On­tario’s car in­sur­ance no easy fix

Out­dated in­for­ma­tion puts sys­tem in a mess

National Post (Latest Edition) - - POST DRIVING - Lor­raine Som­mer­feLd Driv­ing.ca

While it could be ar­gued that the On­tario Lib­eral party re­cently died on many hills, surely judg­ing by years of head­lines one of the big­gest it sac­ri­ficed it­self on would be auto in­sur­ance.

Not a day went by where the other two par­ties weren’t hold­ing the Lib­er­als’ feet to the fire over sky­rock­et­ing rates, gut­ted cov­er­ages and acres of fraud. Ev­ery jab, ev­ery head­line, ev­ery elec­tion made auto in­sur­ance the fea­ture.

So you’d fig­ure if the Con­ser­va­tives are now in the cosy seat, it must have been be­cause they have a so­lu­tion to the cri­sis, no? Re­mem­ber those end­less prom­ises dur­ing the cam­paign about car in­sur­ance rates, the de­bates that cen­tred on the is­sue?

No. You don’t. You heard crick­ets.

Maybe it was be­cause there was an em­bar­rass­ment of riches to pick from when slic­ing and dic­ing a party that had over­stayed its wel­come. But come on, if it was a big enough deal to dom­i­nate head­lines for years and years, surely we still care enough to want re­form, don’t we?

The Lib­er­als’ much vaunted 15-per-cent re­duc­tion in rates fal­tered and stum­bled, with some see­ing a re­duc­tion, but most not. It was an­nounced as a ran­som de­mand for get­ting sup­port from the NDP. This is like two kids hav­ing a food fight and their mother telling them they both have to clean it up. No­body does a very good job, and there’s still crap all over the walls.

Ac­cord­ing to Anne Marie Thomas, an in­sur­ance ex­pert with In­sur­ance Hotline, the in­dus­try is tak­ing a wait-and-see ap­proach, and many com­pa­nies were rather sur­prised when no men­tion of car in­sur­ance, which had pre­vi­ously dom­i­nated years of news cy­cles, even made a land­ing on the 2018 pro­vin­cial elec­tion radar.

Oh, there were some early bur­blings from all three par­ties that will ac­tu­ally prove to be the most in­ter­est­ing in the months to come.

Ev­ery­body wants to go after some­thing called “postal­code dis­crim­i­na­tion.” Lib­er­als and NDPs both rolled it out as a vote-grab, and the PCs went fur­ther, with Caro­line Mul­roney say­ing she wants a des­ig­nated fraud of­fice, some­thing the Lib­er­als dragged their feet on.

But let’s get back to the postal code thing. Right now in On­tario, your auto in­sur­ance pre­mium is based on many things, in­clud­ing where you live. In­sur­ance is a num­bers game; it goes by sta­tis­tics. In­sur­ance com­pa­nies de­ter­mine where they pay out the most money, and then charge that sta­tis­ti­cal group more. Ask any 18-yearold boy with his own car how fair that feels. But ac­tu­ary ta­bles are a real thing.

Like­wise, if I live Kenora, it seems ab­surd I would pay the same as some­one who lives in a crowded ur­ban core. Un­less maybe I was an 18-year-old boy.

As Thomas ex­plains, “If you live near a large in­ter­sec­tion that sees a lot of col­li­sions, that is ma­te­rial in­for­ma­tion.”

Also fac­tored in, of course, are your driv­ing record, the num­ber of kilo­me­tres you drive each year, the type of car you drive and its safety sys­tems, as well as who lives in your house­hold. There are so many in­puts, cher­ryp­ick­ing just one, like a postal code, sends a mud­dled mes­sage to con­sumers.

“Postal-code dis­crim­i­na­tion” sounds omi­nous, be­cause trig­ger words usu­ally do. It’s math. It’s not hard to dig up sto­ries of peo­ple who have moved a kilo­me­tre and dis­cov­ered their car in­sur­ance rates have jacked. I tell peo­ple to check first, much as I rec­om­mend ask­ing about in­sur­ance rates when they go to buy a new car. There are many things that can im­pact that rate.

There is cheer­ing from the places that fa­mously pay the high­est rates, such as Bramp­ton. Elim­i­nate this das­tardly dis­crim­i­na­tion, and the rates there will plum­met, right? Not so fast. All those other things are still go­ing to be fac­tors. In­sur­ance com­pa­nies will spread the pain around, which will prob­a­bly not make peo­ple in far-flung places all that happy. Pain re­lieved in one place means pain de­liv­ered in an­other.

An in­sur­ance ex­ec­u­tive shared with me a far big­ger fac­tor in all of this: out­dated in­for­ma­tion. Some neigh­bour­hoods are trans­form­ing and chas­ing out crime, which should bring rates more in line. But just as in­sur­ance com­pa­nies strug­gle to keep up with the mod­ern tech­nol­ogy in cars and the im­pact it has on re­duc­ing in­jury, the in­put into other ar­eas of their rate-fac­tor­ing is sim­i­larly lag­ging.

Where you live is cer­tainly an im­por­tant fac­tor in de­ter­min­ing how much you pay for car in­sur­ance. But maybe politi­cians should dig a lit­tle deeper into how the in­dus­try could op­er­ate more fairly in­stead of throw­ing around terms like postal-code dis­crim­i­na­tion.


De­spite mak­ing head­lines for years, car in­sur­ance in On­tario didn’t make the re­cent elec­tion’s radar.

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