In 2013, the Provincial Government promised to reduce auto insurance rates in the province by 15%. While there had been an overall decrease based on the imposed rate reduction, that, as well as climate change and increasing injury lawyer activity, has caused insurance companies to lose money. And while I know that no-one feels bad for the insurance companies, that program expired at the beginning of this year, and they have filed for significant rate increases to the Financial Services Commission of Ontario (FSCO), showing those loses, and have been granted the increases.
FSCO has to approve any and all rate changes on auto policies in Ontario. Essentially, companies have to show FSCO where and how they’re making or losing money, in order to get any kind of a rate change. The rates here in Ottawa are often half of what our friends in the GTA pay, but this COULD be changing. There is a Bill in Queen’s Park to end the territory rating system that we currently use. The reason we use this system is simple: if you live in Orleans you’re less likely to have a claim (statistically) than someone in Scarborough. But people in Scarborough feel like they shouldn’t have to pay more to drive there. If you happen to be talking to your MPP, I do suggest you let them know you don’t support removing territories.
There are other ways to modernize the insurance rating system, such as User Based Insurance (UBI) which companies are already working on, and some have implemented in minor ways. The current UBI systems track your cars acceleration, breaking, time of day you’re driving and number of KM’s. Based on these factors, they can offer you a discount, but from what I’ve seen those companies just charge more if you don’t have the UBI installed. I think that the future of UBI will be paying per KM you drive, and where and when you drive, instead of a flat monthly fee. Both those systems bring into question the issue of personal privacy, so it’s very hard to say exactly how they will be able to rate on auto in the future.
We’re certainly seeing weather we’ve never seen before, wind, hail and water, both on the auto and property side, mixed with higher lawsuit payouts, I don’t forecast rates coming back down anytime soon. As of April 2019, FSCO will be shifting to another department, and they will be trying to #GetRatesRight and settle down the massive shift. Hopefully they finally have some success.
Your best insurance, is an insurance broker. #WeTheExperts