Like political football, auto insurance can remain in storage for the Oct. 10 Ontario provincial elections. Rates have been relatively stable for months, and they have fallen substantially since the Liberal and Conservative parties last campaigned on promises to reduce premium costs, reports The Star.
What is there to argue about? Well, not much. But the future could give surprises along the way. A clutch Canada could not even handle the shifts. "Ontario drivers have saved $4.5 billion since November 2003 from lower premiums as a direct result of changes to the (auto insurance) product," says Jane Voll, an economist with the Insurance Bureau of Canada. "The average premium per vehicle has dropped from $1,499 to $1,260 annually - a reduction of nearly 16 percent."
Statistics Canada and the Financial Services Commission of Ontario each take a diverse methodology to calculating the cost of insurance than the IBC. Regardless of the methodology, however, the level of public anguish has sinked.
The industry lobby group IBC merely takes total premiums accumulated and divides that by the number of insured autos. The computation discloses how much shoppers are spending. But not how much coverage they are purchasing.
Statistics Canada attempts to do a value-for-money calculation, on the grounds the true price of wine does not go down if bottles merely get smaller. But a similar computation for auto insurance is more complex. For instance, victims of neck injury might feel shortchanged by the reduction made in the number of pre-approved therapy treatments, adds The Star.
Insurers, professional associations and the government were trying to speed up access to treatment and limit abuse. They would have accomplished both a reduction in premiums and an increase in value if fewer treatments would reduce anxiety and hastened recovery, the report continues.
To raise the value of money, insurers usually offer a higher level of protection from premium increases subsequent to their first accident in within a particular period.
FSCO compares the average of rates and changes it approves. This is not identical to prices paid, because some insurers are raising rates while others are making slashes. FSCO reports that insurers serving about a third of Ontario motorists were cleared to reduce their rates an average of 0.41 percent this summer and early fall. That means a reduction of 0.13 percent for the entire industry. The reduction will offset much of the 0.2 percent raise that FSCO allowed to take effect this past spring. Since 2003, the rates are on average down 14.3 percent.
Over that same period, the price for a typical basket of goods and service has increased about 8.5 percent across Canada. According to Statistics Canada, the average weekly income in Ontario rose by about seven percent between 2003 and 2006.
But analysts in the industry believe that the dropping insurance rates may be nearing end. Insurance brokers are getting reports of rising insurance claims. Some are expecting rate increases. But the same will be elusive prior to the election.
George Cooke, the president of Dominion of Canada General Insurance Co., said that his company has no plans to raise its rates, but will review its stance once industry figures on claims in the first half come available in a few weeks.
Voll says that auto insurance prices could be held within the range of other consumer prices if the government reacts to early signs of cost inflation, and "follows the worldwide trend toward a more competitive rate approval regime."
The issue will not be hyped during the election. But people expect everything will be back to normal after that.
