Auto insurance rates for Ontario drivers are increasing by as much as 11 per cent despite promises from the provincial government to lower rates.
A notice from the Financial Services Commission of Ontario has outlined the approved rate changes for 2020 by the Financial Services Regulatory Authority of Ontario (FSRA) for private passenger automobile insurance.
The notice says auto insurance rates will increase by an average of 1.56 per cent. Individual Ontario drivers may see higher or lower increases, depending on their insurers.
Some companies have been approved for rate increases as high as 11.05 per cent, while other consumers may see a slight increase of 0.02 per cent. Overall, 21 companies will see rate increases which represents almost half of the auto insurance market.
This comes a year after the Ford government surveyed the public for changes they hoped to see with their insurance companies.
“Your feedback will help us identify ways to responsibly lower rates, cut red tape and put drivers first,” the Ontario government website says.
Pete Karageorgos of the Insurance Bureau of Canada says it is unrealistic to expect insurance companies to lower their rates, without taking into account the costs of running their business.
“Auto insurance is a product and like any product we pay as consumers based on costs,” Karageorgos said. “Part of what drives changes for business or the price of a product is the cost going into delivering the service.”
The cost to fix a car through a collision has gone up more than 40 per cent, he said. “There is pressure on costs for the companies, the cost to purchase a car has gone up, repairs, new cars have sensors and their replacement is pricey.”
Insurance companies cannot increase their rates without approval from the FSRA, which requires data supporting the increases.
Some critics, however, reject the claim that company costs has driven Ontario auto insurance rates to be the highest in the country.
There is no actually proof, and insurance companies have not provided enough evidence to the public to justify high insurance rates, said Tom Rakocevic, Humber River—Black Creek MPP and newly minted auto insurance critic for the New Democratic Party,
“Ontario residents are paying massive amounts despite having the lowest claims per capital, this system is unfair, it is clear that the other parties are on the side of the insures,” Rakocevic said.
Working alongside Dr. Fred Lazar, an associate professor of economics at York University, Rakocevic introduced a private member’s bill last spring. Bill 90 would have reduced the cost of insurance for Ontario drivers, but was voted down by the conservative government.
The bill charged companies reached “levels of excessive profitability” and “consumers almost certainly have paid too much for their insurance coverage.”