You are a broker in a large firm in London Ontario. You have been approached by Matthew O'Brien for a quote on automobile insurance. Matthew is 54 years old, married to Mary who is 53. They live in Barrie Ontario with their two children Martha and Mark. Mark is 18 years old and has his G2 license. Martha is only 16 so not yet licensed. Matthew found your brokerage online. He has just purchased a 2022 Ford Escape SE and he will be the principal driver of that vehicle, commuting 68 km each way to work in Toronto. His wife Mary will drive the other family vehicle, a 2018 Ford Focus 4dr. and commutes only 5 km to work daily. They also have a 1994 Chevrolet Camaro Z28 Hatchback which is driven by Matthew for pleasure only. Matthew has been licensed since he was 16 years of age and has no tickets, convictions or accidents on his record. Mary has an equally long and clean record. Matthew does indicate that his son Mark will occasionally drive their cars, is a student at Georgian College and still lives at home. Mark has three speeding tickets currently on his record.

Matthew indicates he has prior insurance with Intact Insurance but is unsure of the expiry date. He indicated that he reached out to them to quote the new vehicle but found the additional premium for this third vehicle unreasonable and wants a competitive quote.

1. Explain in a letter to the applicant why a third vehicle will result in a significant increase in their premiums, especially now that Mark is a licensed driver and is still living in the household. Discuss some of the factors that affect automobile insurance rates and indicate how these factors influence the premium in the Kemp's policy.