Canadian Underwriter

Why auto rates are increasing despite fewer drivers on the road

March 6, 2021   by Jason Contant

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Average auto insurance rates rose in Canada during the second half of 2020 despite the COVID-19 pandemic and lockdowns that led to fewer drivers on the road, a new report from found.

The average auto insurance premium climbed by about 30% in Alberta, 17% in Atlantic Canada and 4% in Ontario over the course of 2020 (2020 Q4 versus 2019 Q4), according to data collected by the comparison site for home and auto insurance, and other financial products.

Price increases were due to the fact that more inexperienced drivers have been hitting the roads since the pandemic began. “More young adults, who might have eschewed car ownership pre-pandemic, are applying for car insurance quotes amid concerns about taking public transit,” said’s latest Auto Insurance Price Index, released Wednesday. The index is created from hundred of thousands of insurance quotes the site receives every year.

There is a trend of former public transit users now opting for vehicles as concerns about health and safety remain. “But while new drivers pushed prices higher, we also saw many drivers save money as they switched from commuting to work daily to working from home,” the report said. There is also a large increase in the number of drivers aged 50 and over that are no longer commuting to work, “which has enabled them to find substantial savings.”

Of the regions examined, Alberta saw the largest average price increases — 29.5% in 2020 Q4 compared to 2019 Q4. “Unfortunately for drivers in Alberta, auto insurance prices in the province have been on a relentless upward tear since last year,” the report said.

Prices have risen since a cap on insurance rate hikes was removed in 2019, when Premier Jason Kenney was elected. “Insurance companies had long complained that the cap, which limited annual rate hikes on consumers to 5% meant they lost money selling insurance in Alberta,” said the report, noting that auto insurance prices have risen by 36% since the cap was removed in the third quarter of 2019. CEO Justin Thouin said drivers can expect to see prices to continue to rise until more insurers return to the Alberta market and make it more competitive. For Alberta, one of the biggest shifts was that fewer adults in the prime working years shopped for auto insurance as COVID-19 cases grew. “We’re hearing from brokers in Alberta that drivers between 25 and 49 are staying with their current providers because insurance is hard to get.”

Atlantic Canada (New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador) is facing some of the same challenges as Alberta. For example, in New Brunswick, insurance companies have said they are either restricting new business or thinking about pulling out due to caps on what they can charge drivers. And like much of the rest of Canada, saw an increase in the number of new drivers from Atlantic Canada that quoted on the comparison site in the last quarter.

In Ontario, prices were 4.1% higher in the last quarter of 2020 than they were one year prior. “Our data show that Ontarians are increasingly trading in their public transit passes for a set of car keys — even if it means paying some of the highest car insurance premiums in Canada,” said the report. “Year-over-year, the number of inexperienced drivers shopping on our site increased by 2.9% (Q3) and 8.7% (Q4).”

Inexperienced drivers are those with less than four years of driving experience.

Since the start of the pandemic, the comparison site also saw an increase in the number of older drivers who quote with very low mileages, and who do not drive to work. “The distribution of users aged 50+ with personal-use vehicles who said they drove zero kilometres to work increased from 28.6% in 2019 Q4 to 35.9% in 2020 Q4,” said. “As a result of lower average mileage and fewer drivers using their car to get to work, average prices for drivers aged 50 and over fell by 8% in the fourth quarter on our site.”

The reduction in traffic has led to few claims and might even lead to lower prices down the road, but it will take some time, said’s chief operating officer, Dave Dyer. “The question is, will any recent drop in traffic and any decline in accidents remain for the long term? That is less certain, and insurers won’t price that in until they have certainty.”


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7 Comments » for Why auto rates are increasing despite fewer drivers on the road
  1. Pam says:

    I’m in Atlantic Canada, Nova Scotia to be precise. The cost of insurance is becoming so very high that coverage is becoming unaffordable while profits of these large companies soar. Unrealistic premiums for items like RV’s where we are paying double the cost that we pay for our home! Worth 4-5 times more to replace. I am wandering IF Insurance Bureau of Canada is going to step in or if they are part and partial with the Government in approving all these high increases. People just don’t get the type of salary increases to keep up with insurance increases.

  2. Philip McClenaghan says:

    I just moved to Canada and I don’t understand what you guys are doing over here; it’s out of control. In the UK car insurance is in the 200-300GBP per year. Here the quotes are $2000-5000. I was told that my insurance will rise each year. This is completely backwards. The point of having insurance history is to prove that you are a good driver with no claims and your insurance should LOWER each year as a reward because you are low risk of making a claim. When I questions why my insurance will go up each year despite no claims I was told that we all have to contribute towards the number of claims being created. That’s not how it works Canada!! The claims are compensated for by punishing the person who crashes with an increased premium! Isn’t that the whole point? You don’t punish the good drivers to compensate for the few who crash!

  3. Nermin Kurtic says:

    I am Truck Driver over 33 years without any accident ever. Possess my European Class 1 license since 1988 , moved to Atlantic Canada March 2014 and switched to Canadian Class 1 ( 7 years ) … till this year February my monthly payment
    for only liability insurance
    was between $ 50 to $ 63, depends on car I owned
    but Intact insurance over the Broker Cooke Insurance raised my policy on the same car without any claim or violation to $ 133 in February … left them , paid cancelation fee $ 150 and found online some Sonnet insurance .. online quote calculation was $126 per month with full coverage but…. when purchased online policy price was $ 185. Today just double checked online quote and got same $126 quote. Called them and they agreed that there was some difference between calculator and price I pay but was told that only thing I can do is cancel current policy, they will keep down payment $ 185 and then I can purchase new policy for $ 126…
    I am out of mind.
    Don’t know if there is any Government office who control these Insurance cheaters… it’s organized mafia because they are connected and sharing info about insurers. Can’t believe that Canadian Government allows such criminal behavior and cheating in Nova Scotia. I am so disappointed, tired by all of this and thinking about to sell my car and use busses or taxi when needed.

  4. Marc says:

    Every year the insurance industry develops new lies to justify their unconscionable rate increases. It is disgusting that they continue to hit customers with such high rate increases when fewer people are driving and most are driving less.

  5. B says:

    What an absolute scam this is!
    Increase in inexperienced drivers – yeah right.
    Premiums should have dropped substantially –
    Based on massive reductions in claims during 2020

  6. Helen says:

    In 2020 I was surprised to get 3 rebates on my auto insurance because of COVID (I work from home anyway and not just because of COVID) that added up to approximately $90 (nice surprise). My thought was “thanks for giving me a break” it was much appreciated. BUT!!!! in 2021 my insurance premiums increased by approximately $90, so in the end they got back their money. Even after shopping around to compare rates it was still cheaper to stay with the same insurance company since the $90 increase was equal to what I paid in 2020 before the rebates.

  7. Vladimir says:

    There are two points that are missing in everyone’s comments:
    –First of all, high auto insurance rates in Canada are dictated that you can not choose on the level of coverage as in, let’s say in US. There in US one can take so much coverage as (s)he wants and can afford in addition to basic; not such things in Canada: you HAVE to pay for extra coverage.
    — Second thing is that insurance companies in Canada have started to loose money due to WFH trend. To compensate these losses they increase premiums.

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