Ontario Auto Insurance: Time for a Change

2 December 5, 2014 at 3:45 pm by

When I started my insurance career in 1952, life in the industry was very simple. Automobile insurance was reasonable and there were very few complaints about high premiums and very little fraud. Changes will always take place in any industry, but changes in Ontario auto insurance have not solved problems – instead they have created them.

It was nice to see the reports in recent issues of Canadian Underwriter covering the conviction of the key person in a fraud ring, but very little was covered about all the other people involved. Did any of the claimants repay the amounts they received? Did the main street press let the public know about the fraud ring or was it kept secret among the people in the insurance industry?

Members of the IBC will often speak out about problems, but the comments are distributed within the insurance industry and not the general public. Richard Dubin stated that fraud costs each policyholder $200-$300 per year in higher insurance premiums. It would be nice to tell the buyers of insurance why they pay so much in Ontario.

Ralph Palumbo has been quoted as saying car insurance in Ontario is too expensive. The elected officials feel this way but all they do is tell the insurance industry to reduce rates by 15% and make a few changes to an old antiquated system that does not work. In fact, the changes that were made this year may limit some of the claims costs but they will increase operational costs.

I live in Toronto and I am no longer involved in insuring cars in Ontario. The basic concept is wrong so the company I own operates in the United States where they decided years ago that no-fault does not work. How many more changes will it take for the Government and insurance industry to accept the fact that the product is too expensive and encourages fraud.

In my many years in the insurance industry I often spoke out about the problems with automobile insurance. As a member of the Ontario Task Force on Insurance in 1986 I provided some guidance and we did improve the system by including limited accident benefits under automobile insurance. It was never intended to grow into the no-fault system that we have today. It did not work in the United States and they were smart enough to go back to the tort system. No-fault will always encourage fraud and drivers in Ontario will continue to pay more than they should for car insurance.

During the past thirty years many issues of Canadian Underwriter had articles where politicians complained about the limited availability of auto insurance during certain periods. IBC made it clear that premiums were too low and they had to be increased. I continued to remind the industry that we must reduce claims costs and eliminate fraud.  It took a long time for the industry to accept the fact that they could do a better job in claims handling. I still have the award I received for the many talks I gave on fraud and the work I did to decline claims from unlicensed clinics.

The changes made in 2014 will help a little but fraud will continue and insurance costs will keep going up. With the aging population in Ontario seniors will still have to pay for no-fault benefits that do not offer them any protection. It is time to scrap the present system or at least allow people to opt out of no-fault and not pay for a coverage they do not need.



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