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As insurance premiums rise, quotes for usage-based auto insurance increase by nearly 20%

March 31, 2023
5 mins
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RATESDOTCA data shows a nearly 20% increase in demand for usage-based insurance (UBI). 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.

What is telematics and how does it help with my insurance rate?

UBI uses telematics to monitor a driver’s behaviour. Brian Halk, vice president of global marketing at Insurance & Mobility Solutions (IMS), a leader in the insurance telematics business, describes telematics as the use of smart technology to monitor vehicles. This smart technology may be a variety of smartphone apps, Bluetooth devices, or diagnostic and black boxes.

“The telematics data derived from the sensors in the smart technology measure speed, trip distance and time, location, harsh braking and cornering, and distracted driving,” he says.

What factors are tracked and used to lower premiums differ from insurance company to company. Onlia Insurance, for instance, tracks how smoothly you drive and steer during your trip, your speed, focus, and contextual factors (the type of road you are driving on and at what time).

“The Onlia Insurance app uses telematics to calculate a ‘driverscore’ each month,” says Fleur Dujardin, president of Onlia Insurance. Depending on their score, safe drivers in Ontario can see potential savings of up to 30% on their average yearly premium. Some other insurance companies that offer UBI are CAA Insurance, Desjardins, and Pembridge.

Quotes for usage-based car insurance increase by nearly 20%

Ontario auto insurance rates are expected to increase by 7-8% in the second quarter of 2023.

One reason being that several Ontario insurance providers were approved for rate changes late last year. Some drivers may have already seen the effect of these changes, while others are likely to see a higher premium upon renewing their policy. While the federal government has paused rate increases, Alberta drivers will also see an increase in their auto insurance premiums if their insurance company was previously approved for a rate increase.

As premiums have gone up, so have UBI quotes.

According to RATESDOTCA data, quotes for UBI have been on the rise since September last year, with a slight dip only in the last month.

January saw an 18.22% increase in UBI quotes, when compared to the same period last year. There was also a 54.64% month-on-month increase in drivers opting for a UBI discount in January and 39.68% increase in quotes opting for it in February.

Telematics insurance is more popular among a younger demographic

The data also highlights that the use of telematic insurance is more popular with a younger demographic. Nearly 55% of drivers in the age group of 20 to 29 opted for a UBI discount.

“Policyholders have the choice to opt for telematics-based insurance programs,” Halk says. “And exchange their driving data for more accurate insurance premium pricing.”

“Insurance companies will leverage the data to accurately measure driving risk and vehicle usage of the policyholder,” he adds.

On the other hand, only 40% of drivers in the age group of 30 to 39 opted for telematics. And the percentage dropped off even more steeply among drivers in the demographic of 60 and older, with only 30% of Canadians in that demographic opting for UBI.

Perhaps, a young demographic is much more comfortable with using smart technology-based systems. Or possibly, amid privacy concerns of sharing telematics data with insurance companies, UBI hasn’t found favour with an older demographic.

Quotes from male drivers in the age group of 20 to 29 went up 75% in January and 68% in February, as compared to their female counterparts with 65% interested in UBI in January and 57% in February.

To reap the benefits of telematics-based insurance and make sure you are getting the lowest rate, compare the best usage-based auto insurance quotes in Canada.

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Shaistha Khan

Shaistha Khan is an editor and writer at RATESDOTCA. She is a journalist, writer, and communications specialist with 13 years of experience across the personal finance, business and professional development, oil and gas, and travel and tourism industries. She has worked as a content editor and writer in seven countries, with Canada being the most recent.

She holds a Master of Business Administration degree (MBA) and a diploma in Public Relations and Reputation Management.

Experience
  • Credit Cards
  • Travel Insurance
  • Car Insurance
Education
  • Master of Business Administration (MBA)
  • Diploma in Public Relations and Reputation Management
Featured in
  • USA Today
  • New Canadian Media
  • BBC Travel
  • Fast Company Middle East
  • Entrepreneur Middle East

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