Vaughan reacts to auto insurance rate-cut proposal

Vaughan Citizen by   Tim Kelly

When you give the people the “time to talk,” the government might just listen.

So it would seem as the Ontario Liberals under Premier Kathleen Wynne are poised to roll back auto insurance premiums by 15 per cent.

This move was prodded on by NDP Leader Andrea Howarth’s  motion.

It’s still early days yet as NDP MPP Jagmeet Singh’s private member’s motion received majority support in the legislature last week, including from Vaughan Liberal MPP Steven Del Duca.

The details about how the 15 per cent rollback would work are also not yet clear.

But Mr. Del Duca said he was pleased to speak to the motion and added that the people in Vaughan and the GTA have said they are concerned about the rising cost of auto insurance.

“Our government has to work closely with the insurance industry and both opposition parties to find meaningful, lasting solutions. At this point, I’m not convinced that the approach proposed by the NDP will have the desired effect, as it seems somewhat arbitrary to me, but I certainly support the shared objective of making auto insurance more affordable.

“I remain convinced that, working together, we can reduce rates by eliminating systemic fraud and demanding more responsiveness from the industry. I know that Premier Wynne is committed to making this happen and I am confident that our government will have more to say about this in the days and weeks ahead.”

Premiums might be cut gradually over a number of years or they might come down more quickly.

But any cut would be welcome, as those who attended the Time to Talk tour run by the Insurance Bureau of Canada (IBC) at Vaughan Mills 10 days ago made clear.

Shan Jjay said his rates “keep going up, not going down. I would like to pay less because rates are very high here”.

And Deepak Majdepan said “obviously rates have to be reduced”.

Steve Kee, director of media relations for the IBC, said he had met with some 30,000 Canadians during the Time to Talk tour since last August and found, especially in Ontario, people believed they were paying too much for insurance.

Mr. Kee said there were several reasons why insurance rates were higher in Ontario, especially in the GTA, where the average premium is about $2,000. The average auto insurance premium Ontariowide is $1,500, which compares to about $700 in Atlantic Canada and $1,000 in Alberta.

“There is a huge problem in Ontario with auto insurance fraud. KPMG estimated it’s as high as $1.6 billion and that’s probably adding $250 to $300 a year to each and every one of our policies.

“There is a lot of fat in the system, a lot of people that target the rich benefit system we have. Look at for-profit medical clinics, look at the legal community that targets drivers and drives prices up,” he said.

Pete Karageorgos, manager of consumer and industry relations for the IBC, said the intent of lowering rates is admirable, and agreed the industry has been saying rates have been too high for some time now as well.

But he believes any arbitrary rate-cut, whether it be 15 per cent or 20 per cent, is not responsible without a plan to achieve it.

“That arbitrary number is really not based on any sort of steps, any sort of effort, any sort of plan to truly, on a longer term basis, achieve savings. We’re saying you need to have some substantive changes to have some reforms that are not just going to lower it on a one-and-done basis, but are actually going to make the decrease sustainable.

Mr. Karageorgos worries such a rate cut is not sustainable for the industry as a whole.

“What are you (government) doing to help effect the change that isn’t going to jeopardize the industry in terms of jobs or making this last? When insurers are looking at their ratios, expenses, operating costs, and expense ratios and you’re just breaking even and you’re asking for 15 per cent on top of that, well, that’s not sustainable, that’s not the way any business should be forced to operate,” he said.

People asked earlier this week in Vaughan by The Citizen about the proposed rate-cut either supported it or were skeptical about whether it will go ahead.

Frank Marchese had his doubts. “It’s all talk right now. If it does happen it would be great, but we’ll see what the catch is.”

Insurance agent Genevieve Grella welcomed the idea. “It would be great for me to be able to offer reduced prices to my clients.”

And Gloria Doyle said, “It’s good that the government’s trying to lower it. Yes, I think they should lower rates on Ontario auto insurance premiums. I think it’s too high.”

The proof of the government’s backing for the measure will come when Finance Minister Charles Sousa rolls out his budget, expected later this month or early next month.

Should he include the 15 per cent cut and several other NDP demands in his budget and get NDP backing, the plan will go forward.