Our auto-insurance rates highest in Canada - differing views

NEWS RELEASE

ONTARIO NEW DEMOCRATIC PARTY

INSURANCE BUREAU OF CANADA

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Time for real debate on sky-high auto insurance rates: NDP
 
QUEEN’S PARK – New Democratic Consumer Affairs Critic Jagmeet Singh and NDP MPP Gilles Bisson says it’s time for an open, honest debate on getting Ontario’s sky-high auto insurance rates under control.
 
“Drivers across Ontario are paying the highest auto insurance premiums in Canada. That’s not a record to be proud of,” said Singh. “The same-old tired ideas put forward by the McGuinty Liberals just aren’t working for drivers. I look forward to hearing from the insurance industry but also from those that often get left out of this debate: the drivers paying the bills.”
 
Ontario has the highest auto insurance rates in the country.

According to a recent Auditor General report, Ontario premiums – which average just over $1,400 per vehicle – are as much as 75 percent higher than other provinces.

This is why New Democrats have arranged open hearings on auto insurance: to push for solutions.
 
“Life is expensive enough in the North without sky-high insurance bills making life even more expensive. When a driver in Manitoba is paying hundreds of dollars less than the same driver would in Ontario, we have a problem,” said Bisson. “Let’s have an open and honest debate about how we get costs under control.”
 
Singh has also proposed a private member’s bill that would ban insurers' practice of discriminating by neighbourhood.

Earlier today, the Insurance Bureau of Canada issued a release [belwo] stating the bill would increase costs for Northern drivers.

Yet insurers stated the opposite to independent researchers with Ontario’s Legislative Research Branch, saying, “Bill 45 would result in cross-subsidization between GTA communities… but not between the GTA and other communities [like the North].”

Furthermore, IBC's own technical study of Bill 45 by J.S. Cheng & Partners Inc. doesn't even mention the possibility of a negative impact on the North or rural areas.
 
“If Dalton McGuinty and the insurance industry want to have a debate then I urge them to support our efforts to do exactly that,” said Bisson.

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IBC Appeals to Northern Ontario MPPs on Bill 45

TORONTO (May 22, 2012) – 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 $1,914 a year.

Insurers repaid $2,981 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 $1,053 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.

Sincerely,
Ralph Palumbo
Vice-President, Ontario

About Insurtance Bueau 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.

To view media releases and information, visit the media section of IBC’s website and for IBC on Twitter @insurancebureau.

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