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Average car Insurance rates Ontario

Ontario’s insurance companies say they can lower your car insurance rates by an average of 12 per cent, but the provincial regulator is being slow in approving the technology that would allow them to do it.

GTA drivers pay the highest car insurance rates in Canada , with an average cost per car of $1, 500 a year. So anything that reduces the cost is welcome. Insurers believe many drivers would be quick to take advantage of their usage-based insurance plans. They all involve some form of GPS tracking device that record how you drive, including such things as acceleration, braking and speed. In exchange for good habits, you get a discount.

Quebec’s Desjardin Insurance is the only insurer offering a usage-based program in Ontario. But three more have been given approval by the provincial regulator to introduce their own versions this year.

Insurance companies are attracted to the technology, because it is a more accurate way of assessing risk — and ideally, it improves a driver’s behaviour by providing an incentive for good driving. That means fewer accidents and fewer claims for the insurance company to pay out.

“We’ve seen some of our clients reduce their claims payouts by up to 40 per cent, because [drivers are] made aware of their driving and therefore they drive slower and safer to get savings, ” said Paul-André Savoie, the president of Montreal’s Baseline Telematics

Savoie’s company produces the GPS tracking technology used by insurers in Europe, the United States and Quebec.

Desjardins launched its usage-based program in Ontario and Quebec last May and has attracted 45, 000 new customers, said Joe Daly, a spokesman for Desjardins.

The Desjardin plan measures three things — distance driven, time of day the vehicle is used and braking and acceleration. The maximum savings is 25 per cent, though this is only possible if the distance driven is less than 15, 000 kilometres a year.

“The average driver in Toronto will [save] around 11 per cent, ” on their insurance bill, Daly said.

Insurers need the approval of the Financial Services Commission of Ontario (FSCO), which regulates the insurance industry, to offer these plans.

“We’ve really decided to proceed cautiously, ” said Bruce Green, a spokesperson for FSCO. He says the regulator wants to make sure consumers are protected and the information collected is not misused.

“The capacity of the devices far exceeds how FSCO would like to see them used, ” Green said. “But we had to start somewhere.”

Daly said it took Desjardins almost a year to get approval and other companies have been waiting a long time.

The Canadian Automobile Association was recently approved and expects to launch a program this year that will offer a discount of up to 15 per cent if drivers meet its targets while Intact Insurance has been approved to offer a usage-based plan in April in Ontario.

The first Canadian usage-based program was launched by Industrial Alliance in Quebec in 2012. Its Mobiliz program is aimed at young drivers to help reduce their high accidents and reward them for better driving habits. Under Ontario’s regulations, data collected by telematics can only be used to reduce rates.

It works, said Baseline Telematics’ Savoie, whose company is behind the Mobiliz technology.

On average, Quebec’s Industrial Alliance customers get a 20 per cent discount on their monthly bill. In this model, bad drivers can be penalized, seeing their bill increase up to 100 per cent more than their base premium, though Savoie notes only a small fraction of customers see this happen.

Unlike usage-based programs in Quebec, insurers in Ontario cannot change premiums every month, as FSCO only allows rates to change when the contract is renewed, typically annually.

Daly said that blunts the effectiveness of the program.

“For psychological reasons, if you can do it month by month, boy does that kind of focus the mind, ” Daly said.

Until consumers get used to fluctuating rates, it is not in their best interest to allow premiums to fluctuate month by month, Green said, as it creates volatility and uncertainty.

The technology is capable of gathering a lot more information. A telematics device can record all kinds of things: how quickly you accelerate and brake, whether you drift out of your lane, how sharply you take corners, whether you’re driving on busy highways or quiet side streets.

“It’s almost limitless, the number of risk factors which you can access, ” said George Cooke, the former CEO of Dominion Insurance company and an advisor for Intelligent Mechatronic Systems, a Waterloo telematics company.

Telematics could also be used to combat insurance fraud, such as staged accidents or exaggerated damage claims. The devices could record information on collisions, similar to a black box in an airplane.

“It should be able to virtually eliminate the staged collision, ” Cooke said.

Green said FSCO understands the potential for the technology, but wants to be sure consumers understand the privacy implications.

That means the agency wants to ensure that data collected by telematics is used and stored appropriately, and drivers have given their explicit consent for it to be collected and used.

Green said the regulator sees the potential of the technology to reduce insurance rates and regulations will continue to evolve.

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