Brokers continue to be directly involved in the ongoing discussion around auto insurance and bringing meaningful reform to the Ontario auto insurance product. There’s a universal recognition that the status quo of the current auto product is failing to serve Ontarians, but we commend the government for taking action in a number of areas to work to reform the auto landscape.

For brokers speaking to consumers or their MPPs on the topic of auto insurance pricing, we offer the following notes to help explain the realities of geographic rating:

  • Accident frequency, theft frequency and the costs associated with repairs all vary depending on where you live in Ontario.
  • Where you live is one of the strongest predictors of claims risk and how much an insurance company will pay out per claim.
  • Removing geographical rating would mean that individuals living in regions where claims costs are lower than other areas could see their insurance premiums increase. It would penalize consumers living in areas with less risk.
  • However, there is room for reform and brokers are working the government to try to find solutions that work for all Ontarians.

Point to note: The current system only allows for 55 tightly defined Rating Territories across Ontario. This can cause consumer confusion. In the April 2022 Budget the Ontario Government announced that they’ll be developing a new framework enhancing fairness that will replace the current territorial rating system. We propose a solution that would support more accurate pricing and we suggest that the government remove or reduce the restriction on the number of rating territories allowable but not remove them altogether.

Insurance brokers across Ontario are committed to our work consulting with the government on reforms to the auto industry. There are many inefficiencies within the current system in Ontario and we’re working to resolve them.