Outlines further changes needed in the continuing goal to make auto insurance more affordable and accessible
TORONTO, Nov. 24, 2014 /CNW/ - Aviva Canada is today applauding the Ontario Government for their passing into legislation of Bill 15. The Bill, which relates to the Ontario auto insurance system and was easily passed in the Ontario Legislature last week, will:
- Reduce extraordinarily expensive vehicle storage costs that some facilities and towing companies charge when they know drivers have no other option;
- Create a new and more efficient system to expedite the hearing of disputes, thereby preventing backlogs and helping reach decisions in a timely manner;
- Align pre-judgment interest rates on pecuniary and non-pecuniary damages (pain and suffering) to today's market rates.
And while these changes will assist in the reduction of insurance rates for Ontario drivers, there are more savings to be had within our current system.
"We are pleased that the Ontario Government passed Bill 15 without issue, it is a good first step," said Karin Ots, Senior Vice President of Regulatory and Government Relations for Aviva Canada. "But to truly affect long-term change for the Ontario auto insurance system, we need to reduce claims costs to be in line with other provinces."
Ontario is one of the most heavily regulated insurance markets in the world and the benefits mandated by the government are the most expensive in Canada - offering a greater amount of benefits, a higher value of benefits and a significantly longer period in which benefits are available versus other provinces. For every $1 of premium that Aviva earns, $0.65 is paid out in claims costs. Claims costs need to come down in order to reduce premiums, especially when 92% of Aviva's policy-holders in Ontario do not make a claim.
In Ontario, accident benefit claims have an average cost of $26,863 compared to $3,628 in Alberta. Of those costs, 48% go to non-treatment expenses, such as legal fees and assessments, versus the 52% that go to actually treating of victims (based on Aviva Canada data). The Ontario automobile insurance system is an integral part of the economy, but an extraordinarily high amount of claims costs are being spent on healthcare providers, lawyers and other service providers. Reducing these costs would lower premiums.
For bodily injury tort claims, the average cost in Ontario is $157,133 while it is only $50,020 in Alberta. While Aviva Canada has already taken measures to make rate reductions, it requires involvement from the government to make these reductions sustainable. Both accident benefit and bodily injury figures come from IBC Analysis of 2012 GISA data.
A recent online survey of 1,000 Ontarians, commissioned by Aviva Canada and conducted by Crunch Research, revealed that over 96% of Ontarians would like to reduce the auto insurance rates that they pay. At Aviva, we believe that auto insurance rates in Ontario are too high, and we are taking steps with our government officials to address the issue.
As only 8% of Ontario drivers make a claim. Aviva Canada has put forward a number of recommendations to the Ontario government that, if instituted, would see an overall decrease in the insurance rate paid by Ontario drivers. The recommendations would decrease the payments to healthcare providers and lawyers. The recommendations would also decrease the basic level of coverage but make additional benefits available as optional coverage, bringing Ontario in line with other provinces.
The recommendations to reduce claims costs listed below were outlined in a plan sent to Ontario Finance Minister Charles Sousa earlier this year.
- Reduce claims costs:
a. Reduce the claiming period for medical and rehabilitation benefits from 10 years to four years.
b. Streamline care for motor vehicle accidents with workers' compensation.
c. Clarify the definition of catastrophic impairment to ensure that the most seriously injured claimants are covered.
d. Implement a tort cap similar to Alberta, Nova Scotia and New Brunswick.
e. Cap plaintiff lawyer contingency fees.
In addition, there is also a need to balance the cost of insurance for those who do not have a claim with providing adequate protection for those who do have a claim. Ninety-two per cent of Aviva's customers do not make a claim. With the institution of the above recommendations, Ontarians will benefit from a fair, sustainable and affordable insurance product that will provide a broad range of coverage and rate stability for the foreseeable future.
About Aviva Canada
Aviva Canada is one of the leading Property and Casualty insurance groups in Canada providing home, automobile, recreational vehicle, group and business insurance to more than three million customers. The Company is a wholly-owned subsidiary of UK-based Aviva plc and has more than 3,000 employees, 25 locations and 1,700 independent broker partners. Aviva Canada and its employees invest in positive change including through the Aviva Community Fund and Eva's Initiatives, its partner in Aviva's global Street to School program to help homeless and other at-risk youth reach their potential.
Image with caption: "Accident Benefits (AB) are medical and income replacement benefits provided to an injured person by their own insurer, regardless of who was at fault for the accident. Bodily Injury (BI) coverage provides compensation to a third party who was injured through the fault of the insured. This is also referred to as a tort claim. (CNW Group/Aviva Canada Inc.)". Image available at: http://photos.newswire.ca/images/download/20141124_C9883_PHOTO_EN_43248.jpg
SOURCE: Aviva Canada Inc.
Heather MacDonald, Senior Coordinator
Kaiser Lachance Communications
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