Insurance Companies and their representatives love to whine about loss of the profit margin, while they continue to rack in more and more money off of those who dare to drive the streets and highways of Ontario. If they could spin the spin even further, they would have you believe that they are overextending themselves for Ontarians and lose money when they offer auto insurance.
Insurance Companies lost in the stock market beginning in 2008 (along with almost every other investor) and have been trying, ever since, to recover and recoup from those losses, while making their shareholders happy, by raising premiums and raising rates that driver’s have no other choice but to pay, if they still want to drive in Ontario.
They hedge their bets however, making sure their money is spread around in order to secure some favour and influence with the leaders of the Provincial political parties.
In the recent leadership race of the Liberal Party of Ontario, they contributed $60,000.00 to the leadership frontrunners. The Insurance Bureau of Canada made the following contributions:
1. $25,000 to Kathleen Wynne (who happened to be elected on Jan.26/13, on the third ballot, as Ontario’s next Premier)
2. $25,000 to Sandra Pupatello (who had to wait to the third ballot to learn that her rival Wynne had secured victory)
3. $10,000 to Dr. Eric Hoskins
4. $500 to Charles Sousa
The Insurance Bureau of Canada will no doubt contribute the same if not more, to the official opposition, the Conservative Party of Ontario, once an election is called.
This may not be the case for the NDP however, considering the position recently put forward by their leader, Andrea Horwath.
The last time the NDP pledged to make a difference regarding auto-insurance, was just before Bob Rae was elected Premier of Ontario in 1990. He was talking about public auto-insurance. When he was elected and spoke about the idea even more, the insurance industry in Ontario threatened to lay-off thousands of workers.
This time we are hearing about a reduction of 15% in premiums and again, the insurance industry is threatening to lay-off workers in that industry – same threat, different time.
If the present leader of the NDP could actually achieve a reduction, in auto-insurance, she would win the respect of and admiration of most Ontarians. It’s not public auto-insurance, but it is a reduction, which most driver’s need.
NDP Leader Andrea Horwath’s call to slash auto insurance premiums by 15 per cent by year end was met with scorn by the Ontario insurance industry.
“The NDP’s math has always been wonky to begin with,” Pete Karageorgos, manager of consumer and industry relations for the Insurance Bureau of Canada (Ontario), told the Star.
He said a hit of 15 per cent could means layoffs in an industry that employs about 77,000 in Ontario.
“I don’t think she (Horwath) has thought it through,” Karageorgos said.
Horwath says the call is reasonable given that industry payouts have dropped dramatically since reforms were introduced in 2010 that sharply reduced accident benefits.
“In fact, in 2011 the value of statutory accident payouts fell by just under $2 billion, an astonishing 50 per cent reduction from 2010, but that same year Ontario’s auto insurance rates still increased by 5 per cent.
“Drivers have yet to see any real reductions in their rates,” she told reporters at Queen’s Park.
The proposed reduction was among a shopping list of things the New Democrats want the minority Liberal government to consider when the legislature resumes sitting Feb. 19, including a home-care guarantee that would see seniors receive services within five days at a cost of $30 million.
“Soon, after a long forced shutdown, MPPs will be getting back to work in the legislature and I see it as an opportunity to get some things down,” Horwath told reporters. She added she would also be recommending there be a “balanced approach” to balancing the budget.
The legislature has not sat since Oct. 15, when outgoing premier Dalton McGuinty announced his resignation and prorogued the house. Premier-designate Kathleen Wynne is replacing McGuinty.
Horwath said the government should direct the Financial Services Commission of Ontario to bring down the average auto insurance for Ontario’s 9.3 million licensed drivers by 15 per cent by the end of 2013, which the NDP estimates would cost the industry about $1 billion.
“It is a product that people have to buy if they want to drive,” she said.
Tory MPP Peter Shurman (Thornhill) also accused Horwath of not “having a clue what she is talking about when she sweeps her hands across in front of the cameras and says a 15-per-cent cut.”
Karageorgos said if the NDP were truly concerned about auto insurance rates it would urge the government to implement the recommendations of last November’s provincial anti-fraud task task force. According to the report, fraudulent claims ranged from $768 million to $1.56 billion dollars in 2010, and amounts to between $116 and $236 per average premium paid by Ontario drivers.
He noted the Ontario auto insurance industry in 2011 made roughly a $233 million profit but “that follows a $1.6 billion loss in 2010 and $824 million loss in 2009.
The former Bob Rae NDP government came to power in 1990 promising to bring in public auto insurance but then backed off in 1991, arguing that it would cost too many jobs at a time when the province was bleeding jobs.