On Tuesday, July 19, 2005, the Canadian Consumers Association released a report stating that, on average, Ontario drivers pay 45% more for auto insurance than drivers in British Columbia.
The report further suggests that the average premium paid by Ontario drivers is almost $2400.00. Now, as a licensed insurance broker in the province of Ontario, I see a lot of auto insurance policies on a daily basis. From what I see every single day working in the insurance industry, the average premium is no where near $2400.00. I would say this number is out by at least $1,000.00.
But why take my word for it. I’m just one little broker compared to the executives and professional researchers of the Canadian Consumers Association, and I’m not on the board of the Insurance Bureau of Canada either.
Well, I’ve done some homework myself and here’s what I’ve found on a price point comparison.
My brother lives in Vancouver and he pays $1760.00 per year for insurance on his 2002 Chev Trailblazer. I did a rate comparison with him living in Toronto (the highest rated territory in Ontario for auto insurance) at $2412.00 per year (still not 45% more). However, the demographics of Ottawa are closer to those in Vancouver and the rate in Ottawa is $1336.00.
Alice Seba of Delta BC, says she pays $1601.00 per year for insurance on her 2003 Nissan Sentra. Delta is a suburb of Vancouver and would be demographically comparable to Oshawa in the GTA. A rate comparison for Alice using a rate from Oshawa is $1570.00.
There are some other factors to consider in a comparison between the two provinces and the auto insurance coverage each offers.
First of all, drivers in British Columbia purchase their insurance from the government. The Insurance Corporation of British Columbia (ICBC) has a monopoly and drivers in British Columbia must purchase their auto insurance through ICBC. Compare that to drivers in Ontario who have the power to choose an insurance provider and ultimately how much they will pay for their auto insurance. Drivers in British Columbia do not have the option of “shopping around� for the best price if they’re unhappy with their auto insurance premium or the service they’ve received.
The Financial Services Commission of Ontario conducts an annual survey measuring customer satisfaction for each of the insurance companies writing auto insurance in Ontario. The results of this survey are available to the public here at http://www.fsco.gov.on.ca/marketconduct/claimsrv.nsf. That’s a powerful incentive to the insurance companies to keep their customers happy.
I wasn’t able to find anything like this for ICBC, but then again, when was the last time you heard of the government conducting a customer satisfaction survey to see how they measured up? Don’t get me wrong, I’m not saying ICBC has bad customer service. As a matter of fact, I haven’t heard anything terribly negative about their customer service. I also have not heard glowing reports of great customer service either. My point is that it’s very difficult to know what level of customer service they’re providing.
The next factor to consider is the product itself. The auto insurance product in Ontario is vastly different from British Columbia. For example, ambulance transportation and much of the treatment, like physiotherapy and chiropractic treatments, as a result of an automobile accident are paid for by the insurance companies in Ontario, but in British Columbia these same costs are passed off to the provincial healthcare plan. This deference of automobile accident medical costs to the provincial healthcare plan has a tremendous impact on the average cost of claims paid out. It’s no wonder the average claim payout in British Columbia by ICBC is significantly lower than the insurance companies in Ontario who do not pass off similar medical expenses to the Ontario Health Insurance Plan (OHIP).
Additionally, the way ICBC underwrites their premium is different than insurance companies in Ontario. Age and gender have no bearing on the insurance premium charged in British Columbia. Statistically, male drivers under the age of 25 have more accidents than any other group of drivers, but in British Columbia no one is rated based on their age or gender. I spoke with an insurance broker in British Columbia about this and was told that in order to compensate for the lower premiums of underage drivers, the discounts available to experienced drivers are limited. In other words, the experienced, claims free drivers are paying for the inexperienced ones.
By the way, this same broker told me the average auto insurance premium in BC is between $1400.00 and $1700.00 per year. By my calculations that’s slightly higher than the average premium in Ontario.
Now I’m not saying that Ontario’s auto insurance is better than British Columbia’s. No system is perfect. But what I am saying is that they are very different, so different that it’s difficult to make price comparisons without taking a lot of factors into consideration. After reviewing auto insurance in British Columbia, I personally prefer the auto insurance product in Ontario. Consumers in Ontario have choice in which company they will deal with and at the same time the government regulates the insurance industry and protects the consumer’s interests. It’s not perfect, but I value choice and I think most consumers do too.
Liane Wood is a Chartered Insurance Professional and Registered Insurance Broker.
She can be reached at questions@insurance-rates.ca.
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All Rights Reserved. Liane Wood 2005. This article may not be published or reproducedin any form (print or electronic) without the express permission of the author. Liane can be reached at: lwood@insurance-rates.ca
