Auto Insurance Rates in Ontario

Who is Responsible?

There is a lot of confusion amongst drivers in Ontario as to how auto insurance rates are determined.  Sometimes it may seem as though insurance providers randomly pluck numbers out of thin air; I myself have thought that when I receive my annual renewal notice.  The truth is auto insurance is strictly regulated by the Financial Services Commission of Ontario (FSCO).  Although each insurance provider has the flexibility to set their own rates based on a number of criteria, the Superintendent of Financial Services must review and approve any changes.

Five Key Facts about the FSCO:

  1. Makes sure auto insurance companies follow the law
  2. Helps consumers avoid being victimized by fraud
  3. Provides tips for drivers on how to find the best auto insurance rates
  4. Helps drivers resolve disputes with their insurers
  5. Helps keep rates reasonable


The Role of the Government

In August 2013, the provincial government announced its Auto Insurance Cost and Rate Reduction Strategy.  This is an on-going action meant to reduce rates by up to 15%, while ensuring that consumers remain protected.

Some of the changes that have already been implemented:

  • Offering a wider range of options on medical and rehabilitation benefits, attendant care, housekeeping and home maintenance expenses, caregiver benefits, tort compensation and compensation for property damage
  • Protecting consumers by strengthening the prohibition on the use of credit scoring, delays and other questionable screening techniques when providing quotes
  • Streamlining a number of processes to reduce transaction costs and ensure more accident benefit dollars go to treating accident victims


Auto Insurance Fraud

A major contributor to rising auto insurance rates is the prevalence of fraud.  In order to address this issue, the government announced the creation of an Auto Insurance Anti-Fraud Task Force in its 2011 Budget.  In November 2012 the group submitted their recommendations and in January 2013 the government took action.

In their commitment to the public they implemented the following modifications:

  • Requiring insurers to provide claimants with all reasons for denying a claim
  • Giving claimants a bi-monthly, detailed statement of benefits paid out on their behalf
  • Requiring claimants to confirm attendance at health clinics
  • Making providers subject to sanctions for overcharging insurers for goods and services
  • Banning providers from asking consumers to sign blank claims forms


Now What?

The government continues to stand by its promise to reduce auto insurance rates by tackling fraud, reducing costs, and implementing legislative changes.  I commend them for following through on this initiative, but I will only be able to confirm its effects when I see my own auto insurance policy renewal in the fall.


Farrah Rajan is a Paralegal student at Centennial College in Toronto studying professional communications with Omar Ha-Redeye.

The Moral Hazard of Automobile Insurance

The Moral Hazard of Automobile Insurance

Handler’s What the Ontario Party Platforms Say About Automobile Insurance showed how the three dominant parties’ plans to lower the automobile insurance for the general public during the 2014 general election in Ontario, none of them, with the exception of the Liberals had any concrete plans to implement the rate reduction. The Liberals, who were in power at the time of election, had the capacity to introduce concrete plans for rate reduction.


  • Legislative Effort

The Liberal’s effort demonstrated its legitimacy in reducing auto insurance rate from Automobile Insurance Transparency and Accountability Report.  The goal is to reduce the rate by 8% in August 2014 and by 15% in August 2015. They went further in introducing Bill 171  to amend the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014 and Bill 189 to amend the Roadside Assistance Protection Act, 2014:

  • Setting limits on vehicle impoundment fees by towing companies and a new tribunal for insurance rates arbitration for the insured and insurer
  • Setting guidelines for towing companies in billing and in offering estimates to users

The Bill advocated reasonable rates for vehicle impoundment by towing companies and introduced new conflict resolution system for auto insurance companies and their clients.   The focus is a shift from the system of mediation from Financial Services Commission of Ontario to arbitration by government appointees. The ultimate goal is to offer a decision to the parties in dispute within six months of application through one of the following arbitration methods:

  • Paper review for medical reimbursement claim under $10,000
  • In-person review for serious physical trauma
  • Expedite in-person-review for medical reimbursement claim between $10,000 and mild physical harm
  • Review through video conferencing (excluding the use of telephone mediation)
  • An appeal to the decision is only possible when there is a question of law and it will be heard by a Superior Court Judge


According to Willie Handler, the NDP did not have any substantial legislative plan to reduce auto insurance rate for the general public. The NDP, nevertheless, had the goal of auto insurance reduction by 15% within one year should they come to power. The NDP believed the granting of a say in the rate implementation process for the general public will keep the rate in check.

