Auto Insurance Reforms Deliver Billions In Savings

Insurance reforms in Ontario, Alberta and Atlantic Canada save consumers $6.8 billion

TORONTO, Aug. 24, 2007 – The Insurance Bureau of Canada announced recently that consumers have enjoyed nearly $7 billion of auto insurance premium savings since insurance reforms were implemented in 2003 and 2004 in Ontario, Alberta, and Atlantic Canada. The analysis is based on the latest data available from the General Insurance Statistical Agency (GISA), a government body that collects data on premiums recorded for every private passenger vehicle in those regions of the country.

After nearly four years of declining auto insurance premiums (2003-2007) in provinces with private auto insurance delivery, Insurance Bureau of Canada believes it is important to provide both a summary and a regional breakdown of the premium savings that have been delivered to consumers.

“Reaching nearly the $7 billion mark is an unprecedented level of savings for consumers,” says Stan Griffin, IBC’s President and CEO.

“In every region of the country where insurers compete for the business of consumers, auto insurance reforms have delivered substantial savings for drivers. These benefits are the direct result of efforts by auto insurers and governments across the country to design and implement auto insurance reforms focused on the best interests of consumers,” Griffin adds.

Here is a detailed breakdown of the provincially-based reforms and the resulting savings to consumers.


Average premiums in Ontario have decreased from approximately $1,499 per vehicle in November 2003 to $1,260 in June of 2007, a reduction of nearly 16 per cent for consumers.

Since November 2003, auto insurers have worked with the Ontario government to bring about these savings through the following key reforms.

  • Getting people with whiplash related injuries into treatment faster, with fewer assessments, thus using health care resources more effectively
  • Ensuring greater fairness among the fees of health care providers operating within different parts of the health care system
  • Providing greater consumer protection against sometimes unscrupulous paralegal representatives
  • Reinforcing that the purpose of auto insurance is to direct needed accident victims to treatment rather than cash settlements that may not be applied to rehabilitation
  • Making sure that the focus of court access for further benefits is on claimants that have suffered serious and permanent injuries

“The savings we have seen in Ontario since the 2003 reforms represents the largest premium reduction ever seen in Canada,” says Mark Yakabuski, Vice-President, Federal Affairs and Ontario, and incoming President, IBC. “For Ontario drivers, it means an aggregate savings of $4.5 billion,” he adds.


In Alberta, Canada’s second-largest private auto insurance market, reform efforts have provided savings of $1.13 billion for consumers. From the peak in 2004, when premiums were, on average, $1,182 to current average levels of $1021, prices have declined by nearly 14 per cent.

Reforms to Alberta’s system included the following;

  • a limit to the pain and suffering court awards ($4000) for minor injuries resulting from a collision, but more money allocated for the care required to return an accident victim to health. These reforms did not affect eligibility for health care benefits and income replacement coverage.
  • Pain and suffering awards for more serious injuries remain unchanged.
  • A direct-to-insurer billing system that permits injured accident victims to obtain treatment with no delays.

“While Albertans across the board benefited from these savings, the reforms featured a strong focus on young drivers, arguably the most notable beneficiaries of these identified savings.” says Jim Rivait, VP, Prairies, Northwest Territories and Nunavut, IBC.

Atlantic Canada

Total savings available to consumers in Atlantic Canada amounted to $1.17 billion.

According to Don Forgeron, Vice-President, Atlantic, IBC, these savings are a direct result of auto insurance reform efforts that focused on rising pain and suffering awards for minor injuries. Governments in Nova Scotia, New Brunswick, and PEI introduced a limit of $2,500 for the compensation paid out as pain and suffering awards for minor injuries sustained in a motor vehicle collision. As was the case in Alberta, these reforms did not affect access to health care benefits or income replacement coverage available to all accident victims. Pain and suffering awards for more serious injuries were also not affected by the reform legislation.

In Nova Scotia, reforms saw premiums drop from an average of $1,048 in November 2003, to $800 in June 2007, an average reduction of nearly 24%, representing cumulative savings of $426.3 million for consumers.

In New Brunswick, auto premiums have dropped significantly from an average high of $1,259 in 2003 to current average of $797.

This is a reduction of nearly 37% as a result of government reforms introduced in 2003 and 2006 providing savings of $493.5 million. In addition, government introduced a first-chance discount to give young drivers a break on their coverage as long as they maintain a clean driving record. New Brunswick drivers receive one of the best insurance deals in Canada: generous no-fault accident benefits coverage, access to the courts for serious injuries, and low premiums.

In Prince Edward Island, peak premiums in 2003 of $881 have since dropped as a result of government reform efforts to an average of $745, resulting in savings of $27.9 million for Island drivers, or nearly 15.5% less than at the peak.

Changes in Newfoundland and Labrador have also achieved significant savings for drivers. Auto insurance premiums have declined, on average, from $1,126 in 2003 to $887 as of June 30, 2007, a reduction of 21%. Drivers have realized savings of $221.8 million in the last four years.

“With these savings of the last few years, it is evident that Atlantic Canada drivers continue to benefit from some of the lowest auto insurance premiums in Canada,” says Don Forgeron.

Savings are based on the difference between the highest premium value in 2003 (or 2004 depending on when reforms were introduced) and the lowest premium value each year multiplied by the number of vehicles for the corresponding year.

About Insurance Bureau of Canada:

Insurance Bureau of Canada is the national trade association of the private property and casualty insurance industry. It represents more than 90% of the non-government home, car, and business insurance in Canada. For more information, visit