For Canadian homeowners, navigating the landscape of insurance rates has become increasingly important, especially following the trends we observed in 2023. Last year, auto insurance rates saw a significant uptick, rising by 10% compared to 2022. Home insurance rates were not far behind, with a 6.6% increase over the same period. This information, sourced from the Applied Rating Index's latest release, highlights a noticeable shift in the insurance market, affecting both personal auto and property insurance premiums.
Steve Whitelaw, the Senior Vice President and General Manager of Applied Systems, remarked on this trend, noting, "The close of 2023 saw the highest premium rate index for both personal auto and personal property seen in years." This upward trend was not limited to an annual comparison but was also evident on a quarterly basis. During the final quarter of 2023, auto insurance premiums rose by 4.8% from the third quarter, while home insurance premiums experienced a 2.4% increase in the same timeframe.
The Applied Rating Index serves as a barometer for the current state and directional trends of personal lines auto and property insurance rates across Canada. By analyzing completed quotes, it provides insight into the average trends in premium rates, highlighting the universal increase in rates across the country.
In terms of regional disparities, every province witnessed a year-over-year increase in personal auto insurance premiums. Quebec and the Atlantic provinces led the pack with increases of 12.4% and 10% respectively, while Ontario and Alberta also saw notable hikes at 8% and 7.6%. The trend in personal property insurance rates mirrored that of auto insurance, with increases across all provinces. British Columbia experienced the most significant rise at 11.1%, followed by the Atlantic provinces at 9.1%, and Ontario at 8.3%. Other provinces, including Saskatchewan, Manitoba, Quebec, and Alberta, also saw increases, albeit at a more moderate pace.
These increases can be attributed to several factors. On the auto insurance front, the return to office commutes has led to a rise in collision frequencies. Moreover, auto theft claims surpassed $1.2 billion last year, setting a new record. The inflationary environment, coupled with supply chain disruptions, has escalated repair costs, primarily due to the higher prices of parts and the integration of advanced technologies in vehicles.
Similarly, the property and casualty (P&C) insurance sector in Canada faced challenges, with more than $3.1 billion paid out in claims related to natural catastrophes last year, marking it as the fourth highest year on record. Inflation and supply chain issues have also inflated the costs associated with home repairs following these catastrophic events.
For homeowners across Canada, these trends underscore the importance of staying informed about insurance rates and understanding the factors driving these increases. Whether it's auto or home insurance, being aware of the current market conditions can help homeowners make more informed decisions about their insurance coverage and financial planning.