TORONTO, April 30, 2013 /CNW/ - The government's plan to target a 15% rate reduction will only work if appropriate reforms consistent with the scope of reductions are in place, says Insurance Bureau of Canada (IBC).
"We understand why the Finance Minister is concerned about auto insurance rates - so is the auto insurance industry. However, lower rates will not be sustainable if the system is still broken," said Ralph Palumbo, Vice President Ontario, IBC. "We caution the government that cutting rates, without first reforming the system, will threaten the ability of insurers to protect Ontario's drivers."
Recent reports stated that between 2008 and 2010, the Ontario auto insurance industry lost $2 billion. It is feared that quick rate cuts without fixing the system could turn a modest industry profit in 2012 to another potential $1 billion loss across the 90 insurance companies that sell auto insurance in Ontario.
IBC welcomes the government's commitment to combating fraud, particularly the proposal to incorporate interpretation guidelines into the Statutory Accident Benefits Schedule. If implemented, these guidelines would help ensure that FSCO arbitrators follow the original intent of the 2010 reforms.
Palumbo added, "We want to work with the government to develop workable solutions to the complex problems that plague the current auto insurance product. We CAN have a fair, affordable, competitive and accessible auto insurance system in Ontario. However, it cannot be achieved with slogans. This is the time for leadership, political courage and a commitment to putting the real interests of consumers first."
About Insurance Bureau of Canada
Insurance Bureau of Canada is the national industry association representing Canada's private home, car and business insurers. Its member companies represent 90% of the property and casualty (P&C) insurance market in Canada. The P&C insurance industry employs over 115,000 Canadians, pays more than $7 billion in taxes to the federal, provincial and municipal governments, and has a total premium base of $44 billion.
If you require more information, IBC spokespeople are available to discuss the details in this media release.
SOURCE: INSURANCE BUREAU OF CANADA
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