Ontario Auto Insurance - when you fail to tell the whole story
TORONTO, Dec. 3, 2012 /CNW/ - "It's a massive disservice to his constituents in Brampton and to Ontarians in general when NDP Consumer Critic Jagmeet Singh cherry picks his facts and uses them to base his argument and conclusions," said Ralph Palumbo, vice president of Ontario for Insurance Bureau of Canada.
At a news conference today at Queen's Park, the rookie MPP alleged that insurance companies have been saving 25 per cent per insured driver following recent insurance reforms while the average driver has seen their rates increase.
According to Palumbo, "While there is some truth to his simplistic math, the story he tells is far from complete. We've tried to explain this to Mr. Singh on many occasions. He just prefers playing politics rather than dealing with the real problems in Ontario's auto insurance system."
It's important to note: While claim costs are being reported as significantly lower in 2011, these are estimates provided by the General Insurance Statistical Agency (GISA), and are not based on the actual claims payments made by insurers on claims that have been successfully closed. If you had an accident in 2011 you might still be getting related treatment in 2012, and if you commenced a law suit against an at-fault driver, you might not have a settlement for two or more years. So GISA is forced to "estimate" what the final claim costs might be. Palumbo added, "Here's the general problem with the data: many assumptions are made, but there are many unknowns right now."
For example, because of FSCO's mediation backlog, even after the reforms of September 2010, many claims have not been settled. The outcome of arbitration decisions could, and likely will, affect claims estimates significantly for the many 2011 claims that are still open. In fact, insurers could end up owing substantial retroactive payments going back as far as 2010 depending upon how the arbitrators decide to interpret the revised regulations.
In fact, this is exactly what happened after the last reform of the Ontario auto system in 2003. Following an initial one year period of apparently reduced claims costs, claims costs ended up being much higher in the subsequent year and, continued to grow very substantially in each of the following years.
As it turned out, of every auto insurance premium dollar collected between 2008-11, over ninety cents was paid out in claims costs. With operating, regulatory and taxation costs, that meant auto insurers' net losses for the four year period were $2.7 billion.
Bottom line: it is difficult to use the recent GISA data to set premiums reflective of actual costs, since no tally is yet available for many of the claims.
Palumbo added, "We have made these simple facts abundantly clear to Mr. Singh in several meetings. It's just plain convenient for him to use numbers for his own political purposes and not to focus and address the very serious problems that our auto insurance system continues to experience. Perhaps Mr. Singh should read the recent report from the Ontario Anti-Fraud Task force which states that KPMG estimated that the price of fraud was up to $1.56 billion dollars in 2010. In the GTA alone, fraud adds an additional $240 to $540 on each and every insured vehicle."
"We know the price of auto insurance in this province is too high. Consumers deserve an auto insurance system that delivers affordable premiums for all drivers and fair benefits for injured collision victims. A big reason they are not getting that is because abuse of the system is keeping costs exorbitantly high. We all have a role to play - government, industry and consumers - to help fix the problem," added Palumbo.
About Insurance Bureau of Canada
Insurance Bureau of Canada is the national industry association representing Canada's home, car and business insurers. Its member companies represent 90% of the private property and casualty (P&C) insurance market in Canada. The P&C insurance industry employs over 114,000 Canadians, pays more than $7 billion in taxes to the federal, provincial and municipal governments, and has a total premium base of $42 billion.
To view media releases and information, visit the Media Centre of IBC's website at www.ibc.ca.
SOURCE: INSURANCE BUREAU OF CANADAFor further information:
For more information, or to schedule an interview, contact:
Media Relations Officer
Insurance Bureau of Canada
416-362-2031 ext. 4312