My premium is going up. Why?
As consumers, we all want to pay as little as possible and that’s normal. Your insurance premium has gone up, even though you haven’t made a claim. And you’re wondering why.
Claims frequency (more specifically collision) and the cost of claims have gone up over the past years in Québec, and the premiums charged by insurers no longer cover payouts. This impacts all policyholders, not only those who make a claim.
Did you know? When it comes to insurance, it’s the premiums paid by all policyholders that are used to compensate those who will have an accident. The greater the frequency and the higher the cost of claims, the more everyone’s premium is likely to rise.
Other factors to consider
To establish your premium, your insurer also takes into account the vehicle you drive, the insurance coverage you choose and, of course, the likelihood of your being involved in an accident. What this means is that the use you make of your vehicle, your place of residence, and the way you drive directly influence the cost of your insurance.
To find out more about auto insurance rating criteria on Infoinsurance.ca.
Car repairs: costs are up
$4,400 : the average cost in 2017 to repair a vehicle after an accident
Vehicles today have become veritable itinerant computers, equipped with more and more sophisticated technology, driving up repair costs. And this doesn’t factor in the cost of parts and labour, which are going up every year.
Insurance plan that benefits consumers
In 1978, Québec introduced a blended automobile insurance plan. Société de l’assurance automobile du Québec (SAAQ) covers bodily injury. Private insurers continue to cover property damage to vehicles and civil liability for drivers.
The Plan has proven very effective as various stats and published reports confirm. The private auto insurance market in Québec remains competitive, which benefits consumers.
“Moreover, it is generally accepted that, at any point in time, variances in rates between insurers for the same policyholder profiles point to healthy competition.”1
“... the premium charged to a same policyholder in 2017 may vary greatly from insurer to insurer. Thus, an insurer may be very competitive for a given insurer profile, but not necessarily for another.” 1
Such strong competition in the market is not new. However, it explains the successive drop in the average auto insurance premium observed during a 10-year period, from 2004 to 2014, from which consumers benefited. In 2017, the average premium was $564, comparable to 2007.2
The data published annually by Groupement des assureurs automobiles points to the need for higher premiums, as is currently the case.
Over a five-year period, from 2012 to 2017, total claim costs (collision, theft, etc.) and claims settlement were up 35%, while the average premium, for the same period, rose only 6%.
Since 2015, for each dollar of premiums charged, insurers had to disburse $1.01 (2015), $1.03 (2016) and $1.07 (2017), respectively, to cover payout costs and operating expenses. Given the context, it was inevitable premiums would be adjusted upward.
Despite this increase, Québec has the lowest auto insurance premiums in Canada.
The average premium in Québec was $685 in 2017 (including the cost of insurance for bodily injury, which is governed by SAAQ), compared to $1,445 and $819 for drivers in Ontario and New Brunswick, for example.