U.S. auto insurance experts says consumers approach vital in Ontario

Published: October 30, 2015

Updated: July 24, 2018

Author: Luke Jones



The province of Ontario is being urged by an auto insurance expert to embrace a consumer based approach to lower premiums and to increase competition between providers. That is the view of Holly Bakke, principal of Strategic Initiatives Management Group LLP and a past New Jersey commissioner for banking and insurance.

She was speaking at Thursday’s Insurance Bureau of Canada’s (IBC) 15th Annual Regulatory Affairs Symposium, citing success of the consumer based approach in New Jersey for moving away from muddy politics of the industry and revitalizing the auto insurance sector. Bakke says approaches used south of the Canadian border would aid the murky Ontarian auto insurance sector, which is mired in uncertainty amid high premiums.

While New Jersey and Ontario may not seem comparable at first, Bakke says that after researching both markets she saw they are more similar than she realized. The regions both have more or less the same amount of drivers, vehicles, and even similar premium averages. However, she sees problems in the Ontarian market that result in high costs for consumers and a lack of competition for providers.

“You have a lot of consolidation here in Ontario, right? How many new entrants have you had to your market other than through some of the consolidations?” Bakke asked those in attendance. “Folks, that’s not a competitive market.”

Bakke pointed to a report by A.M. Best that highlighted the lack of competition in Ontario, which showed that the top five auto insurance providers in the province represent 44 per cent of the market.

“At the same time, mid to small insurers are slowly being pressured by their larger competitors, as evidenced by the shrinking market share of companies that hold the 11 to 20 positions.”

“Consumers want different types of companies that meet their needs. This consolidation, if A.M. Best is right, is not good for the overall market because, going back to my original premise, you want competition,” Bakke told symposium. “Our experience is that it benefits both consumers and companies.”

“We got to the point where you couldn’t buy insurance at any price,” she said, turning attention to the previous situation in New Jersey.

“Are you there? No. But are you in a place where you need to be thinking about not only affordability, but availability? Yes, I think you are,” Bakke suggested to attendees. “With the consolidations, with the threats to the smaller companies, thinking from a consumer perspective, they need choice.”

New Jersey has since righted its problems and the auto insurance industry in the U.S. State is growing again and has renewed life thanks to more competition. The roadmap reform package that helped New Jersey reads:


  • introducing predictability in rate process while maintaining regulatory oversight;
  • reducing subsidization of “bad” drivers by “good drivers”;
  • increasing penalties for such things as underwriting fraud and moving violations;
  • phasing out take-all-comers as competition replaced regulation;
  • adapting excess profit provisions to promote investment and employment;
  • creating means-tested product for consumers with limited assets (dollar-a-day policy);
  • reducing the number of uninsured drivers subsidization by other drivers; and
  • creating web-based tools to help consumers determine coverage needs.