TORONTO, May 22, 2012 /CNW/ - Ralph Palumbo, Vice-President of Ontario for Insurance Bureau of Canada, today released a copy of a letter, sent by his office to northern Ontario MPPs.
Palumbo decided to send the letter to explain the impact of Bill 45, which if passed would ban the use of territory as a rating factor in auto insurance, would have on the north. He also believes the letter will dispel what he calls "myths" in the current positioning of the Bill by NDP Member of Provincial Parliament Jagmeet Singh (Bramalea-Gore-Malton). "Mr. Singh does not have the expertise in actuarial science to meddle with the Ontario auto system to this degree. He does not know the consequences of this bill, nor did he consult with the insurance industry prior to introduction. That is reckless."
The Bill is up for second reading in the Legislature on June 7. The text of Mr. Palumbo's note is below.
Open Letter to Northern MPPs
NDP Member of Provincial Parliament Jagmeet Singh (Bramalea-Gore-Malton) introduced Bill 45 that will dramatically alter the way auto insurance premiums are calculated in Ontario.
We have read the NDP defence of Bill 45, including a statement that the bill was "designed specifically that Northern Ontarians are not impacted". In truth, Bill 45 will result in lower premiums for Mr. Singh's constituents at the expense of all others. Our independent expert evidence proving that this course of action will hurt northern and rural Ontarians has been completely ignored.
Bill 45 is so flawed that people convicted of drunk driving and people driving expensive luxury vehicles will pay less for insurance while good drivers in northern Ontario will have to pay more. Bill 45 is patently unfair.
The reason southern Ontario drivers pay high auto insurance premiums is because it costs more to deliver insurance in those communities:
For example, in Mr. Singh's riding, the average premium is $1914 a year. Insurers repaid $2981 per vehicle in claims that same year. This amounted to a staggering loss of $95 million in Bramalea-Gore-Malton alone.
By comparison, the average premium in Sault Ste. Marie is $1053 because the per vehicle claim cost is only $981. It's important to note that the claim costs do not include insurance company operating expenses such as salaries, overhead, taxes and health-care levies.
As you can see, there is a serious problem with claims costs in the south, not the north. Why Mr. Singh chooses to spread the pain of high insurance premiums instead of tackling the real problem is beyond our understanding.
We strongly urge all MPPs, and in particular MPPs representing northern and rural constituencies, to defeat Bill 45 on June 7, 2012.
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 114,000 Canadians, pays more than $7 billion in taxes to the federal, provincial and municipal governments, and has a total premium base of $40 billion.
For further information:
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