Personal injury lawyers should be concerned about the growing market concentration of large auto insurance companies, the largest insurers’ propensity to litigate, and their influence in the Financial Services Regulatory Authority of Ontario (FSRA).

Big insurers keep getting bigger and more litigious

About 20 years ago, the top ten property & casualty insurers accounted for approximately 10% of the total market. That percentage grew to 33% in only five years, then more than doubled to 68% the next ten years. By 2019, we worked with data that Dr. Fred Lazar of York University prepared for the Ontario Trial Lawyers Association (OTLA) and calculated that nine large automobile insurance groups accounted for 87% of Ontario’s market. The biggest just kept getting bigger, by mergers and acquisitions.

In the past couple of years, the big players in Ontario auto insurance have continued getting bigger still and show no signs of stopping. Intact acquired RSA; now Intact and Aviva are estimated to have over 20% of the market each; add in Desjardins and just these three companies likely control over half of Ontario’s auto insurance market. Economical, ranked #9 among Ontario auto insurers in 2019, demutualized to raise funds for acquisitions, aiming to be among the top five companies. The new company, Definity Financial, which controls Economical and Sonnet, raised $1.4 billion in Canada’s largest IPO in 2021 and saw record revenues and profits last year.

In 2016 we asked personal injury lawyers how the presence of fewer – and bigger – insurance companies would affect personal injury plaintiffs and counsel. Among their concerns:

  • Possible changes in claims handling, with adjusters having less authority to operate independently on a file
  • Committees making decisions, sometimes regardless of the file adjuster or defence lawyer’s recommendation
  • More refusals to pay, including third party claims
  • More aggressive defence – “Americanization” of insurance companies’ tactics as insurers starve out plaintiffs
  • More difficulty settling cases, and delays in assessments and resolutions
  • Less competition, fewer products, and lower benefits for motorists.

And it has come to pass. Ontario’s three biggest auto insurers are also the most litigious of the major companies. In 2019 we compared insurers’ Licence Appeal Tribunal (LAT) Automobile Accident Benefits Service (AABS) applications with their revenues and found that Aviva, Intact, RSA and Desjardins filed significantly more LAT AABS applications than might be expected, given their revenue share. (The most recent analysis for OTLA by Duncan Macgillivray, a personal injury lawyer in Thunder Bay, shows no change in this pattern.)

Big insurers’ presence on FSRA Stakeholder Advisory Committee

The Financial Services Regulatory Authority of Ontario (FSRA) is an independent regulatory agency created to improve consumer protections. FSRA has a Stakeholder Advisory Committee that “advises the Board on FSRA’s priorities and budget, and other matters the Board deems appropriate, as they relate to the Property & Casualty (P&C) Insurance sector.” In November 2021, the committee was looking at several issues of concern to personal injury plaintiffs and counsel, including the Health Claims for Auto Insurance (HCAI) system to address virtual delivery of service, and the change from a rules-based to a principles-based regime.

The committee’s target membership of fourteen stakeholder members represents insurers, associations and professionals working in regulated entities. The large insurers predominate: of eight insurers on the committee, six are among the big insurers that control almost 90% of the market, with all three of the biggest players having a seat at the table. (The only private sector lawyer on the committee represents a corporate law firm.)

The presence on the committee of both the Insurance Bureau of Canada (IBC) and the Canadian Association of Direct Relationship Insurers (CADRI) is oddly redundant. Seven of the eight companies in CADRI are also members of IBC, directly or via parent/subsidiary relationships. These seven are also among Ontario’s largest auto insurers, and again include the three biggest and most litigious.

On the face of it, one can expect the larger companies in any industry to play a major role in government relations and other areas of common interest. But Ontario’s three biggest auto insurers control about half the market, are highly litigious, and presumably have a major voice in both IBC and CADRI. Their influence in FSRA, while perhaps not quite at the level of having “double voting” privileges, could be of concern.

NOTE: This article is based on information available in March 2022.

We hope that the information we provided was helpful. If we can answer any other questions that you might have about Litigation Loans or ATE Insurance, please contact us at 1-877-342-9590 or email our President, Jeffrey Gottheil at jgottheil@nudorra.com . We look forward to speaking with you soon.