22 October 2004 (Toronto, ON) — The rate applications approved during the first, second and third quarters of 2004 indicate a weighted average rate change of -8.75%. The average rate change was weighted by 2002 market share in the first and second quarters and 2003 market share in the third quarter, for those insurers making rate changes. These changes incorporate the impacts of recent reforms to the automobile insurance system. The weighted average rate changes for the previous reported quarters were +7.32%, +8.48% and +8.22% for first quarter 2003, second quarter 2003 and third quarter 2003, respectively. Because of the October 2003 rate freeze the only rates approved in the fourth quarter of 2003 were for a single new insurer.
The average cost of auto insurance in Ontario at the end of the third quarter of 2004 was 4.22% lower when compared with the end of the third quarter a year earlier. This calculation is based on the renewal effective dates of the rate changes. This compares to the 19.43% average increase reported in the third quarter of 2003 over the third quarter of 2002, and the 11.99% increase reported in the third quarter of 2002 over the third quarter of 2001. The rate decreases approved in the third quarter of 2004 become effective in the third quarter of 2004, or later, for renewal business and will further reduce the average cost of auto insurance at that time.
The approved rate change shown for each insurance company is the average for that particular company. The impact of a rate change on an individual consumer will vary depending on where the consumer lives, the type of car he or she is driving, and other risk characteristics.
The rate changes posted reflect cost saving measures arising from recent reforms, which are being passed on to consumers in the form of lower rates.
FSCO will continue to ensure that insurance companies’ rate changes are reasonable and justified, and that the rates insurers charge are balanced with their ability to meet their future claims costs.
More details, by company, are available at http://www.fsco.gov.on.ca/ under “What’s New” tab.
Financial Services Commission of Ontario
The Financial Services Commission of Ontario (FSCO) was created on July 1, 1998, as an arm’s-length agency of the Ministry of Finance.
As an integrated regulator, FSCO merges Ontario’s regulatory activities governing pensions, insurance, trust companies, credit unions, caisses populaires, co-operatives and mortgage brokers into one body. FSCO’s mandate is to enhance consumer confidence and public trust in the regulated sectors; and also to make recommendations to the Minister on matters affecting the regulated sectors.