Why fewer car thefts doesn’t mean cheaper car insurance

Comprehensive insurance isn’t the most expensive part of your auto coverage 

  Dramatic declines in car theft will not likely translate into cheaper car insurance, drivers may be sad to learn.

Diligent police work and new anti-theft devices have cut thefts by half, or about 9,800 cars per year in the Greater Toronto Area, for instance.

But when it comes to insurance, nearly a third of all car owners already pay nothing because they have no theft coverage, and those who do, pay very little for it.

The average premium for what’s called comprehensive coverage — for everything from theft to broken glass — was only $107 per car in Toronto, Peel and southern York regions in 2010, down from $134 in 2006.

This compared with a total average premium of $1,877 per car in the Toronto area in 2010, according to the General Insurance Statistical Agency.

Yet, as high as those premiums were, insurers reported paying $643 more per car for injury accident benefits than the $755 they collected from premiums.

This left a staggering gap of $1.22 billion, enough to buy 40,700 cars at $30,000 each.

It’s still unknown whether changes to auto insurance and other measures implemented starting Sept. 1, 2010 — including a $3,500 cap on treatment of most minor injuries — will close that gap.

Bryan Yetman, former president of the Insurance Brokers Association of Ontario, said “the real challenge is eliminating fraud in injury-related claims. If that can be done it would have a much more significant impact on insurance rates in Ontario. Everyone can take an active role in stopping that if they know someone who is committing insurance fraud.”

According to Joel Baker, president of MSA Research Inc., a Toronto-based insurance industry analyst, “insurers are still justifiably wary (about reducing premiums) as there are still major uncertainties about trends in the Ontario auto insurance market.

“Accident benefit claims dropped in 2011, but third-party liability bodily injury claims are on the rise. In addition, there is concern about whatever the regulatory definition of catastrophic impairment will be, among other things.”

The provincial government is considering whether to change the definition of an injury so catastrophic that a person should be eligible for up to $1 million of accident benefit coverage.
The limit for less severe injuries can be $50,000, $100,000 or $1 million, depending on the option chosen by the driver.

The Financial Services Commission of Ontario announced recently that it had approved an application by Co-operators General Insurance Co. of Guelph to reduce rates for policies renewed after March 26 by a province-wide average of 1.94 per cent, and after April 15 by 4.46 per cent. Eight other insurers were to reduce rates by less than 1 per cent, while five others increased rates.

Torstar News