Across Canada, auto premiums have been on the rise, and many people are asking the question why is our car insurance going up so much? Unfortunately there is no simple, short or easy answer to this, but hopefully this post provides some insight and answers.
So…Why Is Our Car Insurance Going Up So Much?
When trying to understand why car insurance rates are going up so much it’s important to remember that insurance companies are for profit business and like many organizations they are trying to provide a service and product while generating a profit. Ultimately when profitability of Canadian insurance companies is challenged insurers respond by increasing car insurance rates.
Reasons Impacting Insurer Profitability
- Car insurance claims are becoming more frequent and more expensive. This results in an increase in the costs to repair a vehicle after an accident. Since the total cost of all claims is shared across all customers, this impacts how much everyone pays for insurance.
- The increasing cost of claims due to increasing amounts of technology like sensors, cameras etc. in cars
- Increasing claims due to people texting, doing emails, watching videos and generally using devices and phones while driving.
- Studies have shown that people are 23 times more likely to get in a collision while texting
- In Canada someone is injured every 30 minutes due to distracted driving
- Distracted driving is the cause of 8 out of every 10 accidents in Canada
- Increasing sever weather events which are causing damage to vehicles
- Insurance fraud is estimated to cost insurers, and therefore Canadian policy holders nearly $2 Billion each year!
Sources and resources related to the above: