Don’t go counting your auto insurance savings yet



TORONTO – We’re back to let’s-make-a-deal time in provincial politics.

And you should be very afraid.

When you get the Liberals, the NDP and the insurance industry all agreeing on something, it’s a good idea to check the fine print.

New Democratic Leader Andrea Horwath appeared to have pulled off a major coup Wednesday — forcing Premier Kathleen Wynne to cave in to her demand that the government require insurance companies to roll back their rates by 15%.

“It’s something we can work with the NDP on,” Wynne told reporters Wednesday.

Because auto insurance is compulsory, rates are regulated by the Financial Services Commission of Ontario.

So how’s this going to work?

Government is going to tell a private industry how to run their business?

Auto insurance rates are not as much an issue in the rest of the province as they are in the GTA.

According to Insurance Bureau of Canada figures, the average premium Ontario-wide is $1,505.

Here’s the break-down:

In Toronto, Markham, Richmond Hill, Vaughan and Peel, that figure is $2,000. Across the province, the numbers are much lower: Niagara, $1,450; Windsor-Essex, $1,425; Ottawa, $1,141; Brantford, Guelph, Kitchener-Waterloo, Cambridge; $1,374; Halton and Hamilton Wentworth, $1,522; Thunder Bay and North Bay, $1,127; Northwestern Ontario, $1,066.

Why are rates higher in the GTA? Because claims and fraud are higher here.

There are unscrupulous medical providers. There are staged “accidents,” where scam artists fake crashes in order to get big pay-outs from insurers.

Should the rest of the province pay for the GTA’s larceny?

Should bad drivers get a 15% roll-back on premiums?

It’s complex, admitted Finance Minister Charles Sousa.

“I acknowledge that premiums are high,” he told reporters.

“I acknowledge that costs in Ontario are high and we are taking steps to find ways to get it reduced so we can make it more competitive in Ontario, recognizing that the rest of Canada has much lower costs and much lower premiums,” he said.

He also said he would address what he called, “regional and zoning impacts,” across the province.

“What we don’t want to do is find ourselves providing much better rates for those that are creating bigger risks for the province,” he said.

Did I mention he represents Mississauga — where premiums are skyrocketing?

The motion the NDP brought to the legislature and which the government supported, talked about a “gradual” reduction in auto insurance rates — a change from Horwath’s demands that rates be slashed within a year.

Sousa said he’d have more details before the upcoming budget.

Horwath is sticking to her one-year timeline for a 15% cut.

“We’ve indicated from day one that we expect within a year for these rates to come down,” Horwath told reporters.

She’s adamant without that cut, she won’t support the budget.

Tory critic Jeff Yurek called it “bumper sticker politics.

“The PC party agrees auto insurance rates are way too high in this province and they need to come down,” he said.

The Tories would tackle big bureaucracy in the insurance industry, which Yurek said is inhibiting competition.

He said the government sat on the anti-fraud task force recommendations that came out last November.

“The main thing we need to do is look at the dispute resolution mechanism. There’s too much backlog in the mediation-arbitration system and that’s keeping rates high,” he said.

The Insurance Bureau of Canada applauded the move.

“We support any move that links key reforms to meaningful premium reductions,” Vice President Ralph Palumbo said in a statement.

The last time the industry applauded the government it was because they’d been allowed to slash benefits to accident victims.

I’m not breaking out the bubbly yet.

I want to see precisely how the industry will reduce costs.

Crack down on fraudsters, sure.

But good drivers are tired of paying for the bad ones. And honest folk are tired of having their benefits slashed — and their pockets gouged

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