Ontario budget to introduce auto insurance reforms
Ontario budget to introduce auto insurance reforms | Insurance Business Canada
Motor & Fleet
Ontario budget to introduce auto insurance reforms
Government aims to provide more flexibility
Motor & Fleet
By
Jonalyn Cueto
The government of Ontario Premier Doug Ford is poised to announce significant reforms to auto insurance in the upcoming provincial budget, sources reveal. Finance Minister Peter Bethlenfalvy is expected to unveil these plans in his budget presentation on Tuesday (April 23) afternoon.
The changes are designed to give drivers more flexibility in choosing their coverage options in an effort to reduce premium costs.
Industry insiders say the forthcoming budget will not set specific targets for reducing average auto insurance premiums. Instead, it will focus on increasing “optionality” for consumers, potentially allowing Ontarians to tailor their insurance plans more closely to their needs.
According to Yahoo News, this marks a continuing effort by the Ford administration to overhaul the auto insurance industry, building on the “Putting Drivers First” initiative launched in the 2019 budget.
In an email, a spokesperson for Minister Bethlenfalvy stated, “The government is always looking at ways to increase consumer choice, cut down on red tape, and make auto insurance work best for consumers.”
These planned reforms come amid rising auto insurance rates across Canada, exacerbated by inflation, increased auto theft, and lingering pandemic-driven supply chain issues. Data from Ontario’s auditor general highlighted a nearly 14% rise in average premiums from 2017 to 2021, with Ontarians paying the highest rates in the country.
Addressing concerns over increased auto insurance rates
John Shmuel, managing editor of Rates.ca, noted that while the idea of offering drivers more options is appealing, it is crucial that consumers are fully informed about the implications of choosing less coverage.
“Ontario’s insurance prices can absolutely be lower on average,” Shmuel said. “We can make the market more competitive, we can invite more competition so that more insurance companies are participating here, so that customers have more options.”
Auto insurance has consistently been a contentious issue in Ontario politics. The previous Liberal government under Kathleen Wynne promised a 15% reduction in rates within two years, a target it failed to achieve. In contrast, recent reforms under the Ford government have sought to introduce more flexibility and discount options for drivers.
The budget also arrives at a time when auto theft is becoming an increasingly significant factor in insurance pricing. The Insurance Bureau of Canada reported that car theft claims in the country reached $1.2 billion in 2022, triple the amount from 2018.
Last November, the provincial government allocated $18 million over three years to fund police initiatives aimed at curbing auto theft, including a task force on carjacking.
As Ontarians await the full details of the budget, questions remain about how these changes will address the longstanding issue of regional disparities in insurance costs, often referred to as “postal code discrimination.”
The auditor general’s 2022 report found dramatic variations in premiums across the province, highlighting the complexity of the auto insurance landscape in Ontario.
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