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We’ve paid enough. It’s time to

Get Rates Right

Auto insurance rates are too high in Ontario. Ontarians know it, insurance companies know it, and now the government does too. They’re looking for input from Ontario drivers. The government is accepting your feedback until February 15.

 
 
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how does auto insurance pricing work in ontario?

 

Insurance companies and a regulatory agency of the Minister of Finance – the Financial Services Commission of Ontario (FSCO) – work together to approve auto insurance rates. Insurance companies must justify their pricing with historical claims data, and FSCO approves or rejects the pricing they put forth.

The goal of insurance is to allocate premiums in proportion to accident and claim patterns of established risk profiles. Generally speaking, the cost of insurance must cover the cost of claims.

In April 2019, Ontario will see the introduction of a new regulator, the Financial Services Regulatory Authority (FSRA). They have just outlined their 2019 Proposed Budget and Priorities.

 
 
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why do ontario drivers pay more Than other Canadians?

 

The insurance landscape in Ontario is different than elsewhere in Canada. Here are some reasons why:

  1. The minimum coverage offered to consumers (what you receive as payment in the event of a claim) is set by the Ontario Government. It’s broader than what’s provided in other provinces.

  2. Insurance companies cover medical expenses after a car accident. The majority of these costs are not covered by OHIP, which isn’t the case elsewhere in Canada. Incorporating these costs into the public health care system would cause auto insurance prices to drop.

  3. The legal system is incentivized to escalate the value of claims in order to increase their contingency fees.

  4. Insurance fraud is much more prevalent in Ontario than elsewhere in the country.

  5. System-wide, there are many inefficiencies in Ontario, which lead to higher rates across the board.

 
 
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How is my insurance premium calculated?

 

Your insurance rate is calculated using a number of variables that predict your personal level of risk. The variables include:

RATING CLASS: Based off driving experience and how much you use your vehicle.

ACCIDENT AND CONVICTION RECORD: Having a history of reckless driving leads to higher insurance premiums.

COVERAGE: Depends on policy type (deductibles, optional extensions, limits, etc.)

VEHICLE TYPE: Calculated by the make and model of the car, safety features, etc.

RATING TERRITORY: Based on the address and area of operation of the vehicle. There are 55 geographical rating territories in Ontario, 10 of which are in the Greater Toronto Area. Why 55? Because FSCO mandates a maximum of 55 different regions.

 
 
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make your voice heard

We have made the following 3 suggestions to the government - if you agree, please share these points in the comments section of the survey.

  1. Keep geographical rating as a variable. It’s an objective way to set rates that distributes cost in proportion to the accidents and claims patterns across the province. Consumers in areas with less risk shouldn’t cover the cost of areas with more risk.

  2. Simplify the accident benefit and tort systems. Make benefits accessible without the need for legal representation. When legal representations is needed, there should be increased transparency and consumer protections. The maximum amount of benefits should go to claimants, not their legal representatives.

  3. Review and amend the process for approving rates. The current approval process does not effectively respond to market changes. A shortened time-frame would encourage competition, which would help control prices for consumers.