Bad Ontario Drivers Pay Canda’s Highest Insurance Rates

February 14, 2012

By Sheryl Smolkin

If you are a bad driver in Ontario on average you will pay 21 per cent more for automobile insurance and the highest rates overall in Canada,  according to a recent study.

Many factors are taken into consideration when you get a car insurance quote including your age, the value of the vehicle and your driving experience. But your driving record is a key variable. 

To determine how exactly a bad driving record impacts your premiums, InsureEye collected data from over 1,000 Canadians including 600 from Ontario.  Survey participants were asked how much they pay for monthly car insurance premiums and to place themselves in one of three categories:

  1. No violations within the last six years (excluding parking tickets).
  2. Maximum two violations in the last three years.
  3. More than two violations in the last three years, or licence suspension in the last six years.

It turns out that Ontario drivers are comparatively quite safe, with 84 per cent claiming they had no serious violations within the last six years and just 1 per cent reporting more than two violations in the last three years, or licence suspension in the last six years. Only British Columbia (87 per cent) has a higher share of drivers with clean records. 

On average, monthly premiums in Ontario are $148/month with the safest drivers paying only an average of $143/month. In contrast, drivers who had up to two violations in the last three years paid an average of $173/month. Because so few people fall into the worst group of drivers, no premium differential was calculated for Category 3 above.

Related: Ontario car insurance: good news and bad news

In contrast, auto insurance is cheapest in Alberta (average monthly premiums of $113) and the spread in premium costs between the best drivers and those in the second category above is 19 per cent.

In a report filed at the end of last year, Ontario Auditor General Jim McCarter identified several reasons why auto insurance rates in this province are the highest in the country.

  • The average injury claim of  $56,000 in Ontario is five times more than the average claim in other provinces.
  • Ontario’s coverage is the most comprehensive, with the highest benefit levels in the country. This is in spite of fall 2010 benefit reductions for minor injuries.
  • Industry estimates peg the value of auto insurance fraud at between 10 per cent and 15 per cent of the value of 2010 premiums, or as much as $1.3 billion. 

Another problem identified by the auditor-general is that in this province auto insurance company profits are way out of synch.

The Financial Services Commission still allows insurers a 12 per cent rate of return based on long term bond rates in 1996. However the profit margin has not been adjusted downwards since that time, although the long term bond rate has been about three per cent for the last several years and is projected to remain at a relatively low level for some time.

It makes sense for bad drivers in any province to be charged higher premiums. However, I agree with Toronto Star columnist Ellen Roseman that the cost of insurance premiums should have been an issue in the Ontario fall 2011 election and for what we pay, there is considerable room for improvement in our accident benefits system.

One of McCarter’s recommendations is that the Financial Services Commission examine cost containment strategies in other provinces to determine which could be applied in Ontario to control this province’s relatively high claims costs and premiums.

Seems to me someone should have thought of that one long ago. What do you think?

 Contact Toronto lawyer and writer Sheryl Smolkin through her website  Follow her on Twitter @SherylSmolkin

“No Fault” Means No Benefits When You Most Need Them

By Alan Shanoff ,Toronto Sun
First posted: Saturday, February 18, 2012 07:43 PM EST
The main rationale for no fault car insurance accident benefits is simple.
We want people injured in car accidents, regardless of who is at fault, to have quick access to medical and rehabilitation benefits not covered by OHIP, without having to go through the lengthy and expensive process of a lawsuit.
By doing this, we help them recover more quickly and try to prevent their injuries from becoming worse.
But increasingly, the injured are unable to obtain expeditious access to benefits due to the growing practice of insurance companies denying requests for treatment.
According to a survey released last month by the Alliance of Community Medical & Rehabilitation Providers, representing about 3,500 Ontario health care providers, 42% of all requests for treatment are now being rejected by insurers. (The survey reports the denial rate was 11% prior to September, 2010.)
Under Ontario law, claimants cannot go to court to enforce their no fault accident benefits unless mediation has been sought and has failed. This forces denied claimants into the mediation stream at the Financial Services Commission of Ontario (FSCO).
Mediation is supposed to be fast and cheap. Indeed, the law requires a mediator to attempt to effect a settlement “within sixty days after the date on which the application for the appointment of the mediator is filed.” FSCO rules state mediation must be completed within 60 days of the filing of an application for mediation.
But FSCO, a government body with a self-described mandate “to provide regulatory services that protect the public interest and enhance public confidence in the regulated sectors” takes the position the 60-day period doesn’t start with a claimant’s request for mediation, but only when the FSCO “deems” the application to be filed.
They won’t do that until they appoint a specific mediator for the claim. With current backlogs, mediations don’t take place until 10 to 12 months after the filing of a mediation request.
Last December’s report of the Ontario Auditor General said about 50% of all claims result in mediation requests. With an estimated 36,000 applications for mediation being launched in the current fiscal year, the backlog isn’t likely to decrease.
What are accident victims facing a denial of benefits supposed to do? How can they get the attention of the FSCO and insurers to force them to do something about the backlog?
The Kitchener Waterloo law firm Morell Kelly, for example, has hundreds of clients awaiting mediation. They want the 60-day period enforced, so they started lawsuits for four of their clients who had waited longer than that.
Lawsuits will put pressure on the insurers and that can only help the existing situation.
In this case, the insurers could have negotiated settlements rather than face hefty litigation costs.
Instead, the insurers brought applications to dismiss the lawsuits, arguing they should not have been commenced as no mediations had “failed”.
The insurers adopted the FSCO position that the 60-day period doesn’t start until a mediator had been appointed for a claim.
But Superior Court of Ontario Justice James W. Sloan rejected the insurers’ dismissal applications.
In a Feb. 8 decision, he noted the insurance law is supposed to be consumer legislation and claimants who cannot access accident benefits on a timely basis should not be forced to wait “100, 300 or 500 days for mediation.” He called the insurers’ position “preposterous”.
Mediation is supposed to be fast and inexpensive. Forcing injured people to wait a year for non-binding mediation before they can seek a remedy through the courts or arbitration, encourages insurers to deny claims and creates hardship for claimants waiting for treatment and prescription medication.

