May 16, 2026
If your auto insurance renewal arrived this spring and the number on the page made you wince, you are not imagining it. A report by Global News in 2025 found that Canadian drivers have absorbed premium increases of up to nearly 19% on average since 2020 (1), and many are still waiting for relief. The standard explanation — claims inflation — is accurate but incomplete. For a clearer picture of how the cycle works and when it ends, it helps to look at what just happened inside the world's most closely watched insurance company.
Berkshire Hathaway's Government Employees Insurance Company (Geico) lost nearly US$1.9 billion on its underwriting operations in 2022 (2). By 2023, the same insurer posted a US$3.6 billion underwriting gain. That swing — a roughly US$5.5 billion correction in under two years — is not a uniquely American story. It is a case study in how insurers everywhere diagnose mispriced risk, shed unprofitable customers and rebuild margins. Canadian insurers are deep in the same correction cycle. Understanding the mechanics tells you whether rate stability is months away or further off than carriers are letting on.
How did Geico lose US$1.9 billion — and why does that matter to Canadian drivers?
Geico's losses were not caused by a single catastrophe. They grew from two compounding problems: claims inflation and a broken telematics pricing model.
Advertisement
Claims inflation — rising costs for vehicle parts, labour and total-loss payouts — accelerated sharply after 2020. Geico, like many insurers, was slow to reprice its book. Premiums it was collecting in 2021 were calibrated against claims costs from 2019. The gap between what policyholders paid and what claims actually cost created the underwriting deficit. At its worst, Geico's combined ratio — the industry metric that measures claims and expenses as a percentage of earned premium — climbed well above 100%. A combined ratio above 100% means an insurer is paying out more than it takes in on premiums. At that level, rate increases are not a choice; they are a business necessity.
Canadian property and casualty (P&C) insurers faced the same dynamic. Intact Financial Corporation, Canada's largest P&C insurer, openly signalled underwriting pressure during its 2022 and 2023 earnings calls as it repriced its auto book to restore margin (3).
Stop overpaying for insurance. Compare 20+ quotes on Rates.ca and potentially save $500+ on auto insurance.
Must Read
- Warren Buffett used these 4 solid, repeatable money rules to turn $9,800 into a $150B fortune. Here’s how to apply them to your own life
- Stop the leak: 5 costs Canadians (still) overpay for every single month. How many are sabotaging your 2026 budget?
- This 7-step plan from Dave Ramsey is designed to help you ditch debt, save more, and build wealth — here’s how it works
Join 19,000+ readers and get Money.ca’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
The claims inflation problem: same in Canada, same fix
Warren Buffett, in his 2024 shareholder letter, credits Geico’s recovery with more up-to-date underwriting and improved pricing discipline(2). The insurer's policy count fell sharply as it let unprofitable customers lapse. What remained was a leaner, better-priced policy.
Canadian insurers have followed a similar path. Rate filings — the formal process by which insurers apply to provincial regulators for permission to increase premiums — surged between 2022 and 2024. In Ontario, where auto insurance rates are regulated by the Financial Services Regulatory Authority of Ontario (FSRA), multiple carriers filed for increases. Based on FSRA premium average data, the cumulative effect across several renewals was an increase of up to 20% (4).
The secondary driver in Geico's case — telematics mispricing — also has a Canadian parallel. Usage-based insurance (UBI) programs, which set premiums partly based on driving behaviour data collected through an app or device, were aggressively marketed in Canada from 2019 to 2021. Early adopters were often offered deep discounts to enrol. As actual claims data rolled in, some UBI pricing proved too generous, and insurers began tightening the discount structure or converting policyholders to standard-rated products.
What the Geico turnaround signals about where Canadian premiums go from here
Geico's return to profitability is meaningful precisely because of how fast it happened. From a US$1.9 billion cumulative underwriting loss in 2022 to a US$3.6 billion gain in 2023 alone — that is a remarkable two-year correction. The lever Buffett's team pulled was underwriting discipline: tighter risk selection, faster repricing and a willingness to shrink the book.
Advertisement
The Canadian industry is not there yet, but the direction is visible. Intact's combined ratio has trended toward profitability across recent quarters (5), which is an early signal that the hardest part of the repricing cycle may be behind the largest players. Smaller regional carriers and those with higher catastrophe exposure may take longer to stabilize.
The practical implication: premium increases are unlikely to reverse sharply, but the pace of increases may moderate through 2026 as the biggest carriers reach combined ratios below 100%. Policyholders who renewed at a high rate in 2023 or 2024 may see smaller increases at their next renewal — or, if they shop, may find the competitive gap between carriers has widened.
Read more: Here are the 3 net worth milestones that change everything for Canadians (and what they say about you)
How to read your insurer's financial health before renewal
Combined ratio data is public. Canada's largest personal lines insurers — Intact, Definity Financial and Aviva Canada — publish quarterly earnings reports that include P&C combined ratios. A carrier whose combined ratio has moved below 100% in recent quarters is no longer in recovery mode on underwriting. That matters because an insurer still correcting losses may apply larger-than-average rate increases to your renewal regardless of your personal driving record.
If your insurer has been acquired or has exited your province, compare immediately. A new parent's pricing model may not favour your risk profile and the underwriting rules that kept your rate stable under the previous carrier may no longer apply.
The Geico case is a reminder that insurers set prices based on the aggregate experience of a book — not just your individual history. When a book is mispriced, everyone in it absorbs the correction. Understanding that mechanism won’t lower your bill, but it changes how you shop: you are looking not just for the cheapest rate today, but for a carrier that has already completed its underwriting correction and is competing on price again rather than recovering losses.
What to do now
- Check your insurer's combined ratio — above 100% means they are losing money on underwriting and will raise rates. Intact, Definity and Aviva publish quarterly results
- A combined ratio trending below 100% signals rate stabilization. Use it as a signal of when to shop versus when to lock in a multi-year policy
- If your insurer has been acquired or has exited your province, compare immediately — the new parent's pricing model may not favour your risk profile
- Don't renew automatically. An insurer still in recovery mode may be aggressive on your rate even if your driving record has not changed
- Ask whether your usage-based insurance (UBI) discount structure has changed at renewal. If your discount has narrowed, shopping the market may recover more savings than the UBI program now offers
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Global News (1); Berkshire Hathaway 2024 Annual Report (2); Newswire (3); FSRA (4); Insurance Business Magazine (5)
You May Also Like
- Here’s how to retire in 10 short years no matter where you live in Canada — even if you’re starting with $0 savings
- Here are the 3 essential moves to make once you’ve saved $50,000
- Here are 6 simple ways to avoid the stress of living paycheque to paycheque, according to Suze Orman
- Your daily coffee habit isn't the problem. Prioritize these 4 critical investments instead and watch your net worth skyrocket
Sandra MacGregor has been writing about finance and travel for nearly a decade. Her work has appeared in a variety of publications like the New York Times, the UK Telegraph, the Washington Post, Forbes.com and the Toronto Star.
Credit Cards • May 01
