Ontario government likely to miss goal of cutting auto insurance rates by August
A slight increase in the second quarter means premiums are now down only 6.46 per cent since August 2013.
TORONTO—Auto insurance premiums in Ontario rose slightly in the second quarter of 2015, despite the Liberal government’s pledge to lower rates an average of 15 per cent by next month.
The Financial Services Commission of Ontario, which regulates the province’s insurance sector, said Wednesday that rates for 26 companies representing 52 per cent of the market increased an average of 0.6 per cent in the second quarter.
Companies must apply to the commission for any rate hike and provide actuarial proof it is needed, said Ralph Palumbo of the Insurance Bureau of Canada.
“Some companies have asked for rate increases because they need those increases to cover their costs,” Palumbo said in an interview.
“Now I know that people may not believe that, but the regulator has looked at those rate filings and they’ve agreed that rates have to go up in many cases because the costs in the system are not coming down.”
The government had announced in April that premiums were down 0.95 per cent in the first quarter of this year and had been reduced an average of seven per cent since the summer of 2013.
The New Democrats had demanded the Liberals promise the 15 per cent auto insurance rate cut in exchange for supporting the 2013 provincial budget, avoiding the defeat of the then-minority government.
“Kathleen Wynne promised rates would be heading south, instead they’re heading north,” said NDP critic Jagmeet Singh. “She doesn’t seem to know whether she’s coming or going when it comes to keeping her promise of lower insurance rates.”
The slight increase in the second quarter means premiums are now down only 6.46 per cent since August 2013.
“I know it’s not 15 (per cent), it’s six-and-a-half,” said Palumbo. “But that’s not insignificant.”
The Progressive Conservatives said the fact the government is less than halfway to its promised goal is “the latest in a long list of failures and broken promises” from the Liberals.
“They never intended to follow through,” said PC finance critic Vic Fedeli. “They had no plan to achieve their target.”
A statement from Finance Minister Charles Sousa said regulatory changes passed in the spring will help lower costs for insurance companies, giving them room to reduce premiums even further.
“Our plan to tackle auto insurance fraud and reduce costs is working, but we want to go even further,” said Sousa. “We will continue to work on behalf of Ontarians to make premiums more affordable while still providing support and protection for all Ontario drivers.”
Palumbo said the government is making efforts to reduce costs for companies by tackling insurance fraud, but added it will take time for those changes to work their way through the system.
Sousa took steps in this year’s provincial budget to reduce insurance rates for some drivers by telling companies to offer a discount to those who use winter tires.
The Insurance Bureau said auto premiums in Ontario are 45 per cent higher than Alberta’s and about twice as high as those in the Maritime provinces.