Auto Insurance Rates for the First Quarter of 2016

​This notice provides an overview of the private passenger automobile insurance rate changes approved or ordered by the Financial Services Commission of Ontario (FSCO) for filings reviewed in the first quarter of 2016. The number of filings reviewed by FSCO and the overall average rate change for the Ontario market may vary from quarter to quarter, based on updated information about claims costs, market conditions and other financial factors and the resulting impact that these factors have on the adequacy of an insurance company's current rates.

This quarter reflects rate approvals related to automobile insurance reforms enacted by the government to reduce costs and fraud in the auto insurance system. These changes, effective June 1, 2016, include reductions to the compulsory standard Accident Benefits coverage, with the continued ability for consumers to buy enhanced optional benefits. Changes also included a prohibition on rating for certain minor accidents that occur on or after June 1, 2016. Insurers were required to submit automobile insurance reform filings to FSCO by October 30, 2015 to reflect these changes.
 

Average Rate Changes 

 
FSCO approved 50 private passenger automobile insurance rate filings during the first quarter of 2016.  All 50 filings were automobile insurance reform filings.  A total of 50 insurers submitted the filings.   

These 50 insurers represent 83.36% of the market based on premium volume. Approved rates decreased on average by 3.07% when applied across the total market. Rate changes approved for each insurer this quarter and effective dates of the rate changes are shown in Table 1. 
 
This compares to a decrease of 0.15% on average for the fourth quarter of 2015.


Individual Rates


The rate change shown for each insurance company is the average for that company, based on all the drivers it insures. 

However, an individual policyholder may experience a rate change that is either higher or lower than the industry-wide average rate change, or the average rate change for a particular insurer, depending on several factors, such as:

  • the vehicle insured;
  • where he or she lives, driving experience; and at-fault accident and conviction history of drivers, whether the vehicle is used for pleasure or commuting, and other risk factors;
  • choices made by the policyholder on coverages purchased and deductible or liability limits.

Also, as most policyholders purchase annual policies, any changes approved for the insurer and effective prior to the policy renewal date, or changes in the policyholder's circumstances since their last renewal (e.g., at-fault accidents, driving convictions), will impact the policyholder's rate at renewal. 

Consumers are urged to shop around for auto insurance. Ontario has a very competitive marketplace. Rates for the same coverage vary based on each insurer's claims experience and the insurer's rating system.


FSCO has several resources to help consumers better understand auto insurance, including tips on shopping around and saving on auto insurance and information on what different coverages mean

 

FSCO's Rate Approval Process 


Insurers must submit proposed changes to their rates to FSCO for approval along with supporting actuarial data.  

FSCO and its actuaries review this data and insurers' assumptions regarding claims costs, expenses and investment income to ensure that, as required by law, the proposed rates are:
 

  • just and reasonable;
  • not excessive;
  • not going to impair a company's financial solvency.

As a result of FSCO's review, an insurance company may be required to amend its proposed rates before they are approved.

Most premium dollars collected by insurers go towards paying for claims for people injured in car accidents. Insured persons who are injured can make a claim for Accident Benefits (AB), regardless of fault.

In some cases, seriously injured parties can also make a claim by launching a lawsuit against the at-fault driver. These claims are paid under the Third Party Liability – Bodily Injury (TPL) coverage of an automobile insurance policy. The AB and TPL coverages account for 61.5% of claims costs, as shown in Graph 1.

When an insurance company adjusts its rates for a particular coverage, it means that the company has experienced a change in the claims costs for that coverage. For example, an increase in rates for TPL coverage would indicate that an insurer has experienced a higher number or higher average cost of bodily injury claims. A company must provide claims costs data to FSCO when proposing a rate change for any coverage. 

It is important to understand the coverages available to consumers under an automobile insurance policy in Ontario. FSCO has a number of consumer-friendly descriptions of these coverages available on its website.


Automobile Insurance Cost and Rate Reduction Strategy


The Ontario Government initiated a cost and rate reduction strategy in the 2013 Ontario Budget and has continued on a path of reforms aimed at reducing costs and increasing consumer protection through successive budgets in 2014 and 2015. The cost and rate reduction strategy builds on the 2010 reforms and includes further measures aimed at reducing costs and fraud in the auto insurance system.


Awareness is a vital part of combatting auto insurance fraud. FSCO has a fraud hotline and information for consumers about detecting and avoiding fraud on its website.

