Canada’s transition to electric vehicles (EVs) will cause insurance rates to rise, according to Morningstar DBRS.
In a commentary released this week, the credit rating agency cited the country’s new Electric Vehicle Availability Standard and how it is likely to impact auto insurance rates. Morningstar DBRS noted that rate increases are to be expected due to EVs’ higher price tag and repair costs.
It’s not all doom and gloom for motorists, though, given Canada’s price regulation.
Insurance vice president Victor Adesanya said: “For EV drivers in Canada, a silver lining might be found in the highly regulated Canadian automobile insurance industry.
“Provincial governments are responsible for the regulation of auto insurance policies, including the monitoring of claims handling and dispute resolution. Provincial regulators in Canada also review and approve requests made by insurers to increase rates before they can be implemented.
“This could help mitigate the impact of insurance rate increases on the finances of EV owners on renewal or when an EV is registered for the first time. However, we expect that auto insurance rates will trend upward over time as insurers generate more claims data for EVs and reflect that experience in pricing.”
Meanwhile, Canadian insurers’ profitability or credit ratings in the near to medium term are not expected to be impacted.
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