From fuelling your car to feeding your family, no one is immune to the increases in the cost of living seen recently. Everything seems to be getting more expensive! With a potential recession on the horizon, Canadians are feeling the effects of rising inflation. But how will it impact your monthly insurance bill in the new year? Let’s take a look at some of the 2023 insurance predictions for Ontario.

2023 insurance predictions for the new year

According to the Fall 2022 Economic Statement, Canada will experience a mild recession in the first quarter of 2023. With a potential recession looming, in all likelihood consumers will have to re-examine the amount they are spending and where these funds will be allocated to. Experts have weighed in and made some predictions in terms of spending, as well as the cost of insurance for the coming year. Canadian consumers will most likely be impacted by inflation in three main ways:

1. Insurance premiums feeling the impact of inflation

With the rising cost of living, insurance premiums will surely see an impact. Both your auto insurance, as well as your home insurance, has seen increases since the fall of 2022. Let’s examine number one on our list of 2023 insurance preidictions, and the reasons behind the rise in car and home insurance premiums:

Reasons for auto insurance premiums rising

The October 2022 Consumers Price Index (CPI) saw an annual increase of 3.9% in passenger vehicle insurance premiums across Canada due to:

  • Inflated cost of auto repair claims: October’s CPI revealed a 7.4% annual increase in the cost of passenger vehicle parts, maintenance, and repairs. To help cover the costs, auto insurance premiums follow with an increase, as well.
  • Supply chain shortages: Supply chain issues and shortages for parts (such as semi-conductors, plastic, sheet metal and clear coats).
  • Higher valuation of replacing new vehicles: Insurers paying for rental cars longer.
  • Rising gas prices: Due to inflation.

Reasons for home insurance premiums rising

The October’s Consumer Price Index also saw an inflation rate of 7.6% YoY for home and mortgage insurance. As one of our 2023 insurance predictions, home insurance rates are expected to continue to rise across the country over the next year due to:

  • Inflated costs of home rebuilds: Inflation is causing home rebuild projects to become more expensive. An increased demand for construction projects are being met with escalating material costs along with ongoing labour shortages.
  • Increased number of claims due to climate change: According to the Insurance Bureau of Canada, $2.1 billion of insured losses were due to severe weather.
  • Weighing the risks from a national perspective: Premiums may rise due to increased weather-related disasters in other parts of the country, such as flooding.

2. Slowing down or halting in consumer spending

One of the first casualties of a recession is the decrease in consumer spending. As such, big-ticket items – such as cars and homes – may not be on your radar. This will mean a decrease in demand for the Canadian P&C insurance industry. While owning a car offers a lot of convenience, it does come with unavoidable costs; gas, maintenance and auto insurance, to name a few. As a by-product of the pandemic and the recent shortages in both new and used vehicles, many Canadians have learned to become less reliant on their vehicles.

Similarly, the housing industry has also taken a hit over the past few years. A recent survey revealed that 19% of Canadians have either postponed or deprioritized home-buying since the start of 2022 due to cost-of-living pressures and high-interest rates. With a full 4% increase in just 2022 alone, holding off on home ownership may not seem like such a bad idea to you right now. As the housing market won’t bounce back right away, hesitancy to buy currently is having a direct impact on the home insurance market. If there aren’t any new homeowners, there won’t be any new policyholders, which is why this is number two on our list of 2023 insurance predictions.

3. Increase in online insurance shopping

Consumers are going to be looking for ways to save money during these unprecedented financial times. One of the best ways to lower your premium is to shop around and compare insurance quotes. Online insurance shopping will become much more popular in the year to come. There are several ways consumers can save on their insurance policies. Bundling your home and auto policies, loyalty discounts and clean driving records can all help lower costs. But according to Matt Hands, Director of Insurance at, Canadians should first and foremost be prepared to shop the market.

“No two insurance companies will rate you the same – they may all look at similar pricing factors, but weigh them differently in their rating calculations,” stated Hands. “Insurance companies are always looking to balance their book of business against inherent risks associated with their customer base. Some insurers will be more willing to offer favourable insurance rates to you than others based on this ongoing risk-balancing exercise.” Comparing quotes from multiple insurers is essential to ensure you’re getting the best price for your unique needs.

In summary

Canada has pulled through the worst of the COVID-19 pandemic; society has reconnected, and businesses are back up and running. In order to succeed in 2023, Canadians will need to show the same grit and determination needed to navigate the uncertainties of the past couple of years. Debbie Coull-Cicchini, Executive Vice President at Intact Insurance believes that Canadians will be facing some headwinds in 2023 – especially as inflation continues to prolong the hard market. “In our current circumstances, the key question isn’t when the market will soften. It’s how can we provide our customers with greater stability, no matter what the future has in store?”

In order to help you navigate the coming year, discussing your plans for the year ahead with your isure broker is a great way to get ahead of the storm. We can help you offset rising insurance costs by offering suggestions to help lower your premiums, such as increasing your deductibles, managing limits and evaluating coverage terms and conditions. Call our office today to discuss 2023 insurance predictions for the new year, and how they may affect you.

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