Brokers, insurers respond to 2023 Ontario budget

Ontario’s broker association is glad to see auto insurance as well as enhancing Ontario’s emergency response remains on the provincial government’s agenda. 

In its 2023 Ontario Budget, the government said it will “continue to make progress on previous commitments, including cracking down on fraud and abuse and considering options to provide more choice, reduce disputes and improve health access and outcomes for people.” The government is also investing $110 million over three years to fund, train, coordinate and improve emergency preparedness. 

Large portions of the 2023 budget are similar to the 2022 budget, albeit with updates to previous auto reform initiatives. For example, it will be optional to purchase direct compensation – property damage (DCPD) coverage effective Jan. 1, 2024. (One broker told Canadian Underwriter uptake on this opt-out will likely be low and this ‘choice’ will not address consumer concerns regarding lower auto insurance premiums). 

As well, the government has empowered the Financial Services Regulatory Authority of Ontario (FSRA) to request fraud information from insurers on an ongoing basis. “FSRA is working on the development of a fraud reporting tools that will be used to hold insurers accountable for managing, reporting and tracking fraud and will assist in fraud detection, prevention and deterrence.” 

“The new part of [the 2023 budget] is the solid acknowledgment, the fact that [the provincial government] is considering options, so they are working on it,” Insurance Brokers Association of Ontario (IBAO) CEO Colin Simpson said in an interview Friday. “I think they indicate that they didn’t tinker around with it. The fact that they’re saying they’re considering options is actually quite positive. It’s not something that you have to unravel as you go forward, which is good.” 

Although industry players surely want to see quicker action on auto reform, “the challenge is just really the many things that the government is trying to deal with,” Simpson said. 

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In its 2022 and 2023 budget documents, the government said it “intends to propose changes that, over time, would provide consumers with more options when purchasing automobile insurance.” It’s not clear which specific levels of coverage may change (despite the forthcoming DCPD opt-out), Simpson said.

“The challenge and the caution that we always say to government is, ‘You’ve got to be cognizant of the fact that the choice has to lead to the consumer being put back into a position of where they started, as opposed to being worse off,’” he said. “Consumer choice is a very positive thing… but it needs to be simple enough to understand.  

“It can’t be mixed in with other aspects that make it confusing and therefore lead to consumers potentially making the wrong decisions… If you prolong a discussion on auto insurance too long, consumers will switch off.” 

Insurance Bureau of Canada (IBC) told CU: “IBC and its members support recommendations that reduce cost pressures on premiums. Specifically, we support the Ontario government’s call for greater consumer choice, as well as reduced friction costs. 

“IBC does not have any insight into how the government plans to support Ontario drivers beyond what was articulated in the budget, but we stand ready to work with the government and all other stakeholders interested in making auto insurance more affordable for drivers.” 

The 2023 budget also contains a section on enhancing emergency readiness to natural disasters. “[It] is incredibly encouraging,” Simpson said. “Our understanding from our conversations is that this is really the start of evolving what this looks like and that [the government is] going to be reaching out to key stakeholders to figure out what needs to be done.” 

Part of the plan involves the creation of a new, comprehensive emergency preparedness program in coordination with emergency management program to test whole-of-government response. In addition to a year-round public education campaign, the program will involve annual multi-disciplinary provincial, nuclear and federal-led tabletop exercises beginning this year. 

Kim Donaldson, IBC’s vice president for Ontario, said last month she was “especially pleased by the government’s commitment to create new initiatives on hazard and risk monitoring/assessment, improving municipal emergency management training, developing local and provincial emergency management exercises and enhancing public education around emergency preparedness.” 

Feature image by iStock.com/Pattanaphong Khuankaew