Ontario drivers may have overpaid for their auto insurance by at least $7.6 billion — and as much as $12.7 billion — between 2001 and 2018, according to a new report being released Thursday.

Written by York University economist Fred Lazar for the Ontario Trial Lawyers Association, the report concludes that “drivers in this province definitely have paid too much for auto insurance.”

The reason? Permissive provincial government oversight of the insurance industry, Lazar writes.

“Auto insurance companies in Ontario have had a free ride for many years.”

Ontario drivers contribute disproportionately to the profits of national insurance giants through elevated premiums, the study concludes, with the top 10 insurers earning higher profits for their auto insurance businesses in Ontario than all of their Canada-wide insurance operations combined between 2016 and 2018, the report says.

“The reality is that auto insurance in this province has been propping up their overall profitability,” Lazar said in an interview.

Pete Karageorgos, director of consumer and industry relations with the Insurance Bureau of Canada, which represents insurers, agrees auto insurance is too expensive in Ontario.

“The system needs to be fixed. But when you look at the actual facts...the evidence on the whole does not support Professor Lazar’s position.”

Karageorgos says elevated auto premiums are the result of inefficiencies in the regulatory system, insufficient use of technology and “frictions,” including tribunal hearings and medical assessments in the claims process.

“Personal injury lawyers can create impressions in the public that there is a windfall waiting for you when you’re in an accident, which is not helping matters,” he said. “That is not the intention of insurance, which is to help you become whole again.”

Ontario’s auto insurance industry was the subject of a Star investigation in 2018 that reported the details of several class-action lawsuits alleging some of the largest insurers have refused to pay hundreds of millions of dollars in HST to car accident victims despite repeated advice from the provincial regulator and the government to cover those costs.

Following the Star stories, the provincial finance ministry announced amendments to the Insurance Act that mandated insurance companies pay HST on accident benefits.

But Ontario’s auto insurance rates have received no such government crackdown.

Lazar, who calls himself one of the millions of Ontarians overpaying for his car insurance, says big insurance companies impose political pressure on the government by threatening to leave the province if profitability is undermined.

“The companies being regulated expend a lot of money on lobbying and government relations and are able to convince regulators to tread lightly. Politicians are afraid to call the positions of insurance companies...So they take the safe route. I think regulators should call their bluff.”

Average premiums per vehicle have increased by 2.4 per cent between 2010 and 2018, while average claims per vehicle have declined by 10 per cent, the report says.

Ontario Trial Lawyers Association president, Allen Wynperle, says auto insurance benefits were cut 17 times under the previous Liberal government in an effort to reduce premiums. But not only did premiums not decline, the provincial regulator has approved a string of rate increases totalling 20 per cent over the last three years, he says.

“It just doesn’t make sense,” Wynperle says. “You’re paying more and getting less over the last decade. The question is why?”

The OTLA sought out economist Lazar to formulate estimates because insurance companies are not required to publicly report profits from their auto insurance operations in Ontario.

“As Ontarians, we’re not given that information but we’re asked to pay more,” Wynperle says. “There should be greater transparency. That begins with public disclosure.”

Even the legislative change targeting insurance companies that withhold HST from their accident claimants hasn’t settled that matter, say lawyers who represent some of those victims.

Since the amendments requiring insurance companies to cover the HST were approved June 3, at least two insurance companies — Intact and Belair Direct — publicly announced they will comply. But other major companies have resisted.

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“The extent to which a handful of insurance heavyweights continue to thumb their noses at the regulator, the government and their own clients is appalling,” says Paul Harte, a Toronto lawyer who has filed class-action lawsuits against insurance companies. Though the filing of the suits predates the June 3 HST amendments, Harte alleges ongoing HST violations. “Without action to bring greater transparency and accountability to this industry, a number of players will continue to use their wealth and power to the detriment of victims and car drivers.”

As recently as Nov. 26, 2019, Aviva wrote a claimant advising “HST has been included in the limits on this claim.”

“Because this issue is still before the courts, it wouldn’t be appropriate for us to comment publicly,” the company said in a written statement in response to questions from the Star.