Ontario Drivers Pay Excessive Auto Insurance Rates While Company Profits Soar
Trial Lawyers call for immediate rate reductions with no cuts in coverage, full review
A major study released today shows the need for immediate reductions in Ontario motorists’ high auto insurance premiums, the Ontario Trial Lawyers Association says.
The study, conducted by York University Schulich School of Business Professors Fred Lazar and Eli Prisman, reveals in 2013 alone, consumers likely overpaid by $840 million.
“Auto insurance companies in Ontario have had a relatively free ride during the past 20 years. It is conceivable that premiums have been too high and as a result, consumers in Ontario have paid too much for auto insurance,” the professors’ report says.
“We estimate that consumers in Ontario may have overpaid for auto insurance by between $3 and $4 billion over the period 2001 to 2013.”
The report says that the profit benchmark set by Ontario’s insurance regulator at 11 per cent return on equity, should be no more than 5.5 per cent given today’s low interest rate environment. Ontario’s insurance regulator recently changed the profit cap, allowing insurers to earn even higher profits.
The Ontario Trial Lawyers Association (OTLA), which commissioned the new study, calls on government to roll back the high rates that Ontario motorists pay, while halting any further reductions to auto insurance benefits. Insurers reduced coverage in 2010, while profits soared even higher.
“It is now up to the government to do the right thing and implement an immediate, orderly reduction in the profit cap and ensure that savings are passed along to consumers,” said Steve Rastin, President of OTLA. “We must also ensure that coverage is not cut further for the thousands of injured car accident victims in Ontario,” he added.
OTLA also recommends that Ontario’s Auditor General conduct a fully independent review of auto insurance in Ontario.
“It’s time for the Auditor General to step in to examine every aspect of auto insurance. For too long, we have not had all the facts and we simply cannot leave it to big insurance and their consulting actuaries,” Rastin said.
“We need a thorough and truly transparent review that gets to the heart of costs in the insurance business. For example, we know that insurers spend millions on assessments just to deny legitimate claimants – about 50 cents for every dollar of treatment. Insurers should not be able to count those assessments as part of the overall claims cost. We need to put an end to that practice and also curb the abuse of accident victims who must endure endless intrusive assessments,” added Maia Bent, President-Elect, OTLA.