The Future of Fair Auto in Ontario

The Ontario auto industry has had to continuously adapt to the realities of the pandemic. When lockdowns began, workers across the province gave up their commutes to work from home, drastically decreasing the number of drivers on the roads. In response, the Ontario government worked with auto insurance companies to offer rebates to reduce premiums and provide additional emergency relief measures to assist those facing financial hardship. Once Ontarians started to get vaccinated, small businesses reopened their doors to in-person shopping and companies welcomed employees back to offices. With many Ontarians feeling a financial pinch, reports began to circulate about windfall profits in the auto insurance sector, which left many consumers confused and disgruntled after experiencing year-after-year rate increases. In an effort to reduce car insurance costs, many drivers turned to usage-based insurance (UBI).

As more drivers return to their commutes and start taking trips, more collisions—and claims—will likely occur, driving auto insurance rates up once again. Due to auto insurance regulation, however, rate changes won’t happen immediately. Once collision rates stabilize and return to previous numbers, savings should find their way back to the consumer.
In November, the Financial Services Regulatory Authority of Ontario (FSRA) released Take-All-Comers guidance to clearly state the legal obligations of auto insurance providers in the province. Insurance companies, agents and brokers must provide consumers the lowest available rate, offer all eligible consumers a quote or renewal and accept all business from consumers that meets insurance providers’ approved rules. This guidance was released to improve fairness in Ontario’s auto insurance system.A longstanding problem for brokers is seeing Ontario driver frustration in some postal codes as their insurance premiums account for an increasing percentage of their household budgets. Some advocacy groups suggest that the implementation of credit scoring will help eliminate some of these pressures. While the use of credit scoring could help insurance companies better measure an insured’s risk exposure, people should understand that the savings given to those with good credit scores will ultimately be paid for by those with low or no credit scores.

“If the goal is to reduce the cost of auto insurance premiums in Ontario, we support working towards changes that will benefit all consumers and not just those who can already afford it.”

Given the nature of Ontario’s Auto product—a compulsory purchase for drivers— the Ontario Government needs to ensure the product is both accessible and affordable to everyone. Using a consumer’s credit score to determine an auto insurance rate could negatively impact the availability and price offered to those who can least afford insurance— those with low or no credit scores: retired seniors, newcomers to Canada, the unemployed, single income families and small business owners using lines of credit. This practice could negatively impact already marginalized citizens.

We continue to urge the Ontario Government to consider the broader implications before legalizing this practice to ensure necessary protections are in place to protect the most vulnerable. If the goal is to reduce the cost of auto insurance premiums in Ontario, we support working towards changes that will benefit all consumers and not just those who can already afford it. The way to effectively reduce the cost of premiums is to reduce the cost of claims.

Following re-opening from the most recent lockdown in response to the Omicron variant, drivers are filling Ontario’s highways and roads as we witness another return to in-person work. One of Premier Ford’s major infrastructure initiatives prior to the upcoming provincial election is the construction of the proposed highway 413. This new highway would run east from Halton to York Region—the government estimates it could benefit up to 300,000 current commuters. If the government’s dedicated to prioritizing new projects that benefit commuters, they should pair it together with executing their Blue Print for Auto Reform plans, released in 2019.

While the pandemic’s redirected government focus to preserving public health, it’s time to work towards reducing insurance costs for struggling Ontarians. Sustainable relief on auto insurance premiums will come if the inefficiencies outlined by the advisory group behind the Blueprint for Putting Drivers First are executed. This will ensure that retail insurers’ product availability, supply and price can be held stable and become more affordable for consumers. As the provincial election comes closer, Ontario’s auto sector could see more change on the horizon as the government looks to roll out its priorities before people head to the polls.

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