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Ontario budget moves forward with auto insurance reforms

November 18th, 2020  |  Auto Insurance

Ontario’s 2020 budget has zeroed in on the serious health and economic impacts of COVID-19 – and the government’s plan to reform the auto insurance market has been lauded by the Insurance Bureau of Canada.

Finance Minister Rod Phillips unveiled “Ontario’s Action Plan: Protect, Support, Recover” earlier this month. The province has earmarked $45 billion to support more than three years of programs and resources to support Ontario residents and businesses impacted by the pandemic.

In its plan, the government said that it would continue to monitor the impact of COVID‑19 on the auto insurance system to ensure drivers are being treated fairly.

Removes barriers

"During these uncertain times, the Ford government continues to show its adaptability and support for auto insurance consumers," said IBC Ontario Vice-President Kim Donaldson. "Today's budget removes barriers for insurers who are committed to offering the innovative products that consumers are accustomed to receiving from other sectors. In addition, the budget fosters innovation by allowing insurers to bring new products to market that help drivers control their premiums, while also acknowledging a growing demand for a fully digital experience and removing restrictions on usage-based insurance products."

The government had already helped consumers earlier this year, when it enabled almost $1 billion in consumer savings during the pandemic, affecting 93 per cent of Ontario drivers.

For the next phase of its plans to overhaul the province’s auto insurance system, the government will focus on the following reforms:

  • Increasing competition and innovation in the auto insurance sector by modernizing outdated, burdensome requirements. This includes permitting insurers to electronically terminate policy contracts, with consumer consent, to enable fully digital insurers to operate in Ontario. The government is also proposing to allow the Financial Services Regulatory Authority to operate an insurance regulatory sandbox to pilot initiatives that bring new consumer-focused products and services to market more quickly in response to changing consumer needs.
  • Improving deterrence of fraudulent activities that drive up auto insurance system costs by proposing changes that would allow insurers to reject vehicle damage claims where misrepresentation or fraud is involved. A task force has also been established to improve provincial oversight of the towing industry.
  • Increasing consumer choice by enabling insurers to offer more coverage options, including optional not-at-fault property damage coverage for drivers who may determine that insuring their older vehicle costs more than the vehicle is worth. The government is also proposing to increase consumer convenience by allowing credit unions to sell insurance in their branch, and online through a subsidiary or partnership.

Aviva Canada, meanwhile, praised the proposed reforms.

"We are pleased to see the Ontario government promoting innovation in the insurance industry,” Aviva Canada managing director of personal insurance Phil Gibson said in a statement.

“This is a step in the right direction that will give insurers more room to innovate and offer more customized products that better meet the needs of our customers and drivers in Ontario."

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