The Co-operators defends territorial rating system in Ontario

Published: November 1, 2018



Earlier this month, Ontario politicians proposed a change to the auto insurance system to prevent insurers from assessing auto insurance based on location. If passed, the new laws would end the territorial rating system. However, one of Canada’s largest insurance providers says doing so will not solve Ontario’s auto insurance problems.

A private member’s bill introduced this month by Tory legislator Parm Gill of Milton targets discriminatory pricing. Insurers use where a person lives as a major factor in deciding the price they will pay for coverage. Gill says drivers in Toronto pay more than other customers simply because of where they live.

“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.”

Critics of territory assessments argue the system is unfair. In some instances, a driver may pay hundreds of dollars more than another driver located just a street away, if there is a recognized (but invisible) divide between the two addresses according to insurers.

Important factor

Insurers maintain territory assessment is an effective way to determine auto insurance price. Indeed, the territorial rating system is “a significant predictor of geographical risk and risk in general,” The Co-operators said in its management discussion and analysis of its financial results for the third quarter this week.

“Reducing rates for certain territories does not address the core problem of rising claims and auto insurance fraud,” The Co-operators said Oct. 25 in its MD&A.

Discussing this year’s Ontario election win by the Progressive Conservatives, the company says there is no uncertainty around auto insurance:

The election “results in uncertainty around the level to which the elements of the previous government’s Fair Auto Insurance Plan will proceed and around the implementation plans for the previous recommendations made by David Marshall, Ontario’s advisor on auto insurance,” The Co-operators said in its MD&A.