Driving can be expensive — even before you factor in the price of gas. Auto insurance is another ongoing, mandatory cost that can add up quickly without doing a proper car insurance rate comparison beforehand. And if you’re not able to budget accordingly, the summer road trips you had planned may come to a screeching halt.
In its 2022 budget, the Ontario government released proposed changes for the auto insurance industry should it be re-elected on June 2. The plans include changes that claim to offer more choice to drivers and help improve insurance fairness while cracking down on fraud. This is part of the Government of Ontario’s multi-year strategy, introduced in 2019, that has since cancelled licence plate renewal fees and offered rebates to those who paid the fees after March 1, 2020.
Here’s what we know so far about the new auto insurance proposals.
One proposal is to make “the supervision of insurance more transparent, dynamic and flexible.”
This will be done through a new FSRA rule that will provide new guidance on territorial rating, and how drivers will be able to access benefits through their workplace.
When asked about the proposed changes, the Insurance Bureau of Canada (IBC) responded, saying, “Auto insurance is highly regulated by the provincial regulator, the Financial Services Regulatory Authority of Ontario (FSRA), which has the final say on all rate changes. Insurance providers agree that auto insurance should be more affordable, and continue to advocate for a regulatory regime that is more dynamic and allows for flexibility in rate filing and product innovation.”
Ontario drivers are required to purchase car insurance and included in this mandatory package is not-at-fault property damage coverage, known as Direct Compensation-Property Damage (DC-PD).
The proposal would make DC-PD coverage optional instead of mandatory, which may make sense for owners of older cars where the insurance is more than the value of the car. This could reduce the cost of monthly premiums.
Another option put forward was to increase competition so insurance providers can offer more discounts, such as incentives and rebates. Plus the government is encouraging companies to be more innovative and develop robust usage-based insurance programs.
Automotive fraud costs Ontario drivers $1 billion to $2 billion annually, according to the Insurance Bureau of Canada, which claims that can translate into up to $236 per year per policy for Ontario drivers.
The current Ontario government has proposed amendments to the Insurance Act that would require insurance providers to provide fraud information to the FSRA on a regular basis. The onus would be on the companies to track, report and manage fraud incidents, which would encourage them to take action to reduce incidents.
In the proposal, the FSRA will consult on the implementation of a fraud reporting service tool.
The Ontario Liberal Party hasn’t mentioned specifics on auto insurance reform in its platform, only that it would “continue to look for ways to make auto insurance accessible and affordable and fair for people regardless of where they live in this province.”
Ontario’s New Democratic Party, on the other hand, has made a bold promise to reduce auto insurance rates, calling for a 50% cut, while Leader Andrea Horvath has pledged to cut rates by 40% within two years, ban rate increases for 18 months, and ban the use of postal codes in determining drivers’ rates.
Until the election results are in and drivers see these changes implemented, some of the best ways to save on auto insurance are to maintain a good driving record, consider bundling insurance plans such as home and auto, and always compare insurance rates in Ontario before choosing a provider.