The goal of auto insurance reform discussions currently underway in most provinces is to bring down future claims costs enough to allow prices to fall. In some provinces auto insurance prices are already heading south. Longer term, however, many problems will be exacerbated or will reappear because of increased regulatory intervention. Auto insurance is an unsatisfying market for most insurance companies, generating persistent weak financial results.
A decade ago, the largest cost in the auto insurance system was related to repairing vehicle damage following a car accident. Over the past 10 years, the cost of compensating individuals for personal injuries doubled and is now 50 percent higher than the cost of repairing vehicle damage. In 2002, auto insurers paid over $4.4 billion in bodily injury claims.
The new data
The second quarter
The Ontario auto loss ratio, at 95 percent, is even worse than at this time last year. These results remain unacceptable and unsustainable. Substantial increases in the prices charged for auto insurance in Ontario failed to keep pace with the alarming growth in claims costs.
Seeking lasting solutions
Alarming and sustained increase in personal injury claims are inconsistent with evident improvement in road safety Drivers are frustrated by the increase in insurance prices over the past year. Increased personal injury claims are largely responsible. The sustained increase in injury claims is at odds, however, with the considerable evidence that road safety is improving in Canada. Are there lasting solutions to rising injury claims?
(View IBC Perspective September 2003, pdf)
Insurance Bureau of Canada is the national trade association of the private property and casualty insurance industry. It represents the companies that provide more than 90 per cent of the non-government home, car and business insurance in Canada. To view news releases and information, visit the media section of our web site at www.ibc.ca.