Paying More But Getting Less Auto Insurance in Ontario

Howie, Sacks & Henry LLP – Personal Injury Law – Motor Vehicle Accidents

Over the past 25 years, the Ontario government has been constantly tinkering with our car insurance system. A good system should maintain a balance between reasonable premiums for drivers, reasonable profits for insurers, and adequate protection for accident victims. Unfortunately, that balance is now out of whack.

In September of 2010, the Liberal government drastically cut the no-fault medical coverage available to most car accident victims by 97%, down to only $3,500.  Since then, the government has made even more changes that hurt accident victims.  In the recent Ontario Budget the government made even more huge cuts to the already gutted insurance coverage. Why would the Liberal government do this to accident victims?  Insurers keep telling them that they are losing money in Ontario.  Insurers say they can’t reduce premiums, something the Liberal government promised to do, without further cuts to benefits. And the Liberal government has obviously been listening.

No one has ever really questioned whether insurers were telling the truth about their profits. Until now. The Ontario Trial Lawyers Association (OTLA), an organization comprised of lawyers who help victims of all kinds across Ontario, recently commissioned a report from two Schulich School of Business professors; the same professors recently hired by a government agency, the Financial Services Commission of Ontario (FSCO), to look into insurance company profits. They used only publicly available information provided by insurance companies to tell the full story, and what a story it is!

The Schulich report looked to see how profitable individual companies were over the past 15 years.  Despite all of the cries from insurers, the Schulich report confirmed that most companies actually made money this whole time! In fact, ‎in 2013, 83% of companies made money, and their average profit was 17.5%! While that sounds pretty high in today’s low interest environment, it’s even better when you consider that the government regulator, FSCO, says that insurers should have made only 11%.

So, is the “insurance industry” losing money? No! Are some companies losing money?  Yes, they are. Why is that happening? Consider ten lemonade stands in a row, all selling exactly the same lemonade. Eight of those stands make a lot of money. Two of them don’t. Would it make sense to blame the lemonade? Maybe the problem is with the owners of the two lemonade stands who can’t seem to make money selling exactly the same thing as the other eight? That’s what we are dealing with here in Ontario. Every insurer sells exactly the same policy. So why is it that 83% of them made huge profits in 2013, but the rest lost money? It’s easy to blame the policy, but maybe those other companies need to look in the mirror to figure out what they are doing wrong.

Can premiums be reduced? Yes they can. But did the Liberal government need to make even more cuts to an already gutted insurance policy in order to reduce premiums, as they did in the recent Budget? Absolutely not. It is time for insurers to look in the mirror, come clean and stop telling us all how they are not making money. Most of them will like what they see in the mirror, or at least what they see in their bank accounts. But for those other unsuccessful companies, it is time to change their ways instead of asking accident victims to help fund their profits by slashing the benefits even further.

Reasonable premiums. Reasonable profits. Protection that is meaningful for those who have been injured in car accidents.  That’s what the public deserves. That is why you should visit to contact your local MPP and say “no to more cuts”.

Adam Wagman is Senior Partner at Howie, Sacks & Henry.  He is also the incoming President Elect of OTLA.  He can be reached at or 416-361-0988.

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