For the past couple of years most auto insurers have offered reduced premiums on vehicles with immobilizers. The result, as expected, is a better claims rate in auto thefts. This experience has led some insurers to offer additional premium reductions, but not all are ready to take the plunge.
Even though the claims experience for auto theft is better overall, experience varies with each insurance company so the figures are not as telling as was hoped. Adding to the uncertainty surrounding theft claims are the reports that show an overall increase in auto thefts in 2001.
Many attribute the continued high theft rate to autos that are not equipped with immobilizers, and insurers are debating whether or not to offer additional rebates to consumers to have the anti-theft devices installed.
“The way we look at it is that our rates are based on loss experience,” states Derek Fee, Senior Public Affairs Specialist for State Farm Insurance. Mr. Fee says State Farm is waiting for solid figures that will indicate that the installation of an immobilizer results in decreasing incidents of theft. “Most insurers don’t offer additional discounts [for cars equipped with immobilizers], some do, we don’t presently,” he explains.
Mr. Fee acknowledges that the theft rate is declining since the mid 90s, except for 2001, when the theft rate rose from 2000. However, he does not think that the immobilizer alone can be attributed to the reduction in auto theft. Once figures indicate that the theft rate is declining thanks to the immobilizer, he adds, it then may result in lower premium rates.
A big promoter of the immobilizer, Henning Norup, Vice-President, Information, Research and Analysis for the Insurance Bureau of Canada (IBC) states, “From a security perspective of physically preventing someone from stealing a car, there is nothing available that is more effective than the approved electronic immobilizer.”
An IBC study featuring recent figures on the immobilizer’s effects is expected to be released by year’s end. The last study issued in 2000, showed that cars equipped with the approved immobilizer compared to cars without it, demonstrated a decrease of 42% in theft claim frequency, says Costa Kaskavaltzis, Manager of Automotive Engineering and Vehicle Services at IBC.
With this in mind, the Co-operators General Insurance Company recently began piloting a project in Alberta and Ontario where clients receive a discounted premium if they install an aftermarket standard immobilizer, explains Linda Webb, Product Specialist for the Co-operators. Clients, receive a discount on the cost and installation of an immobilizer.
As well, clients with an aftermarket anti-theft device approved by the VIC receive a 15% premium discount on the comprehensive portion of their policy. There is no added discount if the car came equipped with a manufacturer-installed immobilizer, since the premium is already based on the CLEAR (see inset text) rating.
ING Insurance, however, offers discounted premiums and immobilizer installation discounts in addition to the rebate already calculated based on the CLEAR rating says Louise Rodier, Manager Personal Lines. Therefore, there are discounted premiums if a client has a factory-installed immobilizer or if they have installed an aftermarket one. As well, ING accepts a number of immobilizer systems and not solely the VIC approved standard.
The incentive is rather encouraging to clients since IBC estimates total costs related to auto theft at about one billion dollars per year, which adds an average of $48 to every client’s auto insurance annual premium.
For clients to receive reduced premiums, many insurers solely recognize immobilizer systems that have been tested and meet the IBC’s Vehicle Information Centre (VIC) standard.
Incentives are key
Insurance companies must offer incentives to install immobilizers, if they want to begin seeing a deduction in their claims’ experience, stresses Barry Ward, Auto Crime Project Manager for Manitoba Public Insurance (MPI) and Executive Director for the National Committee to Reduce Auto Theft.
Mr. Ward looks to the history of the Ford Mustang. He explains that the 1994, 1995 and 1996 models were notorious for being stolen, which resulted in premiums increasing dramatically and reduced sales of this model. In turn, insurers pressured Ford to implement the immobilizer. As of 1997, Ford Mustangs have been equipped with immobilizers and Mr. Ward explains that the theft rate for this car has since been drastically reduced.
“The issue is that the insurance industry does have a method of encouraging the manufacturers to do something,” says Mr. Ward. He also tells the tale of the Chrysler Neon, which was a target of theft in 1995 and 1996. Mr Ward indicates that last year approximately 3,000 Neons were stolen across Canada. This number is for the Neon models manufactured before 2001 and not equipped with immobilizers. Chrysler began installing immobilizers in the 2001 Neon model, which resulted in only four being reported stolen last year.
Mr. Ward also stresses that it will take a number of years before a significant drop in auto theft will occur, so it is imperative for insurers to promote clients to install aftermarket immobilizers on older vehicles.
He says older vehicles are sought after since they tend to have no anti-theft device. And with more manufacturers heeding to the pressures of insurers and installing immobilizers, the older vehicles will continue to be targeted. As well, Mr. Ward sees trouble ahead for car manufactures like Suzuki and KIA, who have yet to install immobilizers.
Mr. Ward gives the example of DaimlerChrysler which had a high number of auto thefts but is now addressing the problem. Bob Renaud, Vice-President of Public and Government Affairs for DaimlerChrysler explains that when production begins in August for the 2003 models, all its vehicles except the Dodge Viper and the Dodge Ram Van, will be equipped with the Sentry Key system-an immobilizer device. Mr. Renaud explains that the Viper has a customized immobilizer system and the Ram Van, will soon be taken off the market.
“The unfortunate part is in order to benefit from Chrysler’s efforts in 2003, we are looking at a window of 10 to 15 years to enable us to populate our general population with vehicles with immobilizers,” he emphasizes. Mr. Ward sees a particular problem in provinces like Manitoba and Saskatchewan, where the average car age is 12 years old. He explains that the average age of cars across Canada is eight years old.
Smaller manufacturers are not witnessing a huge theft rate since they are not the most popular cars on the road, he points out. Adding that thieves will not attempt stealing a car they know little about. However, Mr. Ward notes that once manufacturers like GM and Chrysler start installing immobilizers on all their models, car thieves will look elsewhere.
“[Auto thieves] will quickly figure out which one is the easiest to steal and they will steal the Suzukis,” he highlights.
Bill Collins, Manager of Government Relations for Suzuki Canada explains that there are no present plans to implement immobilizers. Mr. Collins, also acted as a representative for the Association of International Automobile Manufacturers of Canada (AIAMC), the committee which supported the approved Canadian immobilizer.
He explains that clients are not asking for immobilizers to be installed as often as popular features like tinted windows. Mr. Collins emphasizes that though immobilizers are helpful in deterring drive-away thefts and joy rides, professional thieves will still have sophisticated equipment enabling them to bypass the immobilizers.