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Auto Insurance Rates for the Fourth Quarter of 2010

The Government passed regulations to enact auto insurance reforms effective September 1, 2010. These reforms are designed to reduce excess assessment costs in the auto insurance system and ensure more accident benefit dollars go to treating people injured in auto accidents.

 

Ontario drivers now have more choice when it comes to their auto insurance coverage. Drivers can opt for a new standard level of auto insurance coverage, or they can choose to buy additional levels of coverage based on their own circumstances.

 

As part of the reforms, drivers will also benefit from the new consumer protection measures, including the implementation of a regulation that prohibits the use of a driver's credit rating in connection with auto insurance.

 

Rate filings approved during the fourth quarter of 2010 (October 1, 2010 to December 31, 2010) averaged +1.93% based on the entire market.

 

In the fourth quarter of 2010, for the 54.15% of the market that had rate changes approved, the average rate change was +3.57%, when weighted by market share.

 

The rate changes approved in the fourth quarter of 2010 become effective in the fourth quarter or later.

The approved rate change shown for each insurance company is the average for that company based on all the consumers it insures. An individual consumer may experience a rate change that is either higher or lower than the average, depending on the vehicle insured, where he or she lives and other risk factors as well as choices made by the consumer on coverage purchased and deductible or liability limits. Also, as most consumers purchase annual policies, the rate change from the last renewal will also reflect any changes approved for the insurer in the last year. For more information about auto insurance, please review FSCO’s brochure Understanding Auto Insurance.

 

Ontario has a very competitive auto insurance market. Rates vary from company to company because each company bases its rates on its own claims costs and uses a different set of risk characteristics to determine the rate for a specific consumer. FSCO reviews filings from companies to ensure that the rates proposed are justified based on claims costs and other operating costs. As a result of FSCO’s review, an insurance company may be required to amend its proposed rates before the rates are approved.

 

FSCO's Understanding Rates/An Interactive Tool demonstrates how rates for the same coverage can vary from company to company. You can see how rates will vary depending upon whether you choose to purchase a policy with standard Accident Benefits coverage or with other optional coverages as well as your personal profile.

 

FSCO will continue to ensure that rate changes by insurance companies are reasonable and justified, and that rates charged are balanced with the ability of companies to meet future claims costs.

 

ONTARIO PRIVATE PASSENGER AUTOMOBILE
INSURANCE RATE FILINGS APPROVED
October 1, 2010 to December 31, 2010

 

Insurer

2009 Market Share %

Effective New Business Date

Effective Renewal Business
Date

Approved Rate Change %

Allstate Insurance Company of Canada

2.87

15-Nov-10

01-Jan-11

6.52

AXA Insurance (Canada)

2.65

01-Jan-11

01-Jan-11

4.38

AXA Pacific Insurance Company

0.26

01-Jan-11

01-Jan-11

5.91

Certas Direct Insurance Company (1)

1.07

17-Dec-10

15-Feb-11

0.00

Certas Home and Auto Insurance Company (1)

0.01

17-Dec-10

15-Feb-11

0.00

COSECO Insurance Company

1.47

01-Jan-11

01-Mar-11

0.63

Farm Mutual Reinsurance Plan Inc.

1.8

01-Feb-11

01-Feb-11

-0.24

Intact Insurance Company (2)

7.33

08-Aug-10

08-Aug-10

2.00

Lombard General Insurance Company of Canada

0.07

01-Jan-11

15-Jan-11

3.67

Novex Insurance Company (2)

0.51

25-Jul-10

25-Jul-10

1.08

Pafco Insurance Company

0.37

15-Nov-10

01-Jan-11

10.03

Personal Insurance Company (1)

2.96

17-Dec-10

15-Feb-11

0.00

Perth Insurance Company

1.14

15-Nov-10

01-Feb-11

3.05

Primmum Insurance Company

1.55

01-Jan-11

01-Jan-11

0.06

RBC General Insurance Company

2.72

07-Nov-10

22-Dec-10

8.03

RBC Insurance Company of Canada

0.67

07-Nov-10

22-Dec-10

6.60

Royal & SunAlliance Insurance Company of Canada

1.47

01-Jan-11

01-Mar-11

6.48

Security National Insurance Company

5.69

01-Jan-11

01-Jan-11

-0.01

State Farm Mutual Automobile Insurance Company

13.01

15-Nov-10

15-Nov-10

6.44

TD General Insurance Company

2.48

01-Jan-11

01-Jan-11

-0.28

TD Home and Auto Insurance Company

1.43

01-Jan-11

01-Jan-11

0.08

Trafalgar Insurance Company of Canada

1.34

11-Nov-10

01-Jan-11

5.57

York Fire & Casualty Insurance Company

0.88

01-Jan-11

01-Feb-11

11.98

Zenith Insurance Company

0.4

01-Dec-10

01-Jan-11

3.04

Total Market Share Represented: 54.15%
Average Rate Change for Entire Market: +1.93%
Weighted Average Rate Change: +3.57%

Total Number of Filings Approved: 24

 

  1. Rate group changes with no overall impact.
  2. Annual rate capping filing impact – This is the estimated residual impact of a previously approved rate filing that introduced rate capping procedures.  The purpose of rate capping is to minimize the rate change for a particular risk over a period of time. 

When an insurance company adjusts its rates for any given coverage, it means that the company has experienced a change in the claims costs for that coverage. For example, an increase to rates for Accident Benefits coverage would indicate that an insurance company has experienced an increased number and/ or increased average cost of Accident Benefit claims. A company must provide its claims costs for each coverage in support of any change in rates. The weighted average approved rate change shown is the average for each coverage based on the company filings that were approved during the quarter.

 

APPROVED RATE CHANGE BY COVERAGE
October 1, 2010 to December 31, 2010

Coverage

Weighted Average Rate Change %

Third Party Liability-Bodily Injury

3.41

Third Party Liability-Property Damage

-0.41

Standard Accident Benefits

6.67

Uninsured Automobile

0.39

Direct Compensation-Property Damage

1.14

Specified Perils

0.01

Comprehensive

-2.66

Collision

-1.33

All Perils

0.65

OPCF 44R Family Protection

1.16

This pie chart illustrates what coverages consumers buy with their premium dollars based on 2009 premiums. It shows that most premium dollars go towards purchasing standard Accident Benefits:

 

2009 Written Premium Distribution

2009 Earned Premium Distribution

Source: GISA Exhibit AU05-N

 

The following graph shows that Accident Benefits claims costs per vehicle have increased by 95% from 2005 to 2009. During this period the number of Accident Benefit claims increased by only 19%. This significant increase in claims costs has resulted in higher insurance rates and the introduction of a series of auto insurance reforms by the Ontario Government that became effective September 1, 2010.

 

Claims Cost Per Vehicle

Source: GISA Exhibit AU05-N


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