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Review of Auto Insurance Rates REVIEW OF AUTOMOBILE INSURANCE RATES 40 Canadian Cities 10 Provinces September 2003 Provincial Capitals: Auto Insurance Rates (Highest) $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 Toronto, ON Halifax, NS $6,000 Edmonton, AB $4,000 St. Johns, NF Fredericton, NB $2,000 Charlottetown, PE Quebec City, PQ $- Victoria, BC Winnipeg, MB Regina, SK Consumers’ Association of Canada Auto Insurance Rates Study – September 2003 This Consumers’ Association of Canada study on auto insurance rates answers the following question: How much would the same driver pay for auto insurance if they had the same vehicle, same driving record and same claims history, and lived in each of the 40 cities surveyed in this study? 2 2003 Consumers Association of Canada Consumers’ Association of Canada Auto Insurance Rates Study – September 2003 TABLE OF CONTENTS Executive Summary......................................................................................................................... 5 1.0 OVERVIEW ....................................................................................................................... 7 1.1 Study Focus..................................................................................................................... 7 1.2 Study Methodology......................................................................................................... 7 1.3 Study Assumptions ......................................................................................................... 8 2.0 AUTO INSURANCE RATES & SYSTEMS..................................................................... 9 2.1 Common Factors That Affect Rates ............................................................................... 9 2.2 Different Types of Auto Insurance Systems................................................................... 9 3.0 KEY FINDINGS............................................................................................................... 10 3 2003 Consumers Association of Canada Consumers’ Association of Canada Auto Insurance Rates Study – September 2003 SERVICE TO CANADIAN CONSUMERS The Consumers’ Association of Canada is a national non-profit organization that has served the interests of consumers for over 50 years. A network of volunteer members supports the Association across Canada. In addition to its national office in Ottawa, Ontario branches of the Association are active from Nova Scotia to British Columbia and focus their work on local or regional issues. The Association provides an independent consumer voice when government and industry make decisions about products, policies or programs. The Association has worked with thousands of individual consumers in resolving disputes with product and service providers. The Association also advocates solutions to issues that are clearly in the consumer’s interest even when these solutions are in conflict with Government or industry positions. Auto insurance is one of these issues. All comments, analysis, findings and conclusions in this Study are the sole responsibility of the Association. NOTE This Study and earlier releases of portions of this study may also be found at the following web site www.CACBC.com. COPYRIGHT 2003 The Consumers’ Association of Canada copyrights this study and all its contents. Material from this study may be used for research purposes and the media may freely quote from any part of the study. This study may not be used for any commercial or other purpose without the express authorization of the Consumer’s Association of Canada. 4 2003 Consumers Association of Canada Consumers’ Association of Canada Auto Insurance Rates Study – September 2003 EXECUTIVE SUMMARY Auto insurance has historically been a contentious issue across Canada. For most of 2003 consumers have expressed their displeasure with skyrocketing auto insurance rates in all provinces that have private auto insurance systems. Governments in Newfoundland, Nova Scotia, New Brunswick, Prince Edward Island, Ontario and Alberta have promised or taken initiatives to mitigate rates. At the same time, while Statistics Canada reported that rates had escalated by up to 70% in those six provinces other consumers in a province like Manitoba, with a public auto system, experienced rate increases of only 7.2%. The purpose of this study is to inform consumers about the auto insurance issue by providing an independent source of information about auto insurance rates across Canada. This study examines and compares rates in 40 cities in 10 provinces. The same 34 different driver profiles, reflecting a cross-section of vehicle types, driver history, driver ages and gender, claims and marital status, were used in each city to illustrate how much consumers’ pay for