Legislature defeats bill quashing territorial ratings in Toronto area

If you have clients living in Brampton or near the intersection of Jane St. and Finch Ave., they will probably continue paying more for auto insurance than if they lived elsewhere in the Greater Toronto Area.

A bill proposing to make the GTA one single territory – for the purpose of determining motorists’ insurance premiums – has been defeated in the Ontario legislature.

“Within the GTA, we see huge disparity in rates,” Gurratan Singh, the auto insurance critic for the opposition New Democratic Party, said in a recent interview with Canadian Underwriter.

Singh – MPP for Brampton East – tabled last month a private members’ bill prosing to prevent the Financial Services Commission of Ontario from approving an application made by any auto insurance company that is based on geographic region – within the GTA. Bill 44, the Ending Automobile Insurance Discrimination in the Greater Toronto Area Act, was defeated this past Thursday 35-24.

One rationale for using postal codes as a rating factor is that a client who lives in a small town with little traffic is at less risk of an accident than someone living in a large city.

“That argument doesn’t make sense within the boundaries of the GTA,” Singh told Canadian Underwriter.

Bill 44 defined the GTA as the city of Toronto plus the regional municipalities of York, Durham, Peel and Halton. So the GTA includes the towns and cities of Milton, Oakville, Mississauga, Oshawa, Richmond Hill, Newmarket and Markham, among others.

Politicians who voted Nov. 1 against Bill 44 included Christina Maria Mitas, backbench Progressive Conservative MPP for Scarborough Centre. She said her constituents are paying “higher-than-average” auto insurance rates.

“According to a 2017 report on the most expensive rates in Toronto, Scarborough tops the list with nine neighbourhoods paying over $2,000 a year, making it one of the most expensive neighbourhoods in this city,” Mitas said Thursday during debate on Bill 44. “We cannot afford our rates to go higher.”

A second bill taking issue with territorial ratings is still before the legislature and goes even further than Singh’s bill.

Bill 42 proposes to ban – provincewide – the use of rating factors that are “primarily related to the postal code or telephone area code.” Bill 42  – the Ending Discrimination in Automobile Insurance Act –  was tabled Oct 15 by backbench Progressive Conservative MPP Parm Gill.

If passed into law, this would be “a great way to combat rate discrimination in our auto insurance system,” Finance Minister Vic Fedeli said Oct. 25 during Question Period. Fedeli did not go so far as to promise he would actually vote in favour of Bill 42.

While serving as interim leader of the PC party last year, Fedeli said the PCs would direct FSCO “to stop accepting postal codes as a factor in setting insurance rates.” But this changed after Doug Ford was elected this past March to lead the PC party, whose leadership has not made a definitive statement as to whether or not they support territorial ratings.

Using territory is “a significant predictor of geographical risk and risk in general,” The Co-operators General Insurance Company said in its management discussion and analysis of its financial results for the third quarter, released Oct. 25.