Auto insurers pay out record amount for auto theft

Supply chain issues are creating a hot domestic market for stolen vehicles, which in 2022 cost Canadian property and casualty auto insurers more than an estimated $1 billion — the most the industry has ever paid for auto theft in one year.

“The industry in Ontario paid more on vehicle theft claims in the first half of 2022 than in total for 2020, and the national trend data anticipates losses will continue to grow,” says a new report by Équité Association.

Auto theft during the first three months of 2023 has exceeded that of 2022 Q1, Bryan Gast, Équité Association’s vice president of investigative services, told Canadian Underwriter in May. “And last year was the highest year that we’ve ever seen, so 2023 is shaping up to be a very bad year.”

All provinces are seeing an increase in vehicle thefts year-over-year (YoY) with Ontario (a 48.3% increase from 2021 to 2022) and Quebec (a 50% increase from 2021 to 2022) leading the way.

Alberta is also seeing a rise in auto vehicle thefts (18% YoY) after years of decline, Equite reported. Elsewhere, in private auto insurance regimes in Canada, auto theft increases YoY range between roughly 27% and 57%:

• Atlantic Canada +34.5%
• New Brunswick +35.6%
• Nova Scotia + 26.7%
• Newfoundland + 55%
• PEI + 56.5%

Trucks are the most often stolen vehicles in western Canada, SUVs are most often stolen in Ontario and Quebec, and sedans are choice targets for auto thieves in Atlantic Canada. The majority of vehicle thefts in Ontario (61%) and Quebec (75%) were for models built in 2017 or newer. A majority of Atlantic Canada’s thefts were vehicles made between 2010-16 (43%).

Philip Mather, Definity’s executive vice president and CFO, noted in the company’s 2023 Q1 earnings call that auto theft accounted for about a third of the company’s combined ratio increase in auto from a year ago.

“Although [auto theft] is not a new occurrence, the increased frequency of it has been quite severe,” Mather said. “And we applaud the Ontario government’s recent announcement on its commitment to invest in new measures to combat auto vehicle theft related to organized crime.”

Related: P&C industry reacts to Ontario’s crackdown on auto theft

Ontario announced in May 2023 it is budgeting $51 million dollars to counter the rise of auto theft. Delivered over the next three years, the money will lead to:

• The creation of an Organized Crime Towing and Auto Theft Team led by the Ontario Provincial Police (OPP)
• The creation of a new Major Auto Theft Prosecution Response Team
• A new community safety grant that targets auto theft

 

Theft Prevention

What can brokers tell their clients to reduce the incidence of auto theft?

Insured car owners should take a ‘layered approach’ to safeguarding their vehicles, Équité recommends.

Layer 1 describes simple, common sense safety tips:

• Keep car doors locked at all times
• Never leave keys in the ignition or start the vehicle remotely, even on cold days
• Ensure windows are closed completely when leaving the car
• Park the vehicle in well-lit areas

The second layer involves installing visible or audible anti-theft devices.

• Audible alarms
• Steering column collars
• Steering wheel/brake pedal lock
• On-board diagnostic (OBD) port lock
• Brake and/or wheel locks
• Theft deterrent decals
• Identification markers in or on the vehicle
• Window etchings

Layer 3 is to install some form of vehicle immobilizer

• Smart keys
• Fuse cut-offs
• Kill switches
• Starter, ignition and fuel disablers
• Wireless ignition authentication

The fourth layer is to invest in a tracking system. Tracking services can install multiple, difficult-to-locate tracking devices throughout a vehicle. These devices can help track stolen vehicles.

 

Feature image courtesy of iStock.ca/Andrii Borodai