How Transport Canada’s latest moves could lower auto premiums

Cars are still too easy to steal, and those high theft rates increase insurance costs for Canadian drivers. That’s led to new vehicle safety rules from Transport Canada, some of which are designed to improve anti-theft standards for new vehicles.

“The changes are aimed at making vehicles harder to steal and could help reduce insurance surcharges for some of the country’s most frequently targeted vehicles over time,” says commentary from insurance rate aggregator Rates.ca.

Once fully implemented, the regulations could reduce insured losses from vehicle thefts, thereby easing pressure on insurers and drivers, adds Daniel Ivans, an insurance expert at Rates.ca.

“Auto theft has become one of the biggest factors pushing insurance premiums higher for vehicles that are easy targets,” says Ivans. “As more vehicles come equipped with immobilizers that deter modern theft techniques, we can expect this to influence risk trends – and over time, that can play a role in how insurers view pricing.” 

Canada’s car insurers have welcomed the federal government’s recent update to motor vehicle safety regulations, which now strengthen car anti-theft protection standards to include electronic methods of attack.

“These advanced attack tools, often referred to as electronic attack tools, can include devices such as on-board diagnostics key programmers (i.e., tools used to program new or replacement car keys by plugging into the on-board diagnostics port of a vehicle), emulators (i.e., devices that allow a user to mimic or emulate car keys for certain vehicle models), and key signal relay equipment (i.e., tools that allow a thief to capture the car key’s signal and transmit it, allowing a second thief near the vehicle to transmit the signal to a receiver and start the vehicle),” says commentary from Transport Canada published in the Canada Gazette.

Related: P&C industry responds to updated anti-theft standards for cars

Ivans notes Transport Canada’s changes remain under review and will only be included in vehicles that reach dealer lots in the future. But he did comment on aspects of the practical implications of what the regulator is considering:

• While immobilizers have been installed in new vehicles for some time, current standards for the devices don’t keep pace with modern theft methods – leaving many cars currently on Canadian roads open to relay attacks. 
• Not surprisingly, many insurers will set yearly surcharges of “roughly $500 to $1,500 on comprehensive coverage for commonly stolen vehicles, particularly certain SUVs, trucks and luxury models,” Ivans says.  
• Over time, as insurers’ claims experience improves for vehicles built under the updated standards for future model-years, it may become possible for insurers to remove, or at least reduce, surcharges they now apply to higher-theft-risk models. 
• Insurers appreciate when car owners are proactive, and some currently provide premium relief when approved immobilizing devices are installed. “But making stronger anti-theft systems standard shifts the burden away from drivers and removes the cost and hassle of aftermarket installation,” notes Ivans. 
• Premium relief won’t happen overnight because insurers base rate changes on data that will take a few years to collect. But vehicles manufactured to updated anti-theft standards may see faster recognition in the form of insurer vehicle rating models implemented after the new rules come into force.

Related: Why auto theft continues to decline in Canada

“These changes will improve vehicle security going forward, but it won’t happen overnight. It will take time for new standards to show up in insurance pricing, and they’ll apply to future model-year vehicles,” says Ivans.

“In the meantime, there are practical steps drivers can take to make vehicles harder to steal, such as using steering-wheel locks, parking in secure locations, and protecting key fobs from relay attacks.” 

Phil Porado

Phil, an award-winning journalist with over 30 years of experience in financial topics, has been managing editor of Canadian Underwriter for more than three years.