Ontario legislature defeats bill aimed at ending territorial rating system for auto insurance

Published: November 6, 2018



Over the last month, legislators in Ontario have been weighing two bills that aim to end the territorial rating system in the province. However, politicians have shut down one of those bills, meaning some clients will continue to pay more for their auto insurance.

Insurance companies use the territorial rating system to determine the cost of premiums. It is one of the defining factors in risk assessment and is based on location data regarding the likelihood of collision, theft, or damage. Insurance providers argue some neighbourhoods are riskier than others, based on traffic, crime data, and other criteria.

As a result, some customers pay more for auto insurance in Ontario than others. Interestingly, by comparing two adjoining neighbourhoods, huge disparities in premium cost can be observed. In some cases, even living one street away from an affordable neighbourhood can result in high premiums. For example, Brampton is the most expensive auto insurance market in the country and motorists living there pay more than other Greater Toronto Area customers.

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.

“Drivers in the Peel region and other parts of the GTA continue to arbitrarily pay significantly higher auto insurance rates than anywhere else in the province,” Singh said at a bill hearing last month.

“It will make sure that insurance companies are not allowed to gouge people simply based on the neighbourhood they live in or the municipality that they live in,” he added.

Christina Maria Mitas was one of the politicians who voted to defeat Bill 44. Speaking during a debate, the backbench Progressive Conservative MPP for Scarborough Centre says her constituents already pay the highest rates in GTA.

“According to a 2017 report on the most expensive rates in Toronto, Scarborough tops the list with nine neighbourhoods paying over $2,000 a year, making it one of the most expensive neighbourhoods in this city,” Mitas said. “We cannot afford our rates to go higher.”

While the defeat of Bill 44 is damaging for critics of the territorial rating system in Ontario, another wider bill is still before the legislature. Bill 42, the Ending Discrimination in Automobile Insurance Act was also 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.”