A simple explanation of how auto insurance rates are adjusted is based on how much of a risk the insurer takes on insuring a driver and their vehicle and how much would it cost to repair that vehicle should it be involved in an accident. Unfortunately, insurers also use averages to balance out the rates, so if you live in a city where it is very prone to accidents, then insurance rates would naturally be higher than a city where accidents are rare occurrences. Essentially, you are paying the cost of how much of a risk you are to an insurer. However, Ontario's auto insurance system is deeply flawed according to a government-commissioned report. The province suffers the most expensive premiums yet has one of the lowest levels of accidents seen in the province and among the lowest in the country. Drivers in Ontario pay $1458 per vehicle on average in 2015. In comparison, the national average is only $930, Ontario driver's pay more than 55 percent more. Collectively, if drivers in Ontario paid just the national average, the province's residents would save more than $4 billion a year.
David Marshall, the one who submitted the report upon the request of the government, calls that the "opportunity gap" in Ontario's broken auto insurance system. Aside from extremely disproportionate insurance rates, accident victims are getting substandard care. Those who are injured from an accident are not receiving appropriate care, which may result in longer recovery time and may even develop permanent impairments as a result of even minor damage. Marshall labeled this as the "value gap." Delays for even minor injuries can see a settlement take place well over a year from the accident and more often than not various parties deduct from that settlement for their services. Marshall found that every year, almost a third of benefits, which amounts to $1.4 billion, goes to lawyers' fees, expert opinions and insurers' costs instead of treating injured people. Marshall, a former CEO of the province's Workplace Safety and Insurance Board, diagnosed the current auto insurance system in Ontario as "flawed" and it needs to be reorganized. He calls it as "one of the least effective insurance systems in Canada." Although he rejects a public auto insurance system, similar to the one set up in British Columbia and Manitoba, he does urge a major overhaul of the existing set-up.