Where’s the 15% cut to auto insurance premiums?

By MPP Toby Barrett

Promise made — promise broken. The Ontario government has failed to follow through on a commitment to cut the provincial auto insurance rates.

In the 2013 budget, we were told auto insurance premiums would be reduced by 15 per cent over two years. That would have equaled an annual savings of $225 for each policy holder. But here we are two years later and reductions have yet to reach the halfway mark.

Even Ralph Palumbo of the Insurance Bureau of Canada says Ontario’s rates are too high. Ontario drivers pay twice as much as in the Maritime Provinces, and 45 per cent more than Albertans.

Much of the reason for high insurance premiums can be attributed to over-regulation and fraud.

Auto insurance fraud in the cities is a well-organized business. Sometimes, it’s a massive ring that involves storage yards, repair shops, health care clinics and legal service providers. KPMG estimates fraud in auto insurance at between $768 million and $1.56 billion. This costs each Ontario driver between $116 and $236 each year.

Some of the unfulfilled promises to achieve the 15 per cent cut were:
* Cracking down on fraud, including licensing health clinics
* Requiring insurers to offer discounts to motorists with safe driving records
* Exploring other cost-reduction initiatives, including oversight of the towing industry and collision repair shops

The insurance industry recognizes fraud is an issue, but the government isn’t taking it seriously. Government did create a task force which came up with 38 recommendations on how to tackle the issue. This was a good first step, but the problem after two years is that the province has only implemented six of the 38.

Statistics show much of the fraudulent activity is occurring in the Greater Toronto Area. We all see the tow trucks on the side of the major highways, just waiting for a motorist to have a problem. Many of these drivers do have deals with storage yards, body shops and health clinics – something we don’t see locally.

For example, vehicles involved in collisions are taken to storage facilities that will begin to charge the owner of the vehicle immediately. The unsuspecting owner is often not aware these charges are accumulating until they get the bill.

We in the Official Opposition have always been adamant this government must address insurance fraud. A special fraud unit worked in New Jersey and Britain – it can work here.

It’s also important to encourage competition in the automobile insurance market and reduce unnecessary bureaucracy. This will cut costs. Some insurance providers have already left the province and that does not bode well for a competitive marketplace.

We have a good insurance system in Ontario – think of our local agents, brokers and companies — but we must address the problems plaguing the industry and make it better. Prior to being elected, I sat on the board of Norfolk Mutual. Other mutual insurance companies in the riding are Cayuga Mutual, Wabisa, Erie and Townsend Farmers’ Mutual. Mutuals are not-for-profit companies that are owned by the policy holder themselves. Our local insurance people know their community and the people they serve. I feel we are fortunate to have them.

However, auto insurance bills have not dropped 15 per cent, and this is just more proof the government has neither a plan nor an intention of keeping its promise.