auto insurance. This study answers the following important question: How much would the same driver pay for auto insurance if they had the same vehicle, same driving record and same claims history but lived in each of the 40 cities surveyed in this study? The key findings and conclusions of this study are: Finding #1 – Public Auto Insurance Systems Offer The Lowest Rates For Consumers Finding #2 – Toronto Consumers Pay The Highest Rates In Canada Finding #3 – Winnipeg Has Lowest Rates Of Canada’s Capital Cities Finding #4 – Canada’s Largest Cities - Toronto and Calgary Have The Highest Rates Finding #5 - Western Provinces Have Much Lower Rates Than The Maritimes Finding #6 – Alberta Consumers Pay Much Higher Rates Than In Neighbouring Provinces Finding #7 - Ontario’s Rates Are Much Higher Than In Western Public Auto Provinces Finding #8 - Quebec’s Rates Are Much Lower Than Ontario’s Rates Finding #9 – Rates Are Consistent Between Canada’s Public Auto Systems Finding #10 - Under Private Auto Systems, Good Young Male Drivers Pay More Than Bad Older Drivers With High Priced Vehicles 5 2003 Consumers Association of Canada Consumers’ Association of Canada Auto Insurance Rates Study – September 2003 List of Cities Used in Study Province City Newfoundland & Labrador Corner Brook Gander St. John’s Nova Scotia Halifax New Glasgow Sydney Yarmouth Prince Edward Island Charlottetown Summerside New Brunswick Bathhurst Fredricton Moncton St. John Quebec Hull Montreal Quebec Sherbrooke Trois Rivieres Ontario Barrie London Ottawa St. Catherine’s Thunder Bay Toronto Manitoba Brandon Thompson Winnipeg Saskatchewan Lloydminster Prince Albert Regina Yorkton Alberta Calgary Edmonton Ft. McMurray Lethbridge Lloydminster British Columbia Nelson Penticton Prince George Vancouver Victoria 6 2003 Consumers Association of Canada Consumers’ Association of Canada Auto Insurance Rates Study – September 2003 1.0 OVERVIEW 1.1 STUDY FOCUS The purpose of this study is to provide an independent source of information for consumers about auto insurance rates across Canada. Recently, auto insurance has emerged as a significant consumer and political issue in those provinces where rates have increased dramatically over the last year. Each province has its own system of auto insurance. Canadian consumers face a variety of systems such as: • Nova Scotia’s private insurer tort-based system • Quebec’s mixed public insurer no fault injury based system with a private insurer based vehicle damage system • Ontario’s private insurer threshold no-fault injury based system • Manitoba’s public auto based pure no-fault injury system • Saskatchewan’s choice model, where a consumer can purchase either tort or no-fault injury coverage under that province’s public auto insurance system Irrespective of these differences consumers want to know, and this study focuses on delivering answers to a key question: How much would the same driver pay for auto insurance if they had the same vehicle, same driving record and same claims history but lived in each of the 40 cities surveyed in this study? 1.2 STUDY METHODOLOGY This study examines and compares auto insurance rates in 40 cities in 10 provinces in Canada. A total of 34 different rating profiles is used which reflects a wide cross-section of vehicle types, families, families with multiple drivers, single parent families and singles, from young drivers to seniors, both genders, from clean driving records to not so perfect, and a variety of claims histories. In effect, this study provides a snapshot comparison of Canadian drivers. 7 2003 Consumers Association of Canada Consumers’ Association of Canada Auto Insurance Rates Study – September 2003 In the summer of 2003 the Association compiled over 7,000 auto insurance rate quotes from sources across Canada. In the case of those provinces in which private insurers provide auto insurance the study ensured that the rate quotes obtained reflected the range of prices likely to be found in those markets. In those provinces ten different rate quotes for each driver profile for each city was obtained representing those insurers that have significant market shares in those provinces. In the four provinces with public auto systems rate information was obtained directly from each public auto insurer. Auto insurance rate information was obtained from the following sources: • Newfoundland and Labrador - CompuQuote* • Nova Scotia - CompuQuote* • Prince Edward Island - CompuQuote* • New Brunswick - CompuQuote* • Quebec – SAAQ and CompuQuote* • Ontario - CompuQuote* • Manitoba - Manitoba Public Insurance • Saskatchewan- Saskatchewan Government Insurance • Alberta – CompuQuote* • British Columbia - Insurance Corporation of British Columbia * CompuQuote is an independent rate quotation service that obtains
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