This ought to have been thrashed out during last year’s Ontario election campaign. Now, even with our minority government, it seems no party wants to bring this urgent problem to the attention of the Legislature. 

Intact Posts Best Underwriting Performance in 5 Years

DAILY NEWS Feb 8, 2012 4:25 PM – 0 comments
 2012-02-08
 

Intact Financial Corporation (TSX: IFC) reported an underwriting profit of $118 million in 2011 Q4, up significantly from the $21-million underwriting profit it reported in 2010 Q4.
”Our excellent fourth quarter results rounded off a strong year for our company as we recorded our best underwriting performance in the past five years,” Intact Financial Corporation CEO Charles Brindamour said in a press release.
Its total underwriting income of $273 million was up 41% over the entire year of 2011. This was despite a $113-million increase in catastrophe losses resulting from the Slave Lake wildfires, Tropical Storm Irene and a number of other severe storms.
The company cited improved auto insurance results in Ontario, increased investment income and the ongoing integration of AXA Canada activities as factors in its improved underwriting performance.
Personal auto underwriting income amounted to $52 million in 2011 Q4, up from a loss of $18 million recorded in 2010 Q4. The company’s 2011 Q4 combined ratio in personal auto improved by 9.7% (up to 93.3%) primarily as a result of an improvement in Ontario.
Investment income of $103 million in 2011 Q4 was up 45% from the same period in 2010 as a result of an increase in assets. 
And the integration of AXA Canada activities is on track and expected to be completed within 18 months of the closing of the transaction, the company said in a press release. “The company remains confident that it will progressively reach its $100 million in after-tax synergies [as a result of the AXA Canada acquisition] by the second half of 2013.”
The company had a minimum capital test score of 197% and $435 million in excess capital at the end of 2011 

Car Insurance Appeal Backlog forces Agency to Reach Out to Private Firms for Help


By Josh Rubin Staff Reporter
 
Getting hurt in a car crash is bad enough, but for many people in Ontario, it’s only the beginning of a lengthy nightmare.
People turned down for accident benefits by insurance face a wait of as long as two years before their appeals wind their way through the system administered by the Financial Services Commission of Ontario.
That’s far more than the 60 days required by legislation.
The backlog of cases is so bad that the FSCO is looking for outside help, recently announcing a request for proposals seeking assistance from private “alternative dispute resolution” firms.
For Toronto insurance lawyer Michael Smitiuch, the backlog is an “access to justice” issue: Justice delayed is justice denied.
“Accident benefits are designed to be immediate help for people when they most need it,” said Smitiuch.
Some clients whose insurance claims are rejected are forced to take out second mortgages on their homes, get loans from family members or apply to the Ontario Disability Support Program, in order to get the financial assistance they need, says Smitiuch.
“People are desperate. Some of them aren’t able to work, and they’re told they can’t claim for things like physiotherapy, or occupational therapy. It’s simply not fair,” said Smitiuch.
The first step when a claim is denied is mediation, a less formal and less adversarial — and therefore less time-consuming and costly — solution than binding arbitration or a lawsuit. In theory, says Smitiuch, mediation is supposed to take no more than 60 days from the day an appeal is filed. But the theory doesn’t match up with the real world.
“In my experience, it’s up to 10 months wait just to get a mediator appointed,” said Smitiuch.
That was also the finding of Ontario’s auditor general Jim McCarter, in his most recent annual report, issued in December.
“FSCO’s mediation service is backlogged to the point that resolution of disputes between claimants and insurers is taking 10 to 12 months, rather than the legislated 60 days,” McCarter wrote.
If the mediation fails to come up with a resolution, people can take their case to binding arbitration, something which can drag out for another year, Smitiuch says.
A spokesperson for FSCO acknowledged by email it has seen an “unprecedented increase” in mediation applications over the past few years, which she called a symptom of the “over-utilization of accident benefits.”
Rowena McDougall said FSCO decided against hiring more staff because “the best solution would be to engage a number of companies that provide high volume services.”
In mid-January, FSCO announced that it would be seeking “requests for proposals” from private dispute resolution companies to help clear the backlog. In an open letter to law firms and dispute resolution companies, FSCO auto insurance division head Tom Golfetto, said the aim was to start clearing the backlog by May.
“It is FSCO’s intention to clear the backlog as expeditiously as possible. This cannot happen without your firm’s co-operation,” Golfetto wrote.
That’s good news, says Smitiuch.
“I think it’s a good idea to do whatever it takes to clear the backlog. I think this is a reasonable solution. But they also need to make sure it never gets this bad again,” Smitiuch said.
The lengthy delays are also a thorn in the side for insurance companies, who’d prefer to get decisions as soon as possible, according to an industry association.
“The backlog needs to be addressed so that legitimate claimants can receive the benefits they need. We want people to get better,” said Steve Kee, spokesperson for the Insurance Bureau of Canada. “We have raised the issue of the backlog for years. . . . It’s troubling claimants have to wait.”