Much has been written
about the high rates of insurance in Ontario. However, the biggest
problem is the government’s permission for insurance companies to divide
the province into smaller and smaller districts.
Toronto has 10
different districts. Accident rates are roughly the same wherever you go
in Toronto, but rates are vastly different depending on your postal
code. The same driver, car, and habits gets a rate that is nearly double
if they live at Jane and Lawrence, in Weston versus Forest Hill, for
example. Why is that, when everything else is the same?
The answer seems to be
in the cost to the insurer per collision. The cost per collision in my
riding is approximately $30,000. The average cost in all of Ontario is
approximately $8,000. These figures were given to me by the Insurance
Bureau of Canada. When all other factors are equal, this one drives the
rates.
What makes the cost
per collision in my riding so much higher? My riding of York
South–Weston has the lowest average family income in Toronto. Many of my
constituents are retired, or unemployed or employed in precarious work
with no benefits. As a result, when comparing two accidents, involving
individuals with benefits and without, the answer is obvious.
When a person with
benefits in their employment is injured in an accident, the employer
pays the sick leave and extra medical costs. The auto insurer does not,
until the employer plan is maxed out. When a person with no benefits is
injured, the insurance company is on the hook for wage replacement (sick
leave) and all extra medical cost from day one.
Insurers often point
to fraud as a driver of rates. Insurance fraud is only 1 per cent of the
total cost of insurance in Ontario. It does not explain double rates in
the same city depending on where you live.
The system
discriminates against Ontarians based on income. If you are from an part
of the province where many people are retired, unemployed or employed
with no benefits, you will pay higher premiums. And the difference, even
in the same city, is dramatic.
This is a fundamental
flaw of the no-fault system we have here in Ontario. Insurers are able
to base rates on where you live, in smaller and smaller districts. The
average rate for good drivers in Ontario should be around $800 per year.
In fact in my riding, it is closer to $3,000 per year.
One can understand
rates based on driving record, age, habits, and the like. But to charge
higher rates because you are poor, or poorly employed is completely
unacceptable. I urge the province to investigate and correct this
defect.
Mike Sullivan, MP, York South–Weston
In September 2012 I
moved from Burlington to Brampton. I did not buy a new car. My driving
record has not changed. My annual car insurance went from $1,207 to
$2,441. There is something terribly wrong with this picture. Did a
change in postal code change who I am? I wonder what else my new postal
code implies about me.
Martha Ross, Brampton
source: http://www.thestar.com/opinion/letters_to_the_editors/2013/04/03/insurance_discrimination_unfair.html
source: http://www.thestar.com/opinion/letters_to_the_editors/2013/04/03/insurance_discrimination_unfair.html
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