Canada’s car theft problem may be showing signs of easing, but motorists will likely continue to feel the pressure on their insurance premiums, experts tell Global News.
Nearly half (48 percent) of respondents to a recent Ratehub.ca survey said they have recently experienced a “significant” increase in auto insurance premiums.
However, there are some steps individual drivers can take to put the brakes on rising costs, experts say, both before and after leaving the dealership lot.
Canada’s reputation for car thefts isn’t exactly great, with a recent Interpol report ranking the country in the top 10 for stolen vehicle reports.
The situation has led to an increase in insurance payouts. Private auto insurance companies paid out $1.5 billion in theft claims last year, a 254 percent increase over 2018 levels, according to the Insurance Bureau of Canada. In Ontario, those costs rose above $1 billion for the first time, an increase of 524 percent.
Morgan Roberts, vice president of RH Insurance, says that in her 15 years as a broker in the industry, car theft has always been present, but in recent years it has been something very different.
‘It was astronomical. There have been more thefts than I have ever seen in my career. So that certainly also has costs in the insurance sector,” she tells Global News.
Why are car insurance premiums increasing?
Car thefts have received quite a bit of attention from federal and provincial governments and law enforcement agencies over the past year, and there are signs of improvement.
A new report released Tuesday by the nonprofit Équité Association showed a 17 percent national drop in car theft in the first six months of 2024 compared to the same period last year.
But premiums aren’t going up immediately in response to what’s happening today; it’s mostly a matter of looking to the past, says Adam Mitchell, CEO of Mitch Insurance.
When claims rise, there is a delayed impact, after which insurers begin to increase premiums on affected consumers’ policies, he explains. Insurers must book these claims and prove to regulators that they are incurring these losses before they can fully increase premiums to cover these losses.
Financial news and insights in your email every Saturday.
Receive weekly money news
Receive expert insights, questions and answers on markets, housing, inflation and personal finance information every Saturday.
Insurance acts like a big pot of cash that many people pay into, so that only a few are covered when they need to make a claim. The more withdrawals that come out of that pot, the bigger that pot must become in the form of rising premiums, Mitchell says.
Even if your driver’s license remains clean, you may see your premiums increase as a result.
“It’s okay to remember that you didn’t necessarily do anything wrong. The environment has changed,” he says.
Mitchell says the cost of buying a particular car should take insurance premiums into account, as it’s more common for stolen cars to be more expensive to insure.
“When you buy a car directly or indirectly, you are also looking for insurance,” he says.
On the Équité Association’s list of the 10 most stolen cars in Canada for 2022, the Honda CR-V topped the list. The Dodge RAM 1500 Series, Ford F150 Series, Lexus RS Series and Toyota Highlander rounded out the top five, with different model years stolen more than others within each vehicle type.
Mitchell adds that this process can be challenging, however, as companies will have a ‘dynamic’ list of the vehicles at high risk of being stolen, with different insurers highlighting different cars to compete with each other .
Where you live can also be a risk factor that drives up premiums, with affluent neighborhoods full of expensive SUVs often serving as hotbeds for thieves.
“It used to be that the most sought-after insurance customers were people with good credit and lots of assets who lived in nice areas,” says Mitchell. “Well, guess where the thieves decided to buy all these wonderful toys and trinkets?”
What can you do to lower your car insurance premium?
Comparison site Ratehub.ca, affiliated with RH Insurance, published a survey in June on Canadians’ attitudes toward car insurance and the ways they try to save. The company surveyed 1,250 adults via an online panel between April 8 and May 12.
About 57 percent of respondents said they changed insurers because of a price increase, with three in five saying they would consider dropping a certain level of coverage just to get a lower rate.
About two-thirds of drivers say they compare car insurance and shop around to save, while 58 percent bundle multiple insurance products and 41 percent increase their deductible.
In addition to working with a broker to compare multiple insurers at once, Roberts recommends asking if companies will offer discounts for installing certain anti-theft technologies, such as a tag system that helps track a vehicle if it is stolen.
But she also recommends that you take out insurance that suits your vehicle and needs, so that in the event of theft you receive the payout you actually need.
“I always recommend that you contact your broker and go through your life at that moment, what you do with the car, what you need the car for, just so that it is properly assessed. So if something gets lost, it’s not a problem,” she says.
Mitchell says that where possible, parking in a garage is a good deterrent for thieves, as are physical immobilizers or the ‘club’ steering lock.
However, he imagines that the ultimate solutions to car theft will have to come from the manufacturers themselves. For example, facial identity, two-factor authentication, or cars that are unlocked only with your smartphone could be used in the same way they are today for online accounts and personal devices.
But Mitchell warns that there are delayed effects here, too, and that automakers will only start implementing these tools once car theft generates their own bottom line – namely, if consumers stop buying frequently stolen models.
Rising insurance premiums have left 74 percent of those who don’t own a car doubting their ability to own a vehicle in the future, the Ratehub research found.
Mitchell says some drivers and vehicles could become uninsurable in the future if auto theft trends remain high.
That is a consequence that, according to him, has not yet been fully realized in the market.
Instead of the idea that it’s consumers versus insurers or manufacturers, Mitchell argues that the consequences of car theft are creating increasing challenges across the industry. He says the ripple effects of increasing car theft are a “profound problem” that players at all levels will grapple with in the coming years.
“Fasten your seat belt and realize that we are in this together,” he says.
