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| Solutions to alleviate pressure of rising auto insurance costs |
The solutions to rising auto insurance rates – like those which last hit Albertans – aren’t simple ones, but there are fixes that governments and insurers could implement to bring some relief to consumers, consistent with an auto expert.
For one, distracted driving continues to be a problem and has an impression on drivers’ ability to seek out auto coverage. However, harsher penalties than those currently in situ could help underscore the importance of driving distracted.
“Canadians still be distracted by more and more a day , and if it’s not their phone, it’s the infotainment system and everything happening in their car,” said Justin Thouin, co-founder and CEO of LowestRates.ca. “If drivers were penalized to a greater extent for distracted driving, I’m confident that there would be less of it. as an example , if you’re caught distracted driving, you lose your license for a year. i feel that might cause drivers to consider before they picked up their phone and text while they were driving.”
While Canadians understand that distracted driving is against the law , it’s not necessarily getting through to them that this is often something that not only could make their insurance costs rise, but also can be deadly.
“This is where if the govt wants to urge involved the auto insurance industry, this is often a neighborhood where they have to step in. this is often a neighborhood where they have to use that stick and use exceptionally harsh penalties for those who’ve been caught distracted driving,” said Thouin. “I don’t think Canadians view distracted driving as a criminal offense . If you think that about the foremost likely way you’re getting to get killed today, it’s due to something to try to to with a car. When you’re driving a car, you’re essentially employing a lethal weapon and if you're distracted while you’re using this lethal weapon, you’re being criminally negligent – you’re taking other people’s lives in your hands during a negligent fashion.”
Until Canadians feel the pain of a distracted driving penalty that really impacts their lives during a massive way, Thouin says he doesn’t think the difficulty will get away .
Another solution that governments could examine more closely may be a thanks to address insurance fraud – a serious issue in Ontario and one that also requires stricter penalties.
“If the govt put even harsher criminal sanctions against people who perpetrate insurance fraud, again, it could swing the balance within the direction of those fraudsters saying, ‘you know what, it’s just not worthwhile if I’m facing X-number of years in prison for perpetrating this insurance fraud’,” said Thouin.
Mandatory winter tires in snowy provinces could likewise help alleviate rising insurance costs, as could a much bigger push for telematics and usage-based insurance.
“In weather areas like Ontario and Alberta where prices are very high, it'd add up to mandate winter tires so as to mitigate the amount of accidents,” said Thouin, adding that telematics solutions also are a win-win for both consumers, also as insurance companies. “For consumers, if you’re a secure driver, once you use these telematics apps you'll pay significantly less for insurance, and for insurance companies it’s a win because people with these apps tend to be more vigilant and have a tendency to be better drivers, and thus they’re paying less in claims. And albeit they’re charging less premium, they’re more profitable.”
He adds that insurers aren't being aggressive enough in educating Canadians that these options exist, which they’re not especially invasive or that much of a pain to put in .
“There’s still tons of individuals that believe that you simply got to attach a tool to your vehicle so as for telematics to be effective, whereas actually it’s an app on your phone. i feel that if the insurance industry got together as a gaggle , or maybe individually, and began advertising this with greater frequency and greater spend, i feel you’d see tons more people taking over telematics,” said Thouin, “because the very fact of the matter is that the average Canadian doesn’t really understand telematics and doesn’t really know what it means.”
In fact, the personalization of automobile insurance more broadly is already a step that the Ontario government is taking and more provinces should consider. Not everyone needs an equivalent insurance package and this is often another tactic that would be utilized in order to make personalized lower pricing for consumers that's successively more profitable for insurance companies, consistent with the LowestRates.ca CEO.
“These are some ways in which insurance claims can go down and would allow the insurance companies to be more profitable and thus charge less,” explained Thouin. “It was a difficult year for insurance in 2019, but [there’s] a litany of areas that would be checked out so as to enhance the environment, not just for drivers, but also for brokers and for insurance companies.”