Auto-Insurance in Ontario – The Most Expensive Insurance in the Country

Update:

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Fightyourtickets.ca has been saying it for years now, private insurance companies in Ontario have been taking Ontarians for a costly drive for years now, with the support and assistance of the Ontario Provincial Government.  Insurance have had their way with driver’s in Ontario and the government has not only provided tacid approval, they have relaxed laws to assist their goal of achieving ridiculous profit, while preaching austerity for everyone else.

See Auditor General Jim McCarter’s annual report relating to auto-insurance.

Ontario needs a better grip on an apparent contradiction behind rising auto insurance premiums: it has the highest prices and the lowest per capita death and injury rates of any province, says Auditor General Jim McCarter.

In the last 10 years, the number of people killed or injured in crashes is down 25 per cent — yet insurance costs are being driven higher by industry profits, accident fraudsters and hefty claims for medical treatment.

“The increasing cost of claims cannot be explained by common sense things . . . somebody’s got to get a handle on this,” McCarter urged after delivering his annual report Monday.

The Provincial Government is allowing Private Auto Insurance Companies to Rake in a 12% profit on the backs of driver's while simultaneously preaching austerity and keeping wages down

Motorists in Ontario pay high auto premiums because companies can submit rates for government approval that build in a 12 per cent profit, the $56,000 average cost of claims is five times that in other provinces, and accident benefits here are among the highest in the country, he explained.

But it’s been 15 years since the profit level went under the microscope and a review is needed given that benchmark returns in the bond market have dropped to 3 per cent now from 10 per cent then, McCarter said.

That 12 per cent return on equity “could be higher than appropriate,” he cautioned.

The Insurance Bureau of Canada said 12 per cent is the maximum auto insurers can build into their rate submissions and that the actual return on equity for property and casualty insurers last year was 6.8 per cent — about half that of Canadian banks.

Finance Minister Dwight Duncan said the government has done “a lot” to curb the cost of auto insurance.

Those measures include reforms that capped benefits for minor injuries like whiplash at $3,500 unless policy holders upgrade their coverage at additional expense.

The government is preparing to take another look at fraud, which McCarter put at $1.3 billion annually, with a task force set up earlier this year, Duncan said.

There is suspicion that insurance fraud on staged accidents and faked injuries, with clinics in collusion billing for bogus treatments, accounts for 10 to 15 cents of every dollar paid in premiums.

Currently, the cost of living is so high and the last thing any driver needs to include in their budget, is the ever increasing insurance premiums (which are seldom ever justifiable) of the private insurance companies. Given the obscene profits which the private insurance companies make in Ontario, the best solution available to consumers, (who have no choice but to purchase automobile insurance if they want to drive) is to insist on Public Auto Insurance.

Several Provinces, British Columbia (ICBC), Manitoba, Saskatchewan and Quebec have provincially owned and operated automobile insurance and the residents benefit from the cheaper premiums.  Ontario Private Insurance Companies offer the most expensive automobile insurance in Canada.

 

Auto Insurance Rates for the Third Quarter of 2011 [Bill 5]

The Government passed regulations to enact auto insurance reforms effective September 1, 2010. These reforms are designed to reduce excess assessment costs in the auto insurance system and ensure more accident benefit dollars go to treating people injured in auto accidents.
Ontario drivers now have more choice when it comes to their auto insurance coverage. Drivers can opt for a new standard level of auto insurance coverage, or they can choose to buy additional levels of coverage based on their own circumstances.
As part of the reforms, drivers will also benefit from the new consumer protection measures, including the implementation of a regulation that prohibits the use of a driver’s credit rating in connection with auto insurance.
Rate filings approved during the third quarter of 2011 (July 1 to September 30) averaged 1.21%, based on the entire market.
In the third quarter of 2011, for the 39.66% of the market that had rate changes approved, the average rate change was +3.05%, when weighted by market share.
The rate changes approved in the third quarter of 2011 become effective in the third quarter or later.
The approved rate change shown for each insurance company is the average for that company based on all the consumers it insures.  An individual consumer may experience a rate change that is either higher or lower than the average, depending on the vehicle insured, where he or she lives and other risk factors as well as choices made by the consumer on coverages purchased and deductible or liability limits.  Also, as most consumers purchase annual policies, the rate change from the last renewal will also reflect any changes approved for the insurer in the last year. For more information about auto insurance, please review FSCO’s brochure Understanding Auto Insurance.
Ontario has a very competitive auto insurance market.  Rates vary from company to company because each company bases its rates on its own claims costs and uses a different set of risk characteristics to determine the rate for a specific consumer.  FSCO reviews filings from companies to ensure that the rates proposed are justified based on claims costs and other operating costs.  As a result of FSCO’s review, an insurance company may be required to amend its proposed rates before the rates are approved.
FSCO’s Understanding Rates/An Interactive Tool demonstrates how rates for the same coverage can vary from company to company.  You can see how rates will vary depending upon whether you choose to purchase a policy with standard Accident Benefits coverage or with other optional coverages as well as your personal profile.

