Last month, Aviva Canada, one of the country’s largest property and casualty insurance groups, issued a release claiming that legal contingency fees, referral fees, and widespread legal advertising are “examples of why Ontario drivers are paying the highest insurance premiums in Canada.”
“Ontario drivers pay too much for auto insurance,” Aviva’s Executive Vice President of Claims, Irene Bianchi, said in the release. “Contingency fees are one of the key drivers of claims costs and, as a result, increase insurance premiums that all Ontario drivers pay.”
The release correctly states that Ontario drivers pay 24 per cent more for auto insurance than drivers in Alberta, and 72 per cent more than drivers in Atlantic Canada. However, can car accident lawyers’ contingency fees truly be blamed for this disparity? Why have auto insurance providers and the Government of Ontario not lived up to their pledge to reduce premiums by 15 per cent, even while available accident benefits have been decimated?
Why do Ontario drivers pay more?
Population and population density
While Irene Bianchi states that “the cost difference between the provinces isn’t more accidents or a higher population density,” insurance experts and car accident lawyers would beg to differ. Janine White, vice president of Kanetix.ca, a respected online insurance rate comparison tool, recently spoke to the Globe and Mail about this very subject.
“The most interesting thing is that while Ontario insurance rates have gone down overall they have actually increased overall in Toronto,” White said. “At the end of the day, everything is based on statistics. Higher density areas have a higher rate of accidents and claims.”
Insurance fraud
Insurance fraud is another commonly-cited reason for Ontario’s high premiums, and was a popular scapegoat for the provincial government and insurance companies in the run-up to last summer’s accident benefits reductions. In May 2016, the Toronto Sun’s Jerry Agar pointed out that insurance fraud, not contingency fees, was the villain du-jour at that time.
“Why are insurance rates so high in Ontario compared to other jurisdictions?” Agar wrote. “According to the insurance industry and the Ontario government, it’s that auto insurance fraud is so high here.”
Private insurance
In July 2014, the Globe’s Peter Cheney penned an eye-opening article entitled “Why Ontario drivers pay the highest car insurance rates in the country.” In it, Cheney cites the province’s issues with insurance fraud, but also identifies the private insurance industry as a whole as a major contributor to the problem. Car accident lawyers‘ contingency fees aren’t mentioned in the article.
“Private insurers claim that the actuarial evidence used to rate drivers shows that males under 25 have the worst statistical record as a group,” Cheney explains. “Consequently, individuals in the 16-to-24 group pay more, even if they’ve never been involved in an accident or received a ticket for a traffic violation… Public auto insurance programs, such as those in Manitoba and Saskatchewan, take a different approach. Standard rates apply to every driver, regardless of age or gender. Auto insurance is much less expensive for a 20-year-old full-time student in Winnipeg driving the same car as his counterparts in Toronto, Montreal and Calgary.”
Cheney also points to a 2004 Consumers Association of Canada (CAC) report that learned that private insurers had doled out $290-million in commissions to brokers who directed clients to their companies. Brokers, naturally, prioritized potential commissions over their customers’ best interest.
“There are some things that should be run by private industry,” CAC president Bruce Cran told Cheney. “And there are others that should be in the hands of government. Auto insurance is one of them.”
Simply stated, private companies are beholden first and foremost to their shareholders. And while customer service and public opinion contribute to a company’s overall value, the strongest indicator of a business’s worth is how much money they’re bringing in. In 2009, Aviva’s stock was worth $163. Today, after years of benefits cuts, it sits at $480. The company is clearly succeeding – why, then, have they been unable to lower premiums, even while slashing accident benefits?
Injured in a crash? Call the car accident lawyers at Neinstein Personal Injury Lawyers
The car accident lawyers at Neinstein Personal Injury Lawyers put our clients first. We understand that car accident injuries can have a devastating, long-term impact on your life. Our first priority is to ensure that you have access to the medical, rehabilitative, and therapeutic resources you need to get your life back on track. If you’ve been hurt in a car accident, contact Neinstein Personal Injury Lawyers today for a free, no-obligation consultation.
Greg Neinstein
Latest posts by Greg Neinstein (see all)
- Do I have a personal injury case? - April 23, 2019
- Are your insurance premiums high? Check your postal code - April 17, 2019
- This was an unusually harsh winter for slip-and-falls - April 11, 2019