Auto Insurance

Could regulating Ontario’s auto insurance industry save drivers money?

By: Dominic Licorish on April 17, 2017

A new study has taken a clear picture of the issues facing the Ontario auto insurance industry and concluded that the provincial government should establish an independent regulator of car insurance.

The recommendation was made by former head of the Workplace Safety Insurance Board, David Marshall, in a report titled Fair Benefits Fairly Delivered: A Review of the Auto Insurance System in Ontario. The study found that despite Ontario drivers being some of the safest drivers in the country, they pay the highest auto insurance premiums for often less than adequate coverage for proper medical care.

According to the Canadian Motor Vehicle Traffic Collision Statistics for 2014, Ontario had a below average rate of fatalities and injuries compared to the rest of the country. If Ontarians were paying the average Canadian auto insurance premium, the report says they’d save $528 per vehicle annually. So why are rates so high in Ontario?

Marshall says the main reason behind the high premiums are the high cost of claims. Yet with fewer collisions and safer vehicles, claims costs should be falling. It’s clear to many that the system is broken, though an immediate solution is far from obvious.

Another part of the problem is that the insurance payouts aren’t benefitting the insured as much as they are others. The report says the majority of the $1.4 billion in annual claims isn’t going to those directly involved in the accidents, but rather goes towards medical and legal costs.

Lawyers can be an essential expense during the claims process, sometimes being able to get their clients a better benefits payout. However, they can cost tens of thousands of dollars. The report calls for regulations that assist accident victims in streamlining the claims process, adding services to help assess costs of care and recovery for seriously injured victims. While Marshall acknowledges that the industry needs more regulation to cut down on costs, he stops short of recommending a government-run system like in British Columbia and Manitoba.