The cost of auto insurance is expected to soar to $5 billion a year as the auto industry faces a record low auto sales rate and the economy slows.
That is expected in 2019 as the Canadian Auto Workers Association says the cost of the insurance industry’s business could rise to $3.2 billion a month in 2019.
The number of insured cars and trucks in Canada has plummeted from more than half a million in 2005 to a fraction of that in 2019, according to the CAA.
That means auto insurance companies are facing a serious financial challenge.
The cost for insurance companies has already risen by more than $1 billion since the start of the recession in 2007, according the association.
The association says the insurance companies could face a loss of more than a third of their revenue in 2019 due to the high cost of repairs, which has been increasing steadily since the end of the global financial crisis in 2008.
The association said auto insurers will need to slash costs to stay solvent.