New reports show NDP numbers don't add up
TORONTO, April 12, 2013 /CNW/ - Reports released today by Insurance Bureau of Canada (IBC) show that auto insurers had marginal net returns in 2011 and 2012 after recovering from a severe loss situation prior to 2010 reforms.
The studies were done by two different independent professional firms (KPMG and J.S. Cheng & Partners Inc.).
Key Stats show:
|2011 return on equity (Private Passenger Auto)||2.6%||0.2%|
|2012 return on equity (Private Passenger Auto)||4.9%||3.3%|
|Increase/decrease claims costs 2012 over 2011||+ $300M||- $198M|
These returns on equity numbers are quite modest when compared with other industries such as banks 16.5%, retail sector 12.2%, life and health insurers 9.3% and the securities industry 12.6%.
These reports also add that between 2008 and 2010, the Ontario auto insurance industry lost $2 billion.
"These professionally qualified reports correct the highly misleading comments made by those who do not understand the auto insurance system including the Ontario Trial Lawyers Association," said Ralph Palumbo, Vice-President, Ontario, IBC. "The reality is that the system in Ontario is broken and needs to be fixed."
Palumbo added, "We know that the price of auto insurance in Ontario is too high. Consumers deserve a competitive auto insurance system that delivers affordable premiums for all drivers and fair benefits for injured collision victims. This can only be achieved with a commitment to real reforms that address costs and create a better system for drivers."
The full reports are available on ibc.ca.
"It's quite simplistic for the NDP to call for a rate cut without a plan," added Palumbo. "But do the math - a straight 15% cut to premiums would turn a modest profit in 2012 to another potential $1 billion loss across 90 insurance companies that sell auto insurance in Ontario and sets up the possibility of insurers leaving the market or becoming insolvent."
The P&C insurance industry employs 63,000 people in Ontario and insurers paid $ 2.2 billion in taxes and health levies to the Ontario government. This is money that supports schools, hospitals and other public programs and services.
Palumbo said: "We urge everyone to work with us to develop workable solutions to the complex problems that plague the current auto insurance product."
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.
SOURCE: INSURANCE BUREAU OF CANADA
For further information:
If you require more information, IBC spokespeople are available to discuss the details in this media release.
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Director, Media Relations
Insurance Bureau of Canada