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Point of Divergence: Insurance premiums grow costlier as Ont. crash frequency remains low, AG annual report says

Ottawa, Ontario — The office of Ontario’s Auditor General released its 2022 Annual Report on Wednesday, where more light was shed on the province’s growing disparity between low crash frequency rates and high auto insurance premiums.

Penned by Auditor General Bonnie Lysyk, this year’s report found the average Ontario auto insurance premium rose by 14 percent from 2017 to 2021, totalling an annual rate of about $1,642, despite the fact that the province often records the lowest crash frequency nationally.

The report laid out several suggestions for initiatives that could work to make Ontario’s auto insurance industry more efficient, affordable and equitable for the province’s many drivers.

“Like Alberta, Ontario could develop more protocols to treat automobile accident injuries instead of providing cash for those injured to seek their own treatment,” read an excerpt of the report.

“Ontario could also follow British Columbia and Saskatchewan in implementing a mandatory licensing or certification regime for automobile repair businesses to protect consumers against poor repairs and fraud.”

The issue of “postal code discrimination” was also addressed, as the paper gave examples of ten identical insurance policies, different only in the city of residence for the driver, and found substantial variation in what drivers in certain parts of Ontario are paying compared to others.

For example, it was found that a London, Ont. resident could expect to pay about $1,200 per year for auto insurance, while a driver with the exact same policy in Brampton would likely pay about $3,350—essentially, you can expect to pay about 180 percent more to drive a car in the GTA than elsewhere in the province.

The report criticized the Financial Services Regulatory Authority of Ontario (FSRA) for allowing insurance companies to set insurance premiums based on geography without properly accounting for the population growth of the province, which has risen by about 20 percent since 2005, when the geographic framework was first introduced.

“Our audit concluded that the Financial Services Regulatory Authority of Ontario (FSRA) continues to be a work in progress and needs to accelerate its efforts to fully protect consumers, thereby increasing public confidence in the sectors we reviewed.”

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