Ontario lawmakers are exploring a proposal to make most automobile insurance accident benefits optional, aiming to cut costs and improve policyholder accessibility.
According to proposed changes to the Insurance Act, medical/rehabilitation and attendant care benefits would remain mandatory.
The Ministry of Finance argues that making more benefits optional will increase insurance consumer choice, according to BestWire.
The ministry highlights that current insurance packages lack flexibility, describing them as “one size fits all.” By offering tailored options, policyholders could reduce premiums by selecting only the coverage they need.
If approved, the changes would take effect in July 2026. Benefits that would become optional include income replacement, housekeeping, caregiver support, death and funeral expenses, and educational costs.
The reforms, part of Ontario’s Budget 2024, were introduced by Finance Minister Peter Bethlenfalvy. The Insurance Bureau of Canada (IBC) reports that consultations are ongoing.
IBC and its member insurers have engaged with the government on these reforms. Amanda Dean, IBC’s vice president for Ontario and Atlantic, confirmed the collaboration in a statement. She noted that once consultations wrap up, insurance carriers can begin the actuarial work needed to price the updated products.
We are prepared to support the government’s educational initiatives to ensure consumers understand these changes and the options available
Amanda Dean, IBC’s vice president for Ontario and Atlantic
Still, some industry leaders question the reform’s potential downsides. Adam Mitchell, CEO of Mitch Insurance Brokers, expressed concerns about the proposal’s long-term impacts. He warned that either lawmakers have fully considered the risks and withheld documentation or have overlooked crucial issues, rushing the reforms for political gain.
“They may be pushing this through without fully accounting for the consequences,” Mitchell told.
Mitchell also pointed out a key concern: those most likely to decline extra coverage are often the least able to manage without it. “The overlap between people who would opt out of coverage and those who can’t afford it is significant,” he said.
He fears that opting out of income replacement coverage could create financial hardship for accident victims, particularly those without disability insurance.
As more people opt out of certain coverages, the pool of funds available for claims could shrink.
Insurance premiums are pooled to cover the losses of a few. If the more privileged policyholders opt out, there will be less money for those who need it but can’t afford it. This could increase costs for those remaining in the pool.
Adam Mitchell, CEO of Mitch Insurance Brokers
While supporters of the amendment claim that increasing choice will reduce auto insurance costs, Mitchell cautioned that more choice isn’t always beneficial. He told the need for all stakeholders to carefully weigh the potential downsides.
