Car Insurance – 2010 Prediction – The bad news: it’s going to be much more expensive to insure private passenger vehicles in Ontario this year.

The Financial Services Commission of Ontario (FSCO) – the government body controlling auto premiums in this province – says the average vehicle insurance rate has risen for 10 consecutive quarters.

But, according to FSCO-monitored results, even with these increases, every automobile insurance company in Ontario is currently paying more in claims and expenses than the premiums they collect. This has been the case for the last 2 years.

Every accepted indicator suggests the situation is spinning out of control, prompting FSCO to consider allowing the largest increases seen in Ontario in more than seven years.

My prediction: increases from 10% to 20% this year will not be uncommon - and that’s for people who have had no claims.

As an industry observer, here are the key drivers we see:

* Ontario has the richest menu of coverage features in North America for people injured in car crashes.

* our province has more automobile claims and a much higher average cost per claim than anywhere else in Canada.

* 50% of automobile insurance premiums go toward paying for injuries, rehab, and time off work. (This policy coverage section is currently costing one-third more than premiums paid!) Surprising to
some, less than half of every premium dollar goes to pay for glass and metal.

* The Harmonized Sales Tax will add costs to legal, adjusting and other expenses for any claim payment made after July 1st.

In an effort to control costs, the Ontario Government announced over 40 changes to the vehicle insurance system in November. However, these won’t kick in until September 1st at the earliest.

FSCO has been reluctant to allow more adequate, but measured, increases over the last few years.  As a result, 2010 will be the year to play catch-up.

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This entry was posted on Friday, January 29th, 2010 at 12:42 pm and is filed under Automobile, General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.