Briefing Note: Ontario

Auto reform has been the province’s biggest concern over the past year, says Colin Simpson, CEO of the Insurance Brokers Association of Ontario.

“Inflation on physical damage has been reported to be about 6% to 7% a year,” he says. “So that takes [insurers] quite a bit of time to try and catch up.” As well, “there has been some industry discussion around the use of postal codes [to set auto rates].”

Ontario was expected to release recommended auto product changes in April, Simpson says. But that was put on the backburner after COVID-19.

In personal property, there haven’t been any significant weather-related catastrophes in the province as of press time. However, he says, “I’ve heard one description that, ‘There haven’t been very many Cats, but there have been lots of kittens.’ Smaller Cats go to the retail insurance companies’ bottom lines as opposed to the reinsurers’ hands. And that pushes the retail prices up.”

In commercial lines, brokers have seen insurers raising their rates, reducing capacity, and even exiting some market segments altogether. “The commercial market started to get tighter and therefore prices were starting to go up on the commercial side. Things like snow clearing, the haulage business, and taxis were clearly in the news,” Simpson says.

In 2019, the Financial Services Regulatory Authority of Ontario (FSRA) started to oversee the industry. It engaged with the industry to allow rates required for insurers to return to profitability. “So we’re seeing rates going up gradually, in a controlled manner,” Simpson says. “Things were moving in a positive direction, a bit more stability in the rates. But COVID-19 has taken a sideswipe. The biggest financial impact is unforeseen, with so many businesses that are now closed.”