Despite having one of the lowest levels of auto accidents and fatalities in Canada, Ontario has one of the most expensive auto insurance premiums in the country, according to a report by Ontario’s auto insurance advisor David Marshall.
“Ontario has one of the least effective insurance systems in Canada,” said Marshall. “It is filled with disputes and inefficiencies, and a very high percentage of premiums are being used to pay experts and lawyers and not going directly to injured persons.”
According to Marshall, the issue with the high rates has to do with the flawed system.
“The main cause is not inefficiency or excess profits by insurance companies or the behaviour of claimants, providers or lawyers. It is the way the system is structured,” he said.
The report highlights that Ontario’s average auto insurance premium (which was $1,458 per vehicle in 2015) is 55% higher than the Canadian average.
Moreover, the province’s broad legislation means that it is widely open to interpretation, while the regulations extremely detailed about how insurance companies should deliver their products.
Marshall says this creates a system where there is little agreement about what constitutes as fair diagnosis for caring for injuries.
“Simple minor injury sprains and strains (80 per cent of claims) often take over a year to settle and incur high medical costs,” said Marshall. “Instead of a system that helps accident victims recover from their injuries, a significant portion of the system has been diverted into a cash settlement system in lieu of care.”
In order to remedy the problem, Marshall suggests an action plan which consists of the government setting up an “arm’s length” regulator, changing the system of compensation for catastrophically injured persons, having the system adopt a care not cash approach, and making contingency lawyers transparent.
“Ontario must strive to close the opportunity gap and achieve a premium rate for insurance that is close to if not at the Canadian average of about $900 a year,” said Marshall. “Ontario must also close the value gap in its service and obligations to accident victims. There is absolutely no reason this cannot be achieved.”