Ontario reviewing auto insurance system in effort to lower rates
Published Wednesday, January 9, 2019 11:06AM EST Last Updated Wednesday, January 9, 2019 8:51PM EST
TORONTO -- The Ontario government has launched a review of the province's auto insurance system, saying it hopes to lower rates for drivers who pay some of the most expensive premiums in the country.
The analysis announced Wednesday will examine practices in other jurisdictions to find ways to make improvements and introduce more competition. The Progressive Conservative government also said it will be consulting with drivers, insurance companies and other stakeholders until Feb. 15.
"This (issue) has always been controversial," said Finance Minister Vic Fedeli. "It was left unattended by the Liberals for 15 years and we're going to take some real action on it."
A report commissioned by the previous Liberal government found in 2016 that Ontario had the most expensive auto insurance premiums in Canada despite also having one of the lowest levels of accidents and fatalities.
Since that report was written, British Columbia moved into the lead with the highest rates according to the Insurance Bureau of Canada, with Ontario now the second-most expensive province.
Fedeli said the government will create a regulatory framework that allows for modernization in the auto insurance sector. That will include measures such as changing regulations to permit more electronic communication between companies and their customers and allowing companies to issue electronic proof-of-insurance slips.
"By cutting this red tape and modernizing it we know that that will help us reduce costs," he said.
Fedeli would not say when the Tory plan to change the system will be presented or if the government will commit to a specific rate cut target.
The Liberals had promised an average decrease of 15 per cent in insurance rates by August of 2015 and when that self-imposed deadline passed, then-premier Kathleen Wynne admitted it had been what she called a "stretch goal."
NDP legislator Gurratan Singh accused the Tory government of stalling by holding consultations instead of taking action to lower rates.
"Doug Ford is preparing to consult his insider friends in the insurance companies, so they can keep making record profits on the backs of Ontario families," he said in a statement.
Peter Karageorgos, director of consumer and industry relations for the Insurance Bureau of Canada, said the industry needs help from the government to address a range of issues that lead to increased costs for consumers.
"We can't just focus on a short-term tweak, repair or alteration, it's got to be a complete overhaul," he said.
Karageorgos said regulatory changes, addressing fraud in the system, and tackling auto-repair and health-care costs, are all issues that must be addressed.
"Insurance is no different than any other business," he said. "The costs are what drives the price of the product. If we can look at reducing the costs consumers will see better prices."
Karageorgos said many previous governments have promised change in the sector but most end up making short-term fixes that don't last.
"We've had a lot of tinkering with auto insurance," he said. "We haven't really had a government that's said, 'okay, let's take off the band-aid and fix the root cause of the problem."'