Study update: Ontario consumers pay too much for auto insurance
Published: October 17, 2015
Updated: July 24, 2018
Author: Luke Jones
CATEGORY: Car Insurance
An update of a recent study shows that drivers in Ontario still pay more for their auto insurance than they should, with insurance companies over-profiting from the disparity. The release comes the same week as the Financial Services Commission of Ontario revealed that premiums in the province continue to fall, despite the government failing to lower them by a previously pledged amount.
The study, conducted by York University Schulich School of Business Professors Fred Lazar and Eli Prisman, was original released in August, but has now been updated in view of the government’s latest announcements. The findings show that consumers paid $1.5 billion more than they should have for auto insurance during the last two years. The previous results only counted 2013, which saw drivers pay $840 million more than was necessary, but the update reveals 2014’s figures.
Last year consumers paid $700 million more for auto insurance than was the market rate, according to the study, which was a drop on 2013 but still alarmingly high.
The study was commissioned by the Ontario Trial Lawyers Association (OTLA), and President Maia Bent had some stern words for the insurance industry in the final release:
"Clearly Ontario's auto insurance system is in deep trouble," said Maia Bent.
"Not only are drivers paying through the nose, but the policy is not worth the paper it's written on. Victims are being seriously hurt and it's about to get even worse when further reductions are implemented. It is not an exaggeration to say that we are fast approaching a crisis for accident victims."
"These repeated 'insurance reform initiatives' have clearly only benefited insurance companies by generating record profits."
David Marshall was appointed as a special adviser to the government on auto insurance last week and one of his main mandates is to seek ways to lower premiums. The OTLA says it is looking forward to working with Marshall to find ways to meet that goal.
"We look forward to working with David Marshall and with all stakeholders in the auto insurance system. We need real reform initiatives that strike an appropriate balance among all interests – that means fair and affordable premiums, appropriate and timely treatment for victims, as well as reasonable profits for insurers."
"We have a long way to go to restoring balance and ensuring justice for accident victims and fairness for drivers," Ms. Bent added.