Progressive Conservative

At the end of his article, Willie Handler introduced the PC’s plan for auto insurance reduction. The PC’s goal is to limit insurance rate hike by the following four means:

  • Stress senior executive’s accountability for making insurance rate change decision and for any other major decisions
  • Reduction of red tape by introducing a market run mediation service
  • A streamlined medical assessment plan that has uniform standard
  • Establish a special investigative unit from the Attorney General office to combat unusual billing practice of health care service providers for claimants

The Progressive Conservative, like their NDP counterpart, did not have any substantive plan to combat the upward trend of auto insurance through introduction of legislative Bills.


Leo Tam is a Paralegal student at Centennial College in Toronto studying professional communications with Omar Ha-Redeye.

Hassan/Hassan/Foster v. Traders General Insurance Company


The applicants are Warda Hassan, Mohamud Hassan, and Anthony Foster. They claimed that they were injured in an automobile accident on April 17, 2014 and asked Traders General Insurance Company, the respondent, for statutory accidents benefits. Traders claimed that the applicants were not involved in that automobile accident and thus were not injured. There was a failed mediation and an arbitration that the applicants asked for but did not attend the hearing.


The two issues that need to be resolved are the following:

  1. Should the applications for arbitration be dismissed?
  2. Should Traders be awarded its expenses?


The Expense Regulation, and the rules governing the Commission, specifically Rule 37.7 and 37.9, are applied in this case.


The applicants did not set up a date for the hearing with the arbitrator, so according to Rule 37.7, the hearing was scheduled without their agreement on June 13, 2014. They did not attend the arbitration hearing, so it continued as stated it would in Rule 37.9. Without their presence, there is no arbitration to be had, and the order to dismiss by Traders was unopposed.

Traders is entitled to expenses under section 12, subsection 2 of the Expense Regulation, based upon the criteria of the respondent’s success in the proceeding and the applicants’ failure to submit to an examination because they did not attend the arbitration.


As the applicants did not attend the arbitration, they are not pursuing their claims for statutory accidents benefits. Thus, the applications for arbitration are dismissed and Traders is entitled to receive expenses for its legal costs.

Lester Tong is a Paralegal student at Centennial College in Toronto studying professional communications with Omar Ha-Redeye.

Ontario Parties on Auto Insurance


The Liberal plan for auto insurance is their Cost and Rate Reduction Strategy, which has two goals for average rates in mind:

  1. 8% lower by August 2014, and
  2. 15% lower by August 2015.

They hope to accomplish this with reforms, hoping to bring the average rates down more than the 5.6% after the first three months of 2014. Such reforms include the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, also known as Bill 171. The Bill was not passed before the election, but will be if the Liberals are the next in power, and it will reduce costs by changing the dispute resolution system and through other means, while further preventing things such as fraud to protect consumers.

A source in April 2014, however, indicates that the Strategy by the Liberals is not enough thus far, and more help is needed to make it work. Insurers need to further ensure efficiency and enact other measures for the Strategy to reach its set goals.


The NDP on the other hand wish for auto insurance rates to drop 15% and have promised to do so in a year if they win the election. This sets their goal date at June 12, 2015 rather than August 12, 2015 for the Liberals. They also aim to change the rate-setting process by involving consumers in it, though how that will be accomplished remains only speculation.


The Conservatives, like the Liberals, also have their own plan for auto insurance, with four main goals:

  1. Eliminate red tape,
  2. Fight insurance fraud,
  3. Make the dispute resolution system more effective, and
  4. Ensure auto insurers are accountable to customers.

To accomplish these goals, they suggest the use of private mediators in disputes, independent medical assessment, a switch to a file-and-use system for rates, and the HCAI system for billing. The Conservatives also intend to hold insurance executives more accountable on a financial level. These will enhance customer experience and security.

For further details or more than just a summary, the source can be found here.

Lester Tong is a Paralegal student at Centennial College in Toronto studying professional communications with Omar Ha-Redeye.