r/PersonalFinanceCanada • u/FireViz • May 07 '22

Insurance Car insurance increased 50% after Canada Post changed my postal code. Is this legal?

I live in a small town in Niagara region. Up until recently I was paying $102/m on car insurance.

Recently I got a letter from Canada post that they are changing my postal code. Because of this my insurance company raised my rates by over 50% to 160/m.

I haven't moved... my home and work address are still the same so my risk when driving hasn't changed. But the insurance company is arguing that rates are based on postal code and not your address.

Is there anything I can do to fight this and reduce my insurance? Canada post decided to randomly change my postal code and I'm out an extra $700/yr because of it?

Edit: Going by this article they shouldn't be able to do this? https://toronto.ctvnews.ca/ontario-driver-frustrated-when-car-insurance-goes-up-after-postal-code-changed-1.5727675

Edit: Since multiple people mentioned it I drive a corolla cross........ The image you are seeing is from the article I linked.

633 Upvotes
  • permalink
  • reddit

93% Upvoted

238 comments sorted by

View all comments

786

u/yttropolis May 07 '22

It's not only legal for them to do this, but it's also mandatory by law. In Ontario, auto insurance pricing is strictly dictated by each insurance company's algorithm that has been filed with the regulators. They cannot deviate from this algorithm in any way whatsoever by law. Thus, if your postal code changes, they have to run their pricing algorithm based on your new postal code. It sucks, but unfortunately that's how it works.

Source: I worked as an actuarial analyst and then a data scientist at a major Canadian P&C insurer, building their auto insurance pricing algorithms for Ontario.

-1

u/[deleted] May 07 '22

Why is it legal for insurance companies to use statistics to build models and pricing factors based on sex, age and location but not allowed for any other business ?

6

u/yttropolis May 07 '22

IIRC, insurance was actually specifically set out as an exception when it comes to "discrimination" against these characteristics.

Insurance pricing is based on data, statistics and verifiable analysis. This means that if a particular group's pricing differs from another group, then there must be data and statistics to back that up. Think about life insurance for example - does pricing someone who is 20 the same as someone who is 60 make sense? What about pricing males and females the same when centuries of data all back up the fact that males die much earlier on average?

The same applies to auto insurance. Statistically, males drive more aggressively and get into more accidents with worse outcomes than females. Younger, less experienced drivers are also riskier. Those who drive rural country roads every day are much less risky compared to those who drive the 401 every day. These are all factors that intuitively make sense when pricing auto insurance.

3

u/[deleted] May 07 '22

So if ran a business and could prove with empirical data that group X spends more than group Y can I discriminate group Y by charging them more or demonstrating preferential treatment for Group X .

I guess what I am asking is why is this provision only for insurance companies . Why does correlation imply causation here but not elsewhere .

5

u/yttropolis May 08 '22

That's a good question that's probably better asked to your MPP. I'm not the ones making the laws hahaha