Research has shown that Ontarians (especially GTA residents) often pay the highest auto insurance premiums in the country. In 2024, car insurance premiums will keep climbing with inflation and rampant auto theft driving the charge. So, why is expensive Ontario car insurance a reality? Let’s dive into the reasons why Ontario drivers pay the highest rates in the country.

Ontario auto insurance rate increases approved for insurance providers

In its 2024 auto outlook, Ratesdotca noted that Ontario’s regulator has already approved rate increases for about two dozen insurance providers in the first quarter of the year. “We are seeing increases as high as 25 percent,” says Daniel Ivans, Ratesdotca’s insurance expert — much faster than usual. The average annual premium in the GTA is $ 2,391 as of October 2023. That’s in comparison to $2,208 seen at the same time in 2021. A 25 percent increase bumps up the average yearly cost by nearly $600. The Financial Services Regulatory Authority of Ontario (FRSA) says it’s working to reform insurance rate regulation and underwriting to better protect consumers. A strategy should be made public later this year.

FSCO reported that although the 2023 indexation amount was 6.9%, it was only a 2.5% increase from 2022. This increase applies to monetary and deductible amounts related to specific court awards for claimants in auto injury claims.

Expensive Ontario car insurance; Why are rates so high?

Several factors come into calculating auto insurance premiums. Some factors affecting rates are:

  • Inflation
  • Rise in auto insurance claims costs
  • Location; where you live
  • Cost of servicing and replacing vehicle parts
  • Auto theft
  • Auto fraud
  • Age and gender (especially young male drivers)

Inflation and the cost of auto insurance claims affect Ontario auto insurance rates

Inflation is partly behind rising rates. “With interest rates going up, with inflation getting higher, the average claim payout is a lot higher,” Ivans said. Auto insurance rates are partly based on insurers’ claims costs, which are affected by inflation. “With increased claims costs very often comes increased insurance premiums,” states Anne Marie Thomas of the Insurance Bureau of Canada. Canada’s inflation rate hit a nearly 40-year high of 8.1% in June 2022.

“With an increase in the cost of claims, obviously there’s a need for more money to fund those claims down the road.” Experts predict inflation may start to cool this year, but that isn’t the only factor affecting insurance rates.

Auto theft in Canada is causing high auto insurance premiums

One of the biggest costs to drivers is auto theft. Canadian insurers paid out over $1 billion in claims for the first time in 2022, according to the Insurance Bureau of Canada (IBC). The GTA claims alone accounted for half of that. More than 80,000 cars were stolen in Canada last year, as per the IBC findings. In Toronto, 12,200 auto thefts were listed in 2023 on Toronto police’s major crime indicator dashboard. The province and federal government are spending millions of dollars to crack down on auto thefts, but that’s not likely to impact your premiums in the near future.

Provincewide, claims for stolen vehicles rose 329% between 2018 and 2022, going from $160 million to $700 million. The IBC estimates car thefts cost every Ontario driver about $130 per year. 

Expensive Ontario car insurance comes down to location, location, location

One of the key factors in determining your car insurance premiums is where you live. Insurers set premiums based on the likelihood of local break-ins and accidents in the area. The GTA is densely populated with many highways, with greater chances of a collision. In addition, Ontario finance veteran, David Marshall, says that Ontario’s auto insurance system is too tightly regulated to take advantage of the flexibility and competitiveness of a more open, private market. He says provinces, like Quebec, have public insurers, which means “you can spread the risk among everybody”. This will, in turn, drive down costs, which is why many experts recommend substantially reforming Ontario’s system to make it more competitive.

Technology and supply chain disruptions play a role in expensive Ontario auto insurance

Supply chain issues affecting the car industry date back to the start of the pandemic. The Enterprise report states, “The results for the second quarter of this year are significant, as it appears many of the factors affecting everyone in the collision industry – including technician staffing, ever-changing parts availabilities, new and used vehicle pricing, inflationary pressures, and new claims processes – are becoming prevalent.” Industry experts say that’s partly due to delays in receiving imported vehicle parts — delays which still haven’t fully recovered from the pandemic. 

The cost of servicing and replacing vehicle parts has gone up, as technology itself has advanced, according to Ratesdotca’s report. The report also notes supply chain disruptions have led some companies to pause production. Advancements in car technology contribute to higher repair and replacement costs, leading to expensive Ontario auto insurance premiums. Electric vehicle (EV) claims can get expensive quickly, as EV batteries and parts aren’t cheap. Plus, specialized training may be needed to perform the repairs, contributing to longer wait times.

Age and gender affect Ontario insurance premiums

Ontario’s private auto insurance system, age and gender play a big role in determining driver premiums. There are also many more cases of fraud in Ontario, which increases the costs for everyone. These results are higher than the national average for auto insurance rates. Despite the many obstacles to insuring your vehicle, you do have the choice to shop around for the best price. At isure, we do your insurance shopping for you to make sure you are getting the best quote possible. If you’re thinking that just because you live in Ontario you are doomed to be paying expensive car insurance premiums forever, we can help. There are many tips and tricks for you to lower your auto insurance premiums, as well as auto insurance discounts and endorsements, that won’t compromise your coverage.

If you have any questions about your auto insurance coverage or want to find out ways you can reduce your premium, call or email one of our isure brokers today.

Related Articles