Auto Insurance Rates Stabilizing

By Madhavi Acharya-Tom Yew

The average auto insurance premium in Ontario declined slightly last quarter – a sign that rates may finally be stabilizing after years of sky-high increases.

The Financial Services Commission of Ontario, the body that regulates auto insurance, said the average premium fell 0.18 per cent.

Drivers may see their rates go up or down depending on their insurance company and their driving record – but the overall decline, based on requests from 17 different companies, is a step in the right direction, industry experts say.

“What is significant is that rates are not going up,” said Anne Marie Thomas, manager at

For 2010, the average increase was 12.3 per cent. During the second quarter of 2011, rate increases by individual insurers reached as high as 13 per cent.

“It appears that rate stabilization is starting to occur. That’s my hope,” Thomas said.

Last quarter’s rate changes ranged from an increase of 5.39 per cent by Certas Home and Auto Insurance company to a decrease of 4.46 per cent by Co-operators General Insurance Company.

There were more requests for decreases than increases, the regulator said.

Some of the approved changes have already taken effect, and remaining changes will be implemented by the end of July.

State Farm Mutual Automobile Insurance Company, the biggest player in Ontario’s auto insurance market requested no rate change for the first quarter.

A slate of auto insurance reforms brought in by the Ontario government starting in September, 2010, were designed to stabilize rates.

The changes introduced a cap of $50,000 for medical and rehabilitation benefits for non-catastrophic injuries, half the previous level.

The change also limited medical and rehabilitation benefits for minor injuries to $3,500.

The auto insurance industry argues that the spiraling cost of unnecessary assessments and fraud is raising costs for all drivers.

Insurance company executives say sketchy medical clinics and rehabilitation centres milk the insurance system by sending victims of minor accidents for dozens of questionable medical assessments.

Accident benefits still account for about one-third – the biggest chunk – of overall auto insurance premiums.

The province’s insurers are required to get approval from the Financial Services Commission in order to change their rates.

Similarly, Kanetix, an online auto insurance comparison site, found that rates declined in Ontario, Quebec, and Alberta during the first quarter.

Rates were down by 3.6 per cent in Ontario compared to the year-earlier period, the company said.

“It appears the market is starting to stabilize,” Thomas said. “If you have a good driving record, insurance companies are likely going to want you, so shop round for the best deal.”

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