetix study is a reflection of not only changes in rates but also changes in the purchasing behaviours and demographics of insurance shoppers,” Kanetix says in a press release.
In terms of buying behaviours, consumers are becoming more “cost-conscious” as a result of the economy, Kanetix notes. This, in turn, may have changed the demographics of insurance purchasers.
“For example, both vehicles and drivers were, on average, older this year over last,” Kanetix observes.
Drivers appear to be keeping their current cars longer, Kanetix notes. On average, the vehicles quoted on Kanetix were three months older in 2009 Q2 than the same quarter last year.”
“This is important to note because as cars age, drivers looking to save money on their insurance often drop optional coverages like comprehensive and collision,” Kanetix says.
Also, the average age of drivers obtaining online quotes increased by almost one year. “This is significant because in general, insurance rates are lower for older, more experienced drivers,” the study says.
Ontarians are increasingly taking advantage of money-saving options such as the winter tire and multi-line discounts offered by insurers, Kanetix notes. “This trend has also contributed to the lower average auto insurance rates quoted to consumers on Kanetix.”