Although auto insurance companies have provided all sorts of premium relief measures to customers during the early days of the COVID-19 pandemic, a new study from LowestRates.ca has found that rates for new auto insurance policies have jumped – and are only likely to increase further.
The insurance comparison site found that between April and June, the cost of car insurance for most drivers shopping for a new policy increased – particularly in regions of Canada where rates are not heavily regulated. Existing policyholders may have been receiving rebate cheques, or managed to negotiate lower premiums in exchange for reduced coverage during the past few months, but those looking for new insurance policies were being quoted higher prices on the whole, LowestRates.ca found.
The study also warned that rates are poised to continue increasing due to conditions that predate the pandemic, such as regulatory changes and ongoing concerns regarding insurance fraud.
CBC News reported that in Alberta, the previous NDP government put a cap on insurance rate increases in the province. But that cap has been removed by the current Conservative government, and rates have been steadily increasing since – up 24% on average, the news outlet noted.
LowestRates.ca president Justin Thouin told CBC News in an interview that the NDP government’s policy of keeping rates artificially low had led to some insurers losing money, and others have even left Alberta’s market entirely.
“Rates are going to continue to go up like this while there’s no competition,” Thouin said. “It’s going to be very difficult for Alberta drivers.”
In Ontario, insurance prices have also climbed, but not as much as Alberta’s. The province pays some of the highest insurance premiums in Canada, but LowestRates.ca noted that rates in the province have been trending lower for several quarters – before rising by 2% when the pandemic hit. Insurers in the region have pointed to higher than normal insurance fraud as the reason for the increases.
Meanwhile, Atlantic Canada saw its rates peak in Q4 2019 before declining, the report said. But average premiums in Nova Scotia, Newfoundland and Labrador, PEI, and New Brunswick are still up by over 13% compared to last year.
