Why Ontario’s Insurance Rebate Relief May Not Be Enough for Some Drivers

Why Ontario’s Insurance Rebate Relief May Not Be Enough for Some Drivers

Like many nations around the world, Canada has been rocked by the COVID-19 pandemic and resulting economic fallout. Under stay-at-home measures put in place by the federal government, Canadians were left unsure of their financial stability. While insurance rebates offered by companies have eased some of the pressure, Ontario’s finance minister says insurers can do more.  

In Ontario, the Financial Services Regulatory Authority (FSRA) amended the province’s Insurance Act, opening the door for car insurers to offer rebates to customers. Since April, $685 million in relief has been given to Ontarian motorists in the form of discounts, rebates, payment deferrals and non-sufficient payment fees. 

However, have the rebates resulted in significant savings for drivers, and what impact have they had in comparison to the average cost of car insurance in Toronto

What Insurance Rebates Are Available? 

While FSRA tweaked the Insurance Act to allow insurers to offer rebates, it did not provide any guidelines on what measures companies should take. In other words, auto insurance providers could choose what level of relief they would offer customers.  

Thus, they took individual approaches to the problem. Some offered temporary discounts on premiums, others provided rebates. All had differing criteria for drivers to trigger the relief available to them.  

How Much AreMotorists Saving? 

According to FSRA, the $685 million of insurance relief has been spread to about 70%  of all policyholders in the province. Finance Minister Rod Philips says 10 out of Ontario’s 14 major auto insurers offer rebates to customers.  

How the Insurance Rebates Have Impacted Average Auto Insurance Costs in Toronto 

Motorists in Toronto are used to paying above the odds for auto insurance. Most will pay well above the provincial average of $1,505 per year. According to data from Kanetix.ca, Torontonians pay an average of $1,948 to get coverage for their car, which translates to $162.33 a month, making the city one of Canada’s most expensive insurance markets.  

With such a high average cost of auto insurance, drivers in the city need all the help they can get. Indeed, the situation has been exacerbatedduring the pandemic, making those high car insurance premiums even more of a problem.  

For many people, every bit helps, but how much do insurance industry relief measures help Toronto drivers? 

The answer is not a lot. According to the Ministry of Finance, insurers gave an average saving of $150 per customer through relief measures. That means, on average, customers in Toronto are saving less than one month’s premium. As we approach the end of July, some insurers are ending their temporary relief programs with an aim to “get back to business”.

Can More Be Done? 

While many auto insurers in the provinceembraced FSRA’s call to help Ontarians by offering relief measures, four of the major carriers didnot. As reported by Global News, Finance Minister Rod Philips says he could be forced to name these companies if they do not take action soon.

“I believe there’s still more that can be done,” Philips said. “I don’t believe all of the companies are participating at the level that they should.

“People made it clear they weren’t driving as much; there were fewer accidents. I made it clear to the insurance industry (that) we wanted them to take care of their clients during this difficult time.” 

Waiting for the Provincial Government to Act

During the COVID-19 pandemic, insurance companies responded to the economic crisis by taking steps that brought savings to many drivers in Ontario. Hundreds of millions of dollars have been saved by enacting these measures, but for customers in Toronto the results can only have a minimal impact on their average car insurance premium.  

It is worth noting the New Democratic Party (NDP) – the official opposition party in the Legislative Assembly of Ontario – has called for a more drastic approach. Specifically, the NDP wants the government to issue a mandate that forces auto insurance companies to cut premiums by 50% for three months. Though the ruling Progressive Conservative party has not implemented that measure, expectations are high the government will prompt insurers to do more to help their customers as the pandemic drags on. In the meantime, Ontarians will have to continue to manage any financial hardship they face as a result of COVID-19, including the cost of auto insurance.