Auto Insurance

Ontario government unveils sweeping auto insurance changes

By: Jessica Mach on April 12, 2019

The Progressive Conservative (PC) Party will overhaul the auto insurance system in Ontario by changing rules around medical treatment, legal fees and claims protocols, in addition to giving drivers more ways to lower their premiums.

Unveiled Thursday as part of the PC Party’s first budget since taking office last year, the “blueprint” aims to lower auto insurance premiums in Ontario, which in recent years have ranked as some of the most expensive in the country.

A major focus of the PC Party’s plans is medical treatment. In addition to changing the licensing system for health service providers and lowering their treatment fees, the government plans to reform the medical assessment process that injured drivers are required to go through after an accident.

Changes to medical benefits, ending postal code discrimination

Under the new Driver Care Plan, the Party will additionally revert the default benefit limit for catastrophic injuries back to $2 million, three years after it was reduced to $1 million by the Liberal Party in 2016. The government will also make changes to the early treatment system for common injuries (including mental health treatment); launch a Driver Care Card to “streamline access to care by providing important information” relevant to the claims process; and implement a “Cash, Not Care” default clause aimed at ensuring that coverage pays for medical treatment instead of legal fees (drivers will still have the option of a cash settlement).

Fraud prevention is another major component of the auto insurance blueprint, which the PC government aims to tackle through an online claims process, new rules on unfair practices and enhanced data analytics. The government also plans to work with the Law Society of Ontario to better protect drivers from inflated legal fees.

The PC government also plans to give drivers more ways to lower their own premiums. These include allowing their insurance companies to look at their credit history, or agreeing to use certain health care and car repair providers.

These changes will accompany a reduction in industry regulations, which the government says will encourage more insurance companies — and more competitive rates — to establish themselves in Ontario.

The budget also mentions a bill that was introduced last year to end "postal code discrimination." Currently, insurers use a driver's postal code to determine their insurance rate, the idea being that drivers who live in areas with higher accidents or more break-ins represent a higher risk to insure. Critics say this system unfairly punishes drivers who live in poorer areas even if they have a good driving record

The budget didn't reveal any new details on what system would replace postal codes for insurers. The bill is currently in the legislature after being introduced by Parm Gill, the Progressive Conservative MP for Milton, in 2018.

Industry welcomes changes, but others have concerns

For now, it seems that the industry is on board with the PC government’s changes.

The Insurance Bureau of Canada (IBC) called the new measures a “win” for Ontario drivers, praising the government’s crackdown on inflated legal fees in particular.

“The Government's reform plan… addresses an important issue raised in the 2017 report by David Marshall on Ontario's broken auto insurance system,” said Kim Donaldson, vice president, Ontario at IBC.

“As Marshall noted, hundreds of millions of dollars of insurance benefits are diverted each year into contingency fees for lawyers. Today, the Government committed to re-evaluating the legal contingency fee arrangement to ensure consumers are protected, and to ensure agreements are transparent.”

But others were not so impressed. Natalie Shykula-Clarke of Clarke Law, a car accident injury firm in the Greater Toronto Area, noted that the government’s blueprint included no plans to increase medical rehabilitation expenses.

“Insurance industry getting away with maximum payment of $400/week for loss of wages — below minimum wages level,” Shykula-Clarke tweeted Thursday.

In January, the Ministry of Finance posted an online survey for Ontario drivers to field their concerns about auto insurance. Sixty eight percent of the 51,000 respondents said that they wanted more online tools, while over half additionally agreed that buying auto insurance is a frustrating process and that it takes too long to receive benefits after a collision.

The government also consulted with private industry to get their thoughts on auto insurance reform. was part of that consultation.

As with Ontario’s other major political parties, lowering auto insurance rates was a key part of the PC Party’s platform in last year’s provincial election.

In 2013, the Liberal Party ran and won the provincial election on a platform that promised to reduce auto insurance rates by 15% within two years.

In spite of several new regulatory measures, by the end of 2017, the rate had only fallen by 5.5%.