The notice below provides an overview of changes for the private passenger automobile insurance rate, approved or ordered by the Financial Services Commission of Ontario (FSCO) for filings reviewed in Q1 2014. The number of filings processed by FSCO and the overall average rate change for Ontario may vary from quarter to quarter during a year. It is based on updated information about claims costs, market conditions and other financial factors.

Average Rate Changes

Approved rates declined on average by 5.01% for the 14 insurers’ rate filings approved in the first quarter. These insurers account for 20.22% of the market based on premium volume. Counting the entire market, approved rates declined by 1.01% average.

Individual Rates

It is important for consumers to understand that the average rate changes reported are a strong indicator of the direction of premiums in the upcoming policy holder renewal cycle. However, an individual policy holder may experience a rate change that is either higher or lower than the industry-wide average rate change, or the average rate change for a particular insurer, depending on several factors, such as:

  • vehicle insured
  • policy owner’s location, driving experience, at-fault accident and conviction history of drivers, whether the vehicle is used for pleasure or commuting, and other risk factors
  • coverages purchased and deductible or liability limits options selected

Also, as most policy holders purchase annual policies, any changes approved for the insurer and effective prior to the policy renewal date, or changes in the policy holder’s circumstances from the last renewal (e.g., at-fault accident), will impact the policyholder’s rate at renewal.

Consumers are urged to shop around for auto insurance – Ontario has a very competitive marketplace. Rates for the same coverage depend on many factors and vary based on each insurer’s claims experience and the insurer’s rating system.

FSCO has several resources to help consumers better understand auto insurance, including an Understanding Rates/Interactive Tool and tips on shopping around and saving on auto insurance.

FSCO’s Rate Approval Process

Insurers must submit proposed changes to their rates to FSCO for approval. FSCO and its actuaries research this information and insurers’ assumptions regarding claims costs, expenses and investment income to ensure that, as required by law, the proposed rates are:

  • just and reasonable
  • not excessive
  • not going to impair a company’s long-term financial solvency

As a result of FSCO’s research, an insurance company may be required to decrease its proposed rates before they are approved.

Most premium money collected by insurers go towards paying for claims for people injured in car accidents. An insured individual who is injured in a motor vehicle accident may claim for Accident Benefits, regardless of fault.

In some cases, seriously injured drivers or passengers may also make a claim by launching a lawsuit against the driver at fault. Such claims are to be paid under the Third Party Liability – Bodily Injury coverage of a car insurance policy. These two mentioned coverages account for 66.4% of claims costs.

When an insurance company adjusts its rates for a particular type of coverage, it means that the insurer has experienced a change in the claims costs for that coverage. E.g, an increase in rates for Third Party Liability – Bodily Injury coverage would indicate that an insurance company has experienced a higher number or higher average cost of bodily injury claims. A company must provide claims costs data to FSCO when proposing a rate change for any coverage.

It is important for drivers to understand the coverages available to consumers under an automobile insurance policy in Ontario. FSCO has a number of simple and consumer-friendly descriptions of these coverages available on its website.

Automobile Insurance Cost and Rate Reduction Strategy

The cost and rate reduction strategy builds on the government’s 2010 reforms and includes further measures aimed at reducing costs in the auto insurance system, such as:

  • additional changes to the Statutory Accident Benefits Schedule effective on February 1, 2014
  • additional regulations governing the licensing of health service providers who invoice auto insurers directly
  • introduction of the Fighting Fraud and Reducing Automobile Insurance Rates Act on March 4, 2014 that proposes to: transform the dispute resolution system based on expert recommendations; reduce the amount of time a vehicle can be stored, accruing charges after a motor vehicle accident without notice to the driver, from 60 days to a shorter time frame; and reduce pre-judgement interest on pain and suffering awards from 5% to an interest rate based on current market conditions

Awareness is a vital part of fighting with auto insurance fraud. FSCO has information for consumers on its website on how to recognize and avoid frauds in order to lower premiums, including a fraud hotline.

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