Despite promises, Ontario’s car insurance won’t be an easy fix

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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 the other two parties weren’t holding their feet to 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 cozy 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 centered around the issue?

No. You don’t. You heard crickets.

Maybe it was that 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 Liberal’s much-vaunted fifteen per cent reduction in rates faltered and stumbled, some seeing reduction, 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 InsuranceHotline, 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 “postal code discrimination.” Liberals and NDPs both rolled it out as a vote-grab, and the PCs went further – Caroline Mulroney 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; they go by statistics. They determine where they pay out the most money, and charge that statistical group more. Ask any 18-year-old 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 Anne Marie Thomas explains, “if you live near a large intersection that sees a lot of collisions, that is material information.” Also factored in, of course, is your driving record, the 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, cherry-picking just one, like 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, like 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. Much as insurance companies struggle to keep up with the modern technology in cars and the impact that has on reducing injury, 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.

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