Despite a significant drop in auto theft nationally in 2024, auto insurance pricing remains challenged because of increased accident benefits claims costs and rising litigation costs, Aviva Canada’s CEO told Canadian Underwriter last week.

Aviva Canada plc reported a 13% growth in Canadian personal lines (home and auto) insurance premiums in 2024. Around three-quarters of that increase was driven by premium increases, “including double-digit increases in Ontario motor,” as Aviva plc chief financial officer Charlotte Jones explained Thursday in a video presentation to investors.

Certainly, one tailwind for Aviva Canada in auto lines was 2024’s better-than-anticipated reduction in auto theft. The Canadian property and casualty insurance industry paid out $1.5 billion in auto theft claims in 2023.

Équité Association, a national authority on insurance crime, reported in February that auto theft across Canada decreased by 18.6% in 2024. However, it noted the 57,000 autos stolen last year was “still unreasonably high, posing an ongoing safety threat to all Canadians.”

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Prime Minister Justin Trudeau held a National Summit on Combating Auto Theft last February. Various government departments committed to tasks to reduce auto theft, including better information-sharing between groups, intervention measures to block stolen cars from being shipped overseas, and new, tougher regulations to deter car thieves.

In a year-end, 2024 earnings call with CU, Aviva Canada CEO Tracy Garrad said efforts to curb auto theft appear to have succeeded.

“I think the nationwide activity around auto theft reduction, and the task force footing that was put in, has had good effect,” she told CU. “And I think we’ve seen even better than the market level of theft reduction because of the various other things that we’ve done specifically within Aviva Canada. You know, our Tag program has had massive success because we communicated the ‘why’ to customers, they got it, and they acted upon it.”

Under the Tag system, technicians install multiple, difficult-to-locate tracking devices throughout a vehicle. In the event of a theft, these devices can be tracked anytime and anywhere in North America. The tracking makes it easier to recover a stolen vehicle.

Auto insurers have offered premium discounts to consumers who install the Tag system.

 

Auto reform initiatives

Despite gains auto theft reduction, Garrad says Alberta auto had a drag effect on the company’s results, and auto reforms are still required to help tackle other increasing claims costs for auto insurers.

“One of the biggest costs does continue to be legal costs and bodily injury costs,” Garrad said. “And that does need to be addressed and…managed.”

She said Aviva Canada is continuing to work with the Alberta government to make sure future auto reform will work to address the industry’s litigation costs. Alberta has committed to establishing a no-fault auto insurance system in 2027, which would restrict drivers from suing for damages except in exceptional circumstances — for example, a catastrophic injury claim, in which an at-fault driver commits an illegal act causing the accident (i.e., drinking and driving or distracted driving).

To combat rising accident benefits costs, the Ontario government has introduced auto insurance reforms based on creating optionality for clients. The idea is that drivers can now choose which of the previously mandatory auto accident benefits they would like to purchase, so that they can save money on their insurance premiums by not paying for benefits they don’t want.

Starting July 1, 2026, Ontario consumers would have to opt-in and pay extra if they want coverage for lost wages, non-earner benefits, housekeeping expenses, caregiver expenses, educational expenses, visitor expenses, expenses for damage to personal items, death benefits and funeral benefits.

 

Managing auto claims-handling

Meanwhile, Aviva Canada has been working on ways to achieve better outcomes for consumers on the claims-handling side of the business. That includes assuming more control over the supply chain. To that end, Aviva launched its Aviva AutoCare Centres in June 2023, a partnership with its preferred auto collision repair centres.

“For our part, we’re doing everything we can to come up with innovative ways to manage a better supply [of repair centres], a better claims experience, at a better commercial rate for us, and a better outcome for the customer,” she said. “And our auto body shops, of which we’ve now got nine, are a great example of that.

“They’re a win-win-win, because we [the auto insurer] get a better commercial rate, the customer gets their vehicle repaired quicker, and we know that there’s a discernible difference in the customer [Net Promoter Score] from those sites as well.”

 

Feature image courtesy of iStock.com/supersizer