The Ongoing Debate on Auto Insurance Premiums in Ontario
As many Ontarians are aware, the auto insurance rates in the province are the highest in the country. The average annual premium in Ontario was $1,544.86 in 2012, a massive 45 percent more than in Alberta, reports The Globe and Mail. While it’s clear that’s there’s a problem in the industry, authorities and industry leaders are at odds with how to rectify the situation.
Should Ontario switch to government-run insurance?
Some believe that private insurance favors company revenue over the insureds’ needs. The Consumers Association of Canada studied industry practices and concluded that “a properly run public insurance system was the best choice,” reports The Globe and Mail.
The primary proposed benefit of a public auto insurance system is a reduction in costs, which proponents claim might be achieved by the following.
- fewer companies to manage, which means less equipment and greater efficiency.
- reduced need for profit margin (unlike private companies a public insurance system wouldn’t have to spike rates to pay dividends to shareholders).
- no need for advertising budget.
- and, better control over would-be industry monopolies in the body shop, medical clinic, and towing industries.
Improving the Current Insurance System
There are numerous others on the opposite side of the fence, though. Many think improving in the current system is the way to go, rather than creating a new government-run program.
“A government bureaucracy – with all its inherent waste on top of the political agenda – will only make things much worse when compared to the competitive free market system,” explains Nick Kandiuk, the assistant Vice President of casualty at A.M. Fredericks Underwriting Management Ltd.
The Insurance Bureau of Canada (IBC) polled independent insurance researchers, asking them whether or not they thought Ontario needed a new insurance system. “Their conclusion: Ontario’s system is not really broken except in the Greater Toronto Area (GTA). Their recommendations: the industry and government should contain costs by reducing high claims costs and fraud in the GTA,” reports the IBC.
Instead of changing the whole system, reformers suggesting making amendments such as those listed below.
- focusing more energy on fraud reduction.
- stiffer penalties for scammers.
- a fairer determination of premiums.
- relaxing mandatory insurance requirements for drivers with lower incomes.
- offering miles-based insurance policies.
- stricter monitoring to identify and eliminate fictitious or exaggerated claims.
- and, using treatment guidelines that promote faster healing and recover for accident victims.
Upcoming Changes in the Insurance System
As per the Auto Insurance Cost and Rate Reduction Strategy that the government put into action in August 2013, Ontario drivers will hopefully continue to see their premiums drop over the next year.
The IBC explains what you can expect: “What the government has promised to do is reduce rates on average by 15% – across the whole Ontario auto insurance market – by August 2015. This is a two-part process, with an 8% average reduction to be accomplished by August 2014 and an additional 7% average reduction by August 2015.”
Legal Help for Accidents in Ontario
If you are ever involved in an accident and need to file a claim, call Preszler Injury Lawyers in Ontario for assistance. Contact us today at 1-800-JUSTICE® to set up a legal consultation and let’s see how we may be of service to you.
