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
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
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
"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
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
To view media releases and information, visit the Media Centre of IBC's
website at www.ibc.ca.
SOURCE: INSURANCE BUREAU OF CANADA
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