Ontario Budget to Feature Auto Insurance Reforms

Ontario Budget to Feature Auto Insurance Reforms

Ontario Premier Doug Ford’s government plans to highlight auto insurance reforms in the upcoming budget, as reported by CBC News.

Industry insiders familiar with the government’s intentions reveal that the budget will introduce changes aimed at providing Ontario drivers with more options to reduce their car insurance premiums.

A spokesperson for Finance Minister Peter Bethlenfalvy neither confirmed nor refuted these plans, stating, “The government continuously explores ways to enhance consumer choice, streamline processes, and optimize auto insurance for consumers.” The budget is set to be unveiled on Tuesday afternoon.

This initiative marks the Ford government’s second major effort to reform auto insurance. The 2019 budget introduced the “Putting Drivers First” program, described by then-Finance Minister Vic Fedeli as transformative. However, its success in lowering rates remains uncertain. Ontario’s auditor general reported a nearly 14% increase in average auto insurance premiums from 2017 to 2021.

In 2022, Ontario was noted for having the highest average car insurance premiums nationwide. Since then, insurance rates across Canada have risen further due to inflation, increased auto theft, and pandemic-related supply chain disruptions, with forecasts predicting further hikes in 2024.

During the 2022 election campaign, Ford’s Progressive Conservatives pledged to offer consumers more options for automobile insurance over time.

Increased Flexibility in Coverage Selection
Tuesday’s budget proposals are expected to align with this campaign promise, according to industry sources. CBC News refrains from identifying these sources due to their lack of government authorization to discuss the measures.

The insiders indicate that the budget will not set a specific target for reducing average auto insurance premiums. Instead, it will enhance “optionality” for customers, allowing them greater flexibility in selecting their coverage plans.

Auto Theft’s Impact on Premiums

Recent national and regional discussions have highlighted the role of rising auto theft rates in driving up insurance costs. The Insurance Bureau of Canada reports that car theft claims amounted to $1.2 billion in 2022, tripling the 2018 figures.

In response, Ford’s government allocated $18 million over three years for police initiatives targeting auto theft. Additionally, police forces have launched a task force to address carjacking.

Another determinant of car insurance rates in Ontario is the insured’s residential address. Identical cars and driving histories can result in significantly different premiums based on location, referred to as “postal code discrimination.” The 2022 Ontario auditor general’s report found annual premiums ranging from $1,200 in London to $3,350 in Brampton for identical coverage.

It remains uncertain whether the forthcoming budget changes will address these geographical disparities in insurance rates.