The Ontario government is inviting drivers and consumers to share their views on how to lower the province’s auto insurance rates, part of a broader initiative on auto insurance reform.
“The previous government’s failed system of stretch goals on auto insurance is clearly broken,” Ontario Minister of Finance Vic Fedeli said in a release addressed to consumers announcing the new public consultation process. “Auto insurance rates in Ontario are among the highest in the country, and action is needed. We want to hear directly from you on how to improve the system.”
Comments can be submitted up to February 15, 2019. Consumers can share their views here.
Fedeli’s remarks refer to an attempt by the former Liberal government to require the province’s insurers to provide a 15% rate cut to Ontario drivers by August 2015. The minority Liberal government made the promise in 2013, effectively gaining the support of the opposition NDP to pass its budget at the time.
After the majority Liberal government of Kathleen Wynne was elected in 2014, the government eased off its requirement for a mandatory 15% decrease, calling it a “stretch goal.”
Economical Insurance was among few insurers that actually did offer the mandated 15% decrease – with lingering financial effects. Focusing only on its personal auto results, the company reported to Canadian Underwriter last year that it lost $1.21 in 2017 for every auto premium dollar it was taking in. The company filed for an auto rate increase in the Summer of 2017.
In the latest available statistics from Insurance Bureau of Canada (IBC), auto insurers collectively spent $1.02 on claims for every dollar or premium they were raising for Ontario auto in 2017.
Rates approved by the Financial Services Commission of Ontario (FSCO) in 2017 reportedly showed an average rate decrease of approximately 8%.
Ontario’s Putting Drivers First consultation will coincide with a review of Ontario’s auto insurance rate regulation system, jointly conducted by the Ministry of Finance and the Financial Services Regulatory Authority of Ontario, as previously announced in the 2018 Ontario Economic Outlook and Fiscal Review.
In addition to the public consultation process, the province’s multi-prong auto reform effort announced thus far includes:
Ontario auto insurers are encouraging Ontario drivers to take up the province’s effort to hear consumers’ stories.
“We hope that this process encourages constructive feedback to support positive changes to auto insurance for Ontarians,” said Kim Donaldson, IBC’s vice president for Ontario. “We have been calling for changes to how auto insurance is regulated for years. The province’s auto insurance system is outdated and Ontario drivers pay too much for their insurance. We believe there is a better approach.”
“The government looking at auto reform is certainly well-needed,” said Colin Simpson, CEO of the Insurance Brokers Association of Ontario (IBAO). “I think engaging a public process and obtaining input into the existing product and suggestions on how it could be improved is a very commendable action on their part and the IBAO will be certainly engaging in that process.”
Canadian Underwriter asked if there is anything in particular IBAO would like to see. “What we’ve been advocating is a broad review of the auto product in Ontario rather than just picking on specific aspects of it,” Simpson said, noting that one aspect that has often being discussed is around territorial ratings. “Really, if we want to address the affordability of the product at large, we need to do a broad review of the product as a whole and that is where the government seems to be going, so we are very encouraged at this point.”
In a statement, Aviva Canada president and CEO Colm Holmes described the consultation process with consumers “a positive step towards meaningful product reforms.” He emphasized the importance of regulatory change — one that would allow insurers to adjust in a timely manner to changes in claims inflation and market demands.
“Aviva is committed to working with the government to create a more modern regulatory framework, which we have long championed on behalf of consumers,” Holmes said. “The single most important change we can make to benefit drivers in 2019 is regulatory reform that allows consumers more choice about the product they buy and more options to help them save money on premiums.”
by David Gambrill