Intact Insurance supports one aspect of bill to end territorial rating system in Ontario

Published: November 11, 2018

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Last month, a private members bill in Ontario proposed the ending of the territorial rating system for auto insurance. Insurance companies insist location-based assessment is a good way of determining risk and premium cost. However, Canada’s largest P&C provider agrees with one part of the bill.

Bill 42, the Ending Discrimination in Automobile Insurance Act was tabled last month. Backbench Progressive Conservative MPP Parm Gill has called for the end of territory assessments throughout the province.

“Ontario’s auto insurance rates are amongst the highest in Canada despite having some of the lowest levels of accidents and fatalities,” Gill said. “Our government is committed to ensuring fairness in rate setting and ending discriminatory practices.”

Insurance companies have long argued basing premiums on where consumers live is a good way of assessing risk and want to continue with the territorial rating system. One of the guidelines for changing the system is to define the number of territories in Ontario. Gill’s proposal is for no more than 55 territories across the province and no more than 10 within the City of Toronto.

While Intact Insurance uses the territorial rating system and is an advocate of it, the company does welcome a limit on territories in Ontario.

“Ontario historically limited the number of territories that you could use to 55. When you look at other jurisdictions, you’re in the hundreds of territories,” Intact Financial Corporation CEO Charles Brindamour said Wednesday during an earnings call announcing its 2018 Q3 financial results.

“Ontario, for some reason, had this artificial constraint on the number of territories. The private bill on the table today is killing that constraint, which is a good thing. We’re well-equipped from a segmentation point of view with all the tools that we have in the tool box to do well in that environment.”

The province is expected to open the debate on Bill 42 in Match 29. While supporting limiting the amount of territories, Intact Insurance says removing the territorial rating system will not benefit consumers.

“We don’t believe that restricting segmentation, whether it’s location-based rating or other forms, is in the best interests of drivers and consumers,” said Darren Godfrey, Intact’s senior vice president of personal lines, during the conference call.

Bill 44

Another bill aimed at reducing the territorial rating system was defeated in Ontario last week. Gurratan Singh, the auto insurance critic for the opposition New Democratic Party and MPP for Brampton East tabled Bill 44, the Ending Automobile Insurance Discrimination in the Greater Toronto Area Act calling for an end to the territorial assessment system. However, a vote in the legislature last Thursday defeated the bill 35-24.

Bill 44 proposed giving the Financial Services Commission of Ontario (FSCO) power to refuse approval for pricing systems that do not deem the Greater Toronto Area as a single geographic location.