Insurers unimpressed with Ottawa-imposed immobilizers

By Reynaldo Marquez | May 19 2005 03:50PM

Ottawa’s recent edict on mandatory installation of anti-theft devices (immobilizers) on new vehicles was applauded by the insurance industry. But insurers fear that insufficient security standards are an invitation to thieves.

As of September 2007, Transport Canada will require automobile manufacturers to install immobilizers on new vehicles. This new regulation covers automobiles, light vans, SUVs and mini-vans. The security devices must meet at least one of the two following standards: the Canadian security standard developed by the Insurance Bureau of Canada (IBC) or the European standard, already in effect in all members of the European Union.

In unison with its insurer members, the IBC has hailed the Ottawa initiative. But in a press release it expressed disappointment over the federal government’s decision to recognize the European standard, considered inferior to the Canadian version.

Having recognized the benefits of built-in immobilization systems, insurers are still calling for the installation of more sophisticated systems, after the vehicle leaves the plant. Economical Insurance, for one, offers rebates on premiums to insured that install immobilizers that exceed the minimum standard, said communications director Cindy Graham.

Several other insurers contacted by The Insurance Journal had not yet acted on the news, but expressed reservations about the minimum standard. Bernard Tremblay, actuarial vice-president, Quebec, at ING Canada, predicted that thieves would quickly find ways to get around the basic systems.

For their part, installers of more sophisticated protection systems are not losing sleep over the prospect of losing business. As Mario Desmarais, director of major accounts at Belron Canada put it, “insurers have always endorsed complementary anti-theft systems.” Examples include having car parts engraved (or marked) by Sherlock Anti-theft Marking, and installing Boomerang tracking systems, he said. He thinks insurers will continue to grant rebates to insured that install immobilization systems that are more sophisticated than those required by the standard.

Belron repairs windshields, marks auto parts and installs Boomerang tracking systems. The company operates through subsidiary Standard Autoglass (Duro Vitres d’auto in Quebec).

Insurers, installers and manufacturers agree that the basic systems required by Ottawa are mainly effective at deterring joy rides. Combating organized theft requires more powerful solutions, they insist.

“This initiative is in line with our objective: to protect vehicles from theft,” says Sylvain Gélinas, president and CEO of Vigil GPS, a tracking system supplier. “The government is sending a positive message. It will raise people’s awareness of the importance of protecting their assets. But it will not make a dent in organized theft. There are still many stolen cars that are never found,” he added.

“Immobilizers are mainly effective at deterring joy rides. But with a stolen vehicle recovery rate of barely 40%, these systems will never be effective enough to counter organized criminal networks,” says Frédéric Marcantonio, insurance development and strategic distribution manager at Boomerang Tracking.

“These crime rings operate mainly in Quebec, and in provinces like British Columbia and Ontario, which all have port cities,” making it easier to illegally ship stolen cars, he explained.

“Installing immobilizers on the assembly line means that they are all installed in the same spot. Thieves can then circumvent these systems very quickly,” Mr. Marcantonio says.

Standards fall short

When he announced the decision in March, federal transport minister, Jean Lapierre, said the application of the new regulation will surely reduce the number of car thefts and the number of injuries that occur when a stolen vehicle is crashed, which is often the outcome of joy rides.

Transport Canada added that it had no choice but to impose this regulation. Several manufacturers had already installed immoblizers on their own, but some of these systems did not meet the current standards. “Ottawa had to legislate in this area,” said Jay Rieger, regulatory development engineer at Transport Canada.

The government would have preferred to reach a voluntary agreement with auto manufacturers, he added. But no consensus emerged.

The Insurance Journal revealed the government’s intentions to make immobilization devices mandatory back in April 2003. Ottawa then said it “wanted to show openness” by letting the industry formulate its own regulatory measures.

Several manufacturers were advocating for immobilization systems, but their security standards were considered insufficient by the government, Mr. Rieger explained. “Some manufacturers wanted a laxer standard that they had already met. Our analyses showed that this standard would not meet the Canadian security requirements.”