 

FSCO will continue to ensure that rate changes by insurance companies are reasonable and justified, and that rates charged are balanced with the ability of companies to meet future claims costs.

 

ONTARIO PRIVATE PASSENGER AUTOMOBILE INSURANCE RATE FILINGS APPROVED

July 1, 2011 to September 30, 2011

 

Insurer
2010 Market Share %
Effective New Business Date
Effective Renewal Business Date
Approved Rate change %
Co-operators General Insurance Company
4.35
29-Jul-11
29-Jul-11
-0.15
Intact Insurance Company (4)
7.16
08-Aug-11
08-Aug-11
0.84
Intact Insurance Company
7.16
01-Sep-11
01-Oct-11
2.26
Intact Insurance Company (1)
10.17
15-Oct-11
01-Dec-11
-0.43
Motors Insurance Corporation
0.57
08-Aug-11
02-Oct-11
10.34
Novex Insurance Company (4)
0.63
25-Jul-11
25-Jul-11
0.26
Novex Insurance Company (1)
0.76
15-Oct-11
01-Dec-11
-1.77
Optimum Insurance Company Inc. (2)
0.26
01-Aug-11
15-Sep-11
0.00
Pafco Insurance Company
0.57
15-Jul-11
01-Sep-11
4.76
Personal Insurance Company
2.91
09-Sep-11
08-Nov-11
2.00
Portage La Prairie Mutual Insurance Company
0.25
01-Sep-11
01-Nov-11
2.04
State Farm Mutual Automobile Insurance Company
12.43
21-Nov-11
21-Nov-11
3.16
Waterloo Insurance Company
0.71
01-Nov-11
01-Jan-12
0.43
Wawanesa Mutual Insurance Company
4.27
01-Oct-11
01-Oct-11
9.89
Western Assurance Company
1.06
01-Sep-11
29-Oct-11
3.43
XL Insurance Company Limited (3)
 0.00
01-Oct-11
N/A
 N/A
York Fire & Casualty Insurance Company
0.94
01-Sep-11
01-Oct-11
3.96
Zenith Insurance Company
0.41
01-Sep-11
01-Sep-11
1.9

 

  1. Includes the acquisition of AXA Insurance (Canada) and AXA Pacific Insurance Company.
  2. Rate Change with no overall impact.
  3. XL is a new entrant to the Ontario automobile insurance market.
  4. Annual rate cap filing impact – This is the estimated residual impact of a previously approved rate filing that introduced rate capping procedures.  The purpose of rate capping is to minimize the rate change for a particular risk over a period of time.

Total Market Share Represented: 39.66%

Weighted Average Rate Change:
3.05%

 

When an insurance company adjusts its rates for any given coverage, it means that the company has experienced a change in the claims costs for that coverage.  For example, an increase to rates for Accident Benefits coverage would indicate that an insurance company has experienced an increased number and/ or increased average cost of Accident Benefit claims. A company must provide its claims costs for each coverage in support of any change in rates.  The weighted average approved rate change shown is the average for each coverage based on the company filings that were approved during the quarter.
APPROVED RATE CHANGE BY COVERAGE
July 1, 2011 to September 30, 2011
Coverage
Weighted Average Rate Change %
Third Party Liability-Bodily Injury
4.58
Third Party Liability-Property Damage
3.96
Standard Accident Benefits
4.60
Uninsured Automobile
4.03
Direct Compensation-Property Damage
-0.84
Specified Perils
-29.60
Comprehensive
-5.80
Collision
-2.61
All Perils
-3.46
OPCF 44R Family Protection
-6.62
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