February 12, 2019

Change Is A Coming, Oh Yeah! – Ontario Government to Review the Auto Insurance System.

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Author: Daniel Macdonald, Associate

In January the Ontario Government announced that it has launched a review of the province’s auto insurance system. The reported goal of this review is to lower automobile insurance rates for drivers.

As part of this review the government has said it will be consulting with drivers, insurance companies and other stakeholders until February 15, 2019. At least part of the consultation with drivers is an on-line survey, located at https://www.ontario.ca/form/survey-making-auto-insurance-more-accessible-and-affordable-ontario The survey asks all of 4 questions about how you feel about your current insurance plan, and all of 3 questions about how you feel about shopping for insurance. The survey is open until February 15 if you want to give your input.

Media covering the announcement reported that Finance Minister Vic Fedeli said the government will create a regulatory framework that allows for more modernization in the auto insurance sector, including measures such as changing regulations to permit more electronic communication between companies and their customers and allowing insurance companies to issue electronic proof-of-insurance slips.[1]

It was further reported that the desire of the insurance industry, is a complete overhaul of the system. Peter Karageorgos, director of consumer and industry relations for the Insurance Bureau of Canada is quoted as saying that regulatory changes, addressing fraud in the system, and tackling auto-repair and health-care costs are all issues that must be addressed. In his words “Insurance is no different than any other business. The costs are what drives the price of the product. If we can look at reducing the costs consumers will see better prices”.[2]

There is no set timeline for when the Ontario Government will announce their plan.

Does all of this sound familiar? It should. Over the years there have been many legislative changes to automobile insurance. In June 2016 changes made by the previous Liberal Government came into force. These changes were made for the same purpose – to reduce automobile insurance rates for drivers. One of the most significant parts of these changes was to benefit amounts available if injured in a collision. For non-catastrophic injuries medical and rehabilitation benefits amounts for non-catastrophic injuries of $50,000 and attendant care benefits of $36,000 were combined and reduced to a $65,000 benefit limit. For catastrophic injuries the reduction was even more dramatic. Before the changes those catastrophically injured had access to $1 million in medical and rehabilitation benefits and $1 million in attendant care benefits. After the changes this was reduced to $1 million combined. Despite these changes insurance rates in Ontario continued to rise. InsuranceHotline.com reports that auto insurance rates are expected to rise by 3.35% on average.[3]

The Government saying they are going to reduce insurance rates is all well and good, but consumers should remember that saving costs comes at a cost. Those costs are borne by the drivers, not the insurance companies. Is it worth it to save a couple of dollars on insurance if your benefits are being cut in half? We don’t yet know what the Government plan will look like. However, based on what has happened in the past, it is unlikely to include better coverage and benefits for drivers. Drivers should examine their auto insurance carefully and consider whether they have the protection they need in the event they are injured in a collision. Optional benefits can often be purchased for a small cost but with a large increase in benefit levels.


[1] After Liberals tried and failed, PCs will try to lower Ontario auto insurance rates, by Shawn Jeffords, The Canadian Press, posted January 10, 2019. Accessed at https://www.cbc.ca/news/canada/toronto/ontario-auto-insurance-overhaul-1.4973092

[2] Ibid.

[3] Car Insurance in Ontario: What’s Happening with Rates? January 11, 2019. Accessed at  https://www.insurancehotline.com/car-insurance-in-ontario-whats-happening-with-rates/