The Financial Services Commission of Ontario (FSCO) has released another auto insurance reform for 2016. Some of these changes might have affected your insurance policy already, such as the winter tire discount (January 1st), but most of these changes won’t be effective until June 1, 2016. They consist of items like raising comprehensive deductibles and lowering interest payments – as outlined in a recent blog entry. However, the largest changes, and the ones that you should be most concerned with, are the changes to the accident benefit coverage.
It probably comes as no surprise that Ontario pays the highest insurance premiums out of any other province, but why is that? It can be narrowed down to two main problem areas, our overly generous accident benefit coverage, and our significant problem with insurance fraud. As outlined in the chart below, you can see that Ontario insurance companies pay out 5 to 10 times more than any other province for accident benefits.
Average Accident Benefit Claim (2009 to 2013)
| Province | Average AB Claim cost per earned Vehicle |
|---|---|
| Ontario | $416 |
| Alberta | $40 |
| New Brunswick | $67 |
| Nova Scota | $45 |
| Newfoundland | $50 |
| Prince Edward Island | $30 |
What do those accident benefit insurance payouts do to your insurance premium? Comparisons across all 10 provinces show that the average price for auto insurance premiums was highest in British Columbia, Ontario, Manitoba, and Saskatchewan. Of those provinces, three have government-run auto insurance monopolies. The least expensive premium is typically Quebec, which has a government-run auto insurance monopoly but only for bodily injury. Quebec also has the least onerous rate regulations and the lowest prescribed benefits.
Accident Benefit Coverage (January 1, 2016 reform)
In order to lower Ontario’s insurance premiums the province must first minimize their claim payouts. The first step was passing the Fighting Fraud and Reducing Automobile Insurance Rates Act, which aids in the fight against fraud and abuse within the system. Second, is by lowering the insurance limits for medical rehabilitation and attendant care. You always have the option of increasing these limits to fit your needs, and we suggest you do so, but the minimum standard has be reduced for everyone.
medical + Rehabilitation and Attendant Care Lowered
| Prior to June 2016 | As of June 2016 | Options to Buy Up |
|---|---|---|
| $50,000 for Medical + Rehabilitation (for non-catastrophic injuries) $36,000 for Attendant Care (for non-catastrophic injuries) $1,000,000 for Medical + Rehabilitation (for catastrophic injuries) $1,000,000 for Attendant Care (for catastrophic injuries) | $65,000 total for Medical, Rehabilitation and Attendant Care (for non-catastrophic injuries) $1,000,000 total for Medical Rehabilitation and Attendant Care (for catastrophic injuries) | Increase to $130,00 (for non-catastrophic injuries) Increase to $2,000,000 (for catastrophic injuries) Increase to $1,000,000 (for non-catastrophic injuries) Or $2,000,000 (for catastrophic injuries) to total $3,000,000 |
If you have any questions regarding these changes coming forward, please don’t hesitate to contact one of our offices. We would be more than happy to review your current insurance policy and discuss buy-up options.
Sources:
Personal Cost and Affordability Auto Insurance. (2011, October). Retrieved March 03, 2016, from https://www.fraserinstitute.org/sites/default/files/personal-cost-and-affordability-auto-insurance-2011.pdf
ADOA 3yr Review. (2014, November). Retrieved March 03, 2016, from https://www.fsco.gov.on.ca/en/auto/3yr-review/Documents/aoda-3yr-review.pdf
IBAO. (2016, January 19). Ontario Auto Insurance is Changing. Retrieved March 03, 2016, from http://www.ibao.org/ontario-auto-insurance-is-changing/