Ontario market should change deductible limit to solve auto insurance problems

Published: April 30, 2017

Updated: July 24, 2018

Author: Luke Jones



Ontario insurance providers and the provincial government are continuing to look for ways to reduce premiums. The prohibitive cost of car insurance in Ontario is under the spotlight again, and recently the province’s Ministery of Finance lambasted the situation by saying premiums remain the highest in Canada despite accident rates being relatively low.

One local brokerage believes one way to lower rates would be to raise the deductible limit for suing insurance companies or third parties after a collision.

David Waserman, president of DMW Insurance believes such a move would improve premium costs, while he also would like to see cash settlements going directly from insurers to claimants, instead of through a lawyer middleman. A cap on lawyers’ fees is also something Waserman believes will help the Ontario market.

“If someone sues an insurance company or a third party, there’s a deductible limit. If you bump that deductible limit to a dramatically higher number like 10-fold of what it is now, I think you might see bodily injury claims reduce dramatically,” Waserman said.

According to Shop Insurance Canada data, Ontarians are currently paying on average $1,551 to purchase annual car insurance, far above the $930 national average across Canada. The provincial government Fair Benefits Fairly Delivered: A Review of the Auto Insurance System in Ontario report shows that the most populated region in Canada actually has one of the lowest accident rates in the country.

“Ontario also has one of the least effective insurance systems in Canada,” the report said. “It is filled with disputes and inefficiencies, and a very high percentage of premiums are being used to pay experts and lawyers and not going directly to injured persons.”

Insurance companies are working within government-set limits and cannot do much to change the situation, argues Waserman:

“In most cases it’s the same insurance company in Ontario as it is in Alberta,” he said. “The product itself may be different, with some people saying the benefits in Ontario are more generous than other provinces like Alberta. But is the extra legal assistance necessary to handle the claimant’s disputes in Ontario compared with another province?

“For example, Intact insurance operates in Quebec, Ontario and Alberta. Is Intact insurance so much harsher in Ontario that their customers need that legal representation compared to another province? I don’t think so.”