Proposed NDP private members’ bill would hike auto insurance rates in Ontario substantially: Liberal MPP

Ontario drivers would see auto insurance rates go up, and skyrocket in some parts of the province, if legislative amendments proposed by the NDP get the green light, a Liberal MPP suggests — a claim the NDP denies.

Banning the use of territory as a rating factor to determine auto insurance rates would negatively impact drivers in rural and northern Ontario who benefit from living in areas of the province now classified as lower risk, David Orazietti, MPP for Sault Ste. Marie, argues in a statement.

Lanark, Upper Ottawa and southeast Ontario would be hardest hit, having to absorb a 40% rate hike, Orazietti contends. Not far behind would be northwest Ontario (38.4%), Peterborough, Lindsay and Port Hope (35.8%), Cornwall and Thunder Bay (approximately 35%) and Sudbury and northeast Ontario (30%).

Bill 45, Insurance Amendment Act (Risk Classification Systems for Automobile Insurance), 2012, was tabled by New Democrat MPP Jagmeet Singh on Mar. 7. The private member’s bill seeks to “stop the discriminatory practice of using someone’s geographical location to charge higher rates,” Singh said during a town hall in mid-April.

In a statement to Canadian Underwriter, Singh denied the impact suggested by Oriazetti.

“The NDP’s Bill 45 eliminates the narrow definition of ‘territory’ as a risk classification factor as presently defined in regulations of the Ontario Insurance Act,” Singh says in his statement. “In its place, Bill 45 substitutes a new definition of ‘territory’ that reflects the Statistics Canada definition of a Census Metropolitan Area.

“The end result is that good drivers in what are now considered ‘high risk’ neighbourhoods in larger city centres will be treated exactly the same as good drivers in other neighbourhoods in large city centres. Rates in smaller centres and rural areas will be unaffected.”

The bill states the proposed risk classification system to determine rates for each coverage and category of automobile insurance, which requires an application to and approval from the provincial regulator, must use the following mandatory factors:

• the insured person’s driving safety record, but only with respect of accidents where the person was found to be principally at fault;

• the number of kilometres driven annually by the insured;

• the insured’s years of driving experience; and

• the population of the statistical area in which the insured primarily resides.

“Insurers are prohibited from using a geographical region in which an insured person resides as an element in classifying risks,” the bill adds.