News & Resources

Canadians Pay More for Insurance Compared to Other Countries

May 12, 2021
3 mins
A senior couple look worried as they review their monthly bills

A new C.D. Howe Institute report says Canadians are paying premiums “at the high end of international comparisons” for car insurance and home insurance.

The report, “The Price of Protection: Benchmarking Canada’s Property & Casualty Industry Against its Global Peers”, looks at the amount of money Canadians pay for insurance versus what consumers in other developed nations using data from the Organization for Economic Co-operation and Development.

“As can be seen from the results of this first benchmarking exercise, Canadians tend to pay higher premiums for risk transfer than citizens in many, if not most, other developed nations,” said the report’s co-author, Alister Campbell, in a press release. “This is happening despite the core products being offered by a highly competitive industry with normal claims payout ratios and significantly lower returns on equity. So, the explanations must lie elsewhere.”

The report notes from 2015 to 2018, on average, Canadians paid almost $50 million in insurance premiums for liability, property, and auto coverage. That is more than 2.3% of our country’s Gross Domestic Product annually. In general, the report reads, these relatively higher premiums appear in line with claims costs. Canada’s loss ratio (the ratio of losses of insurers to premiums earned) on average has been roughly mid-pack among benchmark peers, with around 66% of premiums paid out in claims.

For car insurance, the issue appears to be directly correlated with ineffective government intervention, the report continues, whereas for property insurance, the explanations are harder to identify. The report also says these are likely due to “a combination of naturally risk-averse Canadian consumers, the costs of higher prudential capital requirements and the absence of government mechanisms common in many other developed nations to support consumers facing catastrophic risk — such as earthquakes or flooding — leaving consumers to absorb a higher total share of risk from these types of events through higher risk-transfer premiums.”

Concerning each Canadian province and territory, C.D. Howe finds Ontario, B.C., and Manitoba have higher-than-average premiums for auto insurance. In terms of personal property insurance, Albertans pay well above the national average. C.D. Howe suggests that it is in part a reflection of the costs associated with the province’s recent history with natural calamities such as floods, wildfire, and hail.

“Hopefully, this exercise will prompt, as a starting point, better data collection and reporting, and further research and dialogue, so that we can all better understand this essential – but often under-appreciated – segment of the Canadian economy,” adds former C.D. Howe policy analyst, Farah Omran, who co-authored the report with Campbell.

car mascot.png

Don't waste time calling around for auto insurance

Use RATESDOTCA to shop around, and compare multiple quotes at the same time.

Liam Lahey

Liam Lahey is a versatile marketer with experience as a staff and freelance writer for many business and technology publications and newspapers. He previously worked as the editor and media spokesperson for RATESDOTCA, handling home, auto, and travel insurance topics.

Latest auto insurance articles

As insurance premiums rise, quotes for usage-based auto insurance increase by nearly 20%
RATESDOTCA data shows a nearly 20% increase in demand for usage-based insurance. Although the use of telematics in the auto insurance industry has been around since 2013, there seems to be a growing interest with more Canadian drivers now opting for it.
Learn More
5 mins read
69% of Albertans think distracted driving is the greatest threat to road safety, yet 27% drive distracted
Through a recent RATESDOTCA survey, we determined how likely Albertans are to engage in distracting behaviours behind the wheel and whether they think they’re safe. The results serve as a reminder to stay aware of how distracted driving can impact not only everyone’s safety, but your car insurance rate too.
Learn More
7 mins read
You’ve been a victim of vehicle theft, now what?
Vehicle theft is seriously discouraging. If you find yourself a victim to it, follow these steps.
Learn More
3 mins read

Subscribe to our newsletter

Stay on top of our latest offers, relevant news and tips!

Thanks for joining!

You'll be hearing from us shortly - stay tuned.