Table 1

Ontario Private Passenger Automobile
Insurance Rate Filings Approved/Ordered

Filings reviewed January 1, 2016 – March 31, 2016  


Insurer
2014 Market Share (%)
Effective New Business Date
Effective Renewal Business Date
Approved Average Rate Change (%)
AIG Insurance Company of Canada
0.04
1-Jun-16
1-Jun-16
-5.22
Allstate Insurance Company of Canada
5.06
1-Jun-16
1-Jun-16
-4.36
Aviva Insurance Company of Canada
6.21
1-Jun-16
1-Jun-16
-2.00
Belair Insurance Company Inc.
0.08
1-Jun-16
1-Jun-16
0.00
CAA Insurance Company
1.27
1-Jun-16
1-Jun-16
-7.76
Certas Direct Insurance Company
2.61
1-Jun-16
1-Jun-16
-7.01
Certas Home and Auto Insurance Company
9.47
1-Jun-16
1-Jun-16
-7.20
Chubb Insurance Company of Canada (incl. Mitsui Sumitomo Insurance Company, Limited and Federal Insurance Company)
0.51
1-Jun-16
1-Jun-16
-4.08
Coachman Insurance Company
0.41
1-Jun-16
1-Jun-16
-7.53
Commonwell Mutual Insurance Group, The
0.39
1-Jun-16
1-Jun-16
-0.60
COSECO Insurance Company
1.18
1-Jun-16
1-Jun-16
-7.74
CUMIS General Insurance Company
0.36
1-Jun-16
1-Jun-16
8.99
Dominion of Canada General Insurance Company, The
4.42
1-Jun-16
1-Jun-16
0.00
Echelon Insurance
0.61
1-Jun-16
1-Jun-16
-8.29
Economical Mutual Insurance Company
3.44
1-Jun-16
1-Jun-16
-3.46
Farm Mutual Reinsurance Plan Inc. (on behalf of Ontario Mutuals)
1.65
1-Jun-16
1-Jun-16
0.00
Federated Insurance Company of Canada
0.02
1-Jun-16
1-Jun-16
-6.34
Gore Mutual Insurance Company
1.57
1-Jun-16
1-Jun-16
-4.97
Guarantee Company of North America, The
0.61
1-Jun-16
1-Jun-16
-2.07
Hartford Fire Insurance Company
0.00
1-Jun-16
1-Jun-16
-4.40
Heartland Farm Mutual Inc.
0.31
1-Jun-16
1-Jun-16
-2.20
Intact Insurance Company
10.02
1-Jun-16
1-Jun-16
-3.08
Jevco Insurance Company
0.80
1-Jun-16
1-Jun-16
-3.61
Nordic Insurance Company of Canada, The
4.35
1-Jun-16
1-Jun-16
0.01
Northbridge General Insurance Corporation
0.01
1-Jun-16
1-Jun-16
-25.51
Northbridge Personal Insurance Corporation
0.71
1-Jun-16
1-Jun-16
-4.73
Novex Insurance Company
1.02
1-Jun-16
1-Jun-16
-2.56
Optimum Insurance Company Inc.
0.25
1-Jun-16
1-Jun-16
-4.70
Pafco Insurance Company
0.67
1-Jun-16
1-Jun-16
-8.61
Pembridge Insurance Company
1.42
1-Jun-16
1-Jun-16
-4.27
Personal Insurance Company, The
3.80
1-Jun-16
1-Jun-16
-3.81
Perth Insurance Company
0.95
1-Jun-16
1-Jun-16
-7.96
Pilot Insurance Company
0.00
1-Jun-16
1-Jun-16
0.00
Portage La Prairie Mutual Insurance Company, The
0.27
1-Jun-16
1-Jun-16
-7.87
RBC General Insurance Company
4.52
1-Jun-16
1-Jun-16
-6.54
Royal & SunAlliance Insurance Company of Canada
1.07
1-Jun-16
1-Jun-16
0.00
S & Y Insurance Company
0.00
1-Jun-16
1-Jun-16
0.00
Scottish & York Insurance Co. Limited
1.11
1-Jun-16
1-Jun-16
-7.70
SGI CANADA Insurance Services Ltd.
0.00
1-Jun-16
1-Jun-16
0.00
Sovereign General Insurance Company, The
0.00
1-Jun-16
1-Jun-16
-6.03
Tokio Marine and Nichido Fire Insurance Co., Ltd.
0.01
1-Jun-16
1-Jun-16
-7.58
Traders General Insurance Company
1.79
1-Jun-16
1-Jun-16
-1.87
Unica Insurance Inc.
0.61
1-Jun-16
1-Jun-16
-1.03
Unifund Assurance Company
3.73
1-Jun-16
1-Jun-16
-4.49
Waterloo Insurance Company
0.86
1-Jun-16
1-Jun-16
-0.05
Wawanesa Mutual Insurance Company, The
3.64
1-Jun-16
1-Jun-16
0.00
Western Assurance Company
1.16
1-Jun-16
1-Jun-16
0.00
XL Insurance Company SE
0.00
1-Jun-16
1-Jun-16
-8.65
Zenith Insurance Company
0.37
1-Jun-16
1-Jun-16
-4.48
Zurich Insurance Company Ltd
0.00
1-Jun-16
1-Jun-16
-6.77
Total Market Impact
-3.07


Graph 1

% of Claim Costs by Coverage for Accidents in 2014

 

% of Claim Costs by Coverage for Accidents in 2014


 

2014 GISA Automobile Statistical Plan AUTO1005 Private Passenger excluding Farmers Actual Loss Ratio Exhibit

Accessible Description of Graph 1:

Accident benefits 33.5 percent, Third-party liability bodily injury 28 percent, Direct compensation and property damage 15.6 percent, Collision 16.7 percent, Comprehensive 3.8 percent, Uninsured automobile, 1.6 percent, OPCF 44R Family Protection Coverage 0.8 percent.

 


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