Brokers say optionality will save Ontario drivers $100 at most per year

Optionality in the Ontario auto insurance product will end up saving consumers about $100 yearly at most, with the majority of potential savings ($75) coming from income replacement benefits, speakers said Wednesday during an Ontario auto panel at IBAOcon in Niagara Falls.

Early estimates show a consumer can save $75 a year by opting out of income replacement benefits and $12 a year by opting out of non-earner benefits, Insurance Brokers Association of Ontario (IBAO) CEO Colin Simpson says of the two largest savings. Others amount to dollars a year, with dependent care optionality potentially saving clients just three cents yearly, he says.

Effective July 1, 2026, all benefits under the Statutory Accident Benefits Schedule (SABS) will become optional, except for medical/rehabilitation and attendant care benefits. Optional benefits include income replacement benefits, non-earner benefits, caregiver expenses, and those related to death and funeral benefits, among others.

“The overall assumption at this particular point in time is that 80% of all consumers will buy all the options,” Simpson says. “So, we’re talking about optionality for 20% of the market.”

Panellist Rick Orr, owner of brokerage Orr Insurance & Investment, questions whether the time brokers will need to spend explaining all the options will be in the client’s best interest.

“Really, you’re going to have a conversation with a client and spend 10 or 20 minutes explaining all the options. ‘And does your benefit plan cover you for death benefit? Do you have this coverage, that coverage,’” Orr says.

“And at the end of that conversation, you’re saying, ‘Oh, by the way, the death benefit is eight cents.’ Imagine how [ticked] off your client’s going to be.”

Bundling options

Orr says he hopes the optionality discussion revolves around “a bundle of $25 that gives you everything you had before. And then we spend our time talking about $75, ‘Do you need income replacement or not?’ He anticipates clients may say, ‘Just give me the $25 bundle, we’ll move on. It’s $2 a month.’”

Michelle Dodokin, head of auto insurance supervision with the Financial Services Regulatory Authority of Ontario, says insurers can choose whether they want to offer each individual coverage separately, or whether they want to offer bundles, and how they want to assemble those bundles.

“Basically, from our perspective, the bundles have to make sense,” she says. “It does kind of make sense for those smaller coverages to be bundled together, because you’re not going to sell coverage for 50 cents or $1…

“I agree with Rick that the really important conversation is around income replacement and non-earner benefits,” she says. “Income replacement is trying to understand whether that customer has coverage somewhere else through their employer benefits or some of their supplemental plans.”

Which coverages will be included in bundles remains an open question. For example, what happens if a client wants death benefits but not funeral benefits, but all bundles contain funeral benefits, Simpson asks. “Then you won’t get any bundle quotes back. So, hang on, that can’t possibly work.”

Or what if the lowest price option for the consumer contains the death benefit coverage but the consumer is cut out of that because they don’t want it, asks Mark Abraham, CEO of the Registered Insurance Brokers of Ontario. “So that will be a very important thing to understand, what are these bundles?” Abraham says.

There’s also the potential that insurers will discount bundles.

“We don’t know who’s going to come up with what bundles; what consumers are going to want,” Orr says. “I think July 1 is really the starting point of where we’re going to start to see more changes in evolution coming forward.”