Ontario’s plans for auto insurance reform still under wraps

A month after being sworn into office, Ontario’s new political rulers have been silent on the issue of auto insurance reform.

“We haven’t heard anything formal yet from government,” confirmed Pete Karageorgos, the director of consumer and industry relations for Insurance Bureau of Canada. “We will wait and see.”

Contacted by Canadian Underwriter about the topic of auto insurance reform, Vic Fedeli, the new Progressive Conservative minister of finance, declined to comment for this article. The PCs were elected to power this past June, replacing the Liberals, who had ruled since 2003. The PC party did not campaign on any insurance issues, although the party did raise the matter of territory-based rates prior to the election.

In 2017, a spokesperson for Fedeli, then the PC finance critic, told Canadian Underwriter the PCs were promising to “stop accepting postal codes as a factor in setting insurance rates,” echoing a promise made by the New Democratic Party. At the time, the PC party leader was Patrick Brown. After Doug Ford, now the premier, replaced Brown this past March as party leader, the PCs quietly dropped the issue of territory-based ratings.

When setting auto insurance rates in Ontario, carriers currently use the owner or principal driver’s home address, among other factors. The rationale is essentially that a vehicle driven in a densely populated area is at greater risk of collision because there are more vehicles on the road.

During their 15 years in office, the Liberals made several auto insurance reforms, including:

• the minor injury guideline;
• reducing (first in 2010 and again in 2016) the mandatory accident benefits coverage;
• a new definition of catastrophic impairment; and
• moving accident benefits dispute arbitration from the Financial Services Commission of Ontario to the License Appeal Tribunal.

Charles Sousa, then the Liberal finance minister, announced this past December several reforms intended to implement some recommendations made by David Marshall, a former Workplace Safety Insurance board CEO appointed as a special advisor on auto insurance to Sousa. Among the reforms Sousa announced this past December were independent medical exam centres for auto accident benefits claims, and standard treatment plans for common collision injuries such as sprains, strains and whiplash.

Not all of Marshall’s recommendations were endorsed either by the industry or by Sousa. But one of Marshall’s central arguments – that too much money is spent on litigating disputes rather than going towards treating accident victims – was generally echoed by the auto insurance industry.

It is not clear whether the Progressive Conservatives will go ahead with either the independent examination centres or the standard treatment plans.

IBC is “reaching out to government and the opposition to highlight some of the issues” in auto insurance, Karageorgos told Canadian Underwriter Tuesday. He alluded to the fact that insurers who base rates on data from telematics can only give discounts to low-risk drivers and cannot impose surcharges for risky driving behaviour.

The system currently in place does not use the “full capacity of usage-based insurance,” Karageorgos said. He was referring to programs where insurers track how far and fast a vehicle is driven and whether there are incidents of sudden acceleration and hard braking. Motorists can sign up for such programs using either mobile apps or devices that plug into their vehicle’s diagnostic port.

A “full utilization” of UBI would “more accurately reflect driver’s behaviours,” Karageorgos noted, adding it is not clear whether the new PC government would allow this. “It still is quite early in their mandate,” he said. “To be fair, recognizing how government works, when there is a change of government, there is a change of government staff, there is a review at the bureaucratic level, briefings that have to occur and so on.”

Ford and his new cabinet were sworn in June 29.

“We have to be reasonable in terms of allowing them to get up to speed on some of the issues and files,” Karageorgos said.