The minority Liberal Government in their 2013 budget has made a commitment to Ontarians that they can expect auto insurance rates to be reduced by about 15% before August 2015. This was a deal made with the NDP Government in exchange for their approval of the 2013 budget. Unfortunately, it has been made official on October 15, 2014 that the now majority Liberals are not on track with their promise.
The Financial Services Commission of Ontario has confirmed that there has been virtually no change in auto insurance rates for the second straight quarter. This falls extremely short of the 8% decrease in rates which was originally projected.[1] In fact, Finance Minister, Charles Sousa admitted in July 2014 that average premiums may have even “inched 0.22 percent higher in the second quarter.”[2] His solution to customers was to simply ‘shop around’.
The Liberal Government had begun making changes to the auto insurance industry since 2010. At that time, auto insurance benefits were slashed in half for routine accident claims, which gave insurance companies massive savings of about $2 billion. The NDP argued that, because insurance companies had seen their best profits in years, they would be able to pass along their savings to customers. An article in the CBC dated May 29, 2013 raves that, despite the promises made, the Liberals are actually allowing insurance companies to raise rates.[3] The NDP leader claims that she has been receiving complaints from citizens that their rates have been increasing and that the government is allowing insurance companies to increase rates by 30%.
Finance Minister, Charles Sousa insists, however, that the government is still on track for the 15% cut in insurance rates by August 2015. He is relying on the initiatives that have been and will continue to be implemented. The government says that fraud is largely to blame for rising prices. Thus, recommendations by the Anti-Fraud Task force have now taken affect. Some changes include, the requirement for patients of health clinics to sign in on attendance sheets when coming for their appointment, insurance companies are now required to give detailed reasons for denying a claim and health clinics are no longer allowed to have customers sign blank forms. On November 20, 2014, the Liberal Government passed Bill 15, which contains further changes that are aimed at reducing auto insurance rates. Government says that car accident claims will be settled faster because they are being moved to a new dispute resolution system, which is said to reduce administrative costs. Also, the tow truck driving industry will be more heavily regulated giving consumers more rights with regard to impound fees. Furthermore, the bill created new rules requiring health practitioners to be licensed if they want to continue to be reimbursed directly by insurance companies for treatment plans administered to car accident victims.
Interestingly, the NDP did not vote yes on Bill 15, even though they have been strong supporters of the 15% reduction plan for auto insurance rates. The NDP are against the new bill, because it takes away the right of drivers to sue the insurance company for denying their accident benefits. The result is that the insurance companies will pay less in legal fees to their lawyers thereby being in a position to drag cases out longer, which may force motor vehicle victims to eventually abandon their claims.
Aside from initiatives taken by the government, some insurance companies like Desjardin and Co-operators have begun a new usage-based auto insurance program. This program asks customers to install a wireless monitoring device into their cars. The device sends data back to the insurance company about your speed, acceleration, braking, distance travelled, the times when the car is being driven and other driving habits. The information that is collected is then used to calculate a potential discount upon renewal. There are critics, of course, that say the information can be misinterpreted. It may be that, the usual ways of assessing rates such as driving history, claim history, etc… is more reliable. There is potential for abuse, for example, if insurance companies use the device to set their own standards of who is a good driver and who is a poor driver. This device may in the end, be a tool for raising premiums on people who do not want to have it installed. There is also a privacy concern to consider before agreeing to have one of these devices in your car collecting your data. Nonetheless, many drivers will go an extra mile for a promise to pay less in auto insurance fees.
In Ontario, we have some of the highest insurance rates in the country. The initiatives being taken by the Government and even the insurance companies are a good start. Conservative MPP Vic Fedeli stated that, “Bill 15 should have tackled all the recommendations of the Ontario Auto Insurance Anti-Fraud Task Force, not just half.”[4] Only time will tell, but hopefully Ontarians will be pleasantly surprised by the reduction in auto insurance rates without further reduction in accident benefits and privacy, maybe even by August 2015.
