Home and auto rates harden in 2024 Q1

Canadian home and auto insurance premium rates continue to increase year over year, per the 2024 Q1 results in the Applied Rating Index.

“We continue to watch the market trends as premium renewal rates for both personal auto and personal property increased in the double digits year over year,” says Steve Whitelaw, senior vice president and general manager at Applied Systems Canada. “As the market changes, the data within the Index will serve as an indicator for brokers’ renewal conversations and insurer pricing decisions.”

Analyzing quotes completed, the Applied Rating Index measures the increase or decrease in average premium rate trends across Canada. The index suggests a hardening market in personal lines auto and property in Canada.

In personal auto, premium rates increased 13.3% in 2024 Q1 compared to 2023 Q1. All provinces saw an increase year-over-year, as follows:

• Atlantic provinces 14.5%
• Ontario 12.1%
• Quebec 9.7%
• Alberta 7%

Compared to the last financial quarter, 2023 Q4, auto premium rates in the first quarter of 2024 increased by 0.5% generally, although several provinces saw slight decreases compared to the last quarter. For example, compared to 2023 Q4, this year’s first quarter auto rates in Alberta (-1.3%), Quebec (-2.3%), and the Atlantic provinces (-1.4%) all decreased slightly, while Ontario saw a 1.2% increase since the last quarter in 2023.

It is well-documented how auto theft and the increased costs of car repairs have driven up auto insurers’ costs, thereby contributing to rate increases. Rising labour costs at repair centres, the increased cost to replace advanced technologies in cars, and tech and auto shortages arising from supply chain disruptions have all contributed to auto insurers’ increased costs.

In other news: Insurers respond to Alberta’s auto reform reports

Meanwhile, in 2024 Q1, Canadian home insurance premium rates increased 10.9% year-over-year.  The provincial breakdown of personal property rate increases year-over-year is as follows:

• B.C. 18.3%
• Ontario 12.7%
• Alberta 10.5%
• Prairie provinces (Manitoba and Saskatchewan) 12%
• Atlantic provinces 9.2%
• Quebec 3.7%

Compared to last quarter, all Canadian provinces saw their home insurance rates increase in 2024 Q1, except for Quebec, which saw a 2.1% decrease from last quarter. B.C. saw the highest home insurance premium rate increases since the last quarter of 2023, with a 10.7% quarterly rate increase.

Home insurance rate increases are in keeping with escalating claims costs arising from the fourth-worst catastrophe season in Canadian history last year. Insurers paid out $3.1 billion in Cat claims in 2023, led by the worst wildfire season in Canadian history.

Morningstar DBRS estimated last August Canadian wildfires would cause insured damage of between $700 and $1.5 billion. CatIQ estimates last October showed B.C. wildfires alone would cost insurers approximately $720 million.

Feature image courtesy of iStock.com/Schroptschop