Ontario postal code rating bill defeated

A PRIVATE member’s bill that aimed to revamp auto insurance postal code ratings in the Greater Toronto Area has failed to pass second reading.

The bill from MPP Gurratan Singh (NDP–Brampton East) would have placed all of the Greater Toronto Area in one rating territory.

During the bill’s debate earlier this month, he said Ontario’s auto insurance system is broken and in need of a complete overhaul. He said the bill’s intent was to ensure GTA drivers pay premiums based on their driving record rather than where they live.

“The first is that (the bill) prevents the superintendent from approving an application made by any auto insurance company that is based on a risk classification system that considers someone’s geographic region,” Mr. Singh said.

“The superintendent who approves any increases to car insurance rates will say no to an auto insurance company if their policy assesses that individual based on where they live.”

He said the bill’s authors recognized the complexity of the Insurance Act and therefore wanted to keep the legislation focused.

He said the bill also suggested that if an insurance company provides policies based on geographic location, the company would be fined up to $500,000.

But Progressive Conservatives didn’t think Mr. Singh’s bill went far enough, Scarborough Centre MPP Christina Maria Mitas said.

A separate bill tabled last month by Milton MPP Parm Gill (PC–Milton), the Ending Discrimination in the Automobile Insurance Act, aims to end postal code ratings across the entire province.

That bill has yet to be debated.

Pete Karageorgos, the Insurance Bureau of Canada’s director of consumer and industry relations, said the fact that two auto insurance-focused private member’s bills were tabled this fall indicates the Ontario government is serious about improving the auto insurance system in the province.

He said the IBC wants to make sure that Ontario’s auto insurance regulations are updated.

“Many of the regulations are stale, they need to be updated and they don’t reflect the reality of customers today,” he said.

He said the debate at Queen’s Park this month highlighted misconceptions about how much insurers are profiting on auto insurance.

Mr. Singh said insurance companies “are making record profits” and that insurance companies are overcharging Ontario drivers to the tune of $4.5bn.

“Many of the points were inaccurate, false and misleading,” Mr. Karageorgos said. “Nothing can be further from the truth, that is a false fantasy world and not the reality today.”

He said the Ontario auto insurance industry is experiencing upward pressure on premiums because claims costs are continuing to rise, impacting insurers’ bottom line and companies’ ability to compete with each other.

Mr. Karageorgos said more needs to be done to fix Ontario’s auto insurance system than tinkering with postal code ratings.

He noted geography as a rating factor is practised across Canada and globally because it is a core risk factor.

“We know and the data show that there are higher claims costs and higher frequency and severity of accidents in some areas.

“The whole premise of insurance is pricing the product for the risk,” he said. “But it can be modernized and changed.”

He said IBC is having conversations with government and opposition to emphasize the importance of mending Ontario’s auto insurance system.

“It doesn’t matter what party you belong to, you have to fix auto insurance for all of Ontarians,” Mr. Karageorgos said.

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