Rising insurance premiums.

March 27, 2024

Understanding why insurance prices are rising

3 min read


Between the price of rent, daily necessities, gas, and more, there’s no question that Canada is in the thick of a cost-of-living crisis. Amid all these rising expenses, Canadians are seeing another cost going up with each passing year: insurance. 

Wondering why your insurance premiums keep increasing despite no changes to your policy or recent claims? Let’s dive into some of the factors that are driving up insurance costs for everyone.  

Why are insurance costs rising?

Insurance rates aren’t set arbitrarily. Insurers determine your premium based on a number of factors that are unique to you and your level of risk.  

For example, your car insurance rates are determined by assessing your driving record and past insurance claims, where you live, how far you drive to work each day, the type/model of car you drive, and even your age and gender. Underwriters take these factors and weigh them against an existing database of statistics to assess your likelihood of making a claim. The higher the odds, the more your insurance will cost. This means that a young driver with a few speeding tickets or an at-fault accident who drives over 30 km each day to work and then back again will see much higher rates than an older, experienced driver with no accidents and who is retired. 

But what if you’re a decent driver who’s made no claims in the last three years or more who’s started to see their rates rising? Or a homeowner who’s never made a claim and has historically always paid under $1,200/year in premiums? Here are some other factors that are impacting insurance prices. 

Fraudulent claims are on the rise

Fraudulent claims occur when a policyholder has been dishonest for the purpose of receiving a higher claim payout or receiving a payout when no legitimate loss was sustained. These are becoming increasingly common, especially in Ontario. The Insurance Bureau of Canada reports that fraud costs roughly $1.6 billion a year, which equals $236 for every insured driver. Fraudsters can stage accidents for claim purposes, sometimes resulting in very real injuries and damages to property. 

Emergency services, trades, and belongings are costing more 

Inflation is driving up prices for things like emergency services, skilled trades, and even personal belongings. This means that when an insurance company pays for a claim, it tends to cost a lot more. 

The distraction dilemma

Distracted driving now outpaces drunk driving as the leading cause of accidents and deaths on the road. To offset these claims, premiums have increased, and many insurers are now treating distracted driving convictions as major violations due to their association with traffic collisions.   

Postal code influence

If your area is seeing an increase in property and auto claims, whether due to severe weather, theft, or a high rate of traffic collisions, you’re likely to see a spike in your insurance rates even if you haven’t made a claim yourself over the last policy period.  

Rising cost of healthcare services 

The cost of medical services is increasing as well, and traffic collision events will often result in victims needing access to services like physiotherapy to recover.  

Climate change 

Severe weather events throughout Canada are causing more insured damage and driving up insurance premiums across the board. These events, ranging from flooding and tornadoes to wildfires, hurricanes and more, are wreaking havoc on homes and vehicles nationwide. 

Knowing about all these factors isn’t likely to alleviate your concerns and frustrations with seeing your insurance prices go up, but it’s worth knowing that your increasing premiums aren’t necessarily because you’ve done anything wrong. 

What can you do?

Ways to reduce premium outlined below.

It’s always a smart move to chat with an insurance broker when your policy is up for renewal to make sure you still have the right coverage and see if you can find a better price.  
see how your coverage can be improved and rates can be improved. Brokers can go over your policy, make recommendations and even discuss eligibility for certain discounts. Mitch works with over 70 of Canada’s top insurers, so our brokers can help you find the best rates available on the market. 

Some suggestions we might recommend to help you save include: 

  • Installing an aftermarket anti-theft device in your car. If your vehicle is on Ontario’s high-theft list, you may have to invest in certain anti-theft tools to avoid the surcharge that some companies will assign. 
  • Increase your deductible. Talk with a broker about this option since it’s not always feasible for individuals who don’t have the finances to pay out-of-pocket or who won’t see much of a discount in doing so. 
  • If you’re a good driver or someone who doesn’t drive very often, consider opting into a usage-based insurance program. Most insurers will give you a discount just for signing up. 
  • Bundle your auto andhome insurance if you aren’t already. If you are, check to see if your policies renew on the same date. Some insurers will give you even bigger discounts for policies that renew at the same time, plus it’s just more convenient.  

If you’ve noticed significant increases in your insurance costs, give us a call. We’ll help you shop around so you know what options are available from different insurers,  see if you qualify for discounts, and try and find more ways to help you get the best rate possible.  

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