Ontario drivers may have overpaid as much as $5 billion on their auto insurance premiums over the past five years, according to a report released Tuesday by the Ontario Trial Lawyers Association.
By Jenny Yuen
The Toronto Sun
That works out to be $143 more out-of-pocket per year for auto insurance policy holders in Ontario, said the OTLA.
The report also criticized the “lack of transparency” in Ontario about data “reported by the government for automobile insurance companies.”
“The insurance industry is not required to disclose the profit it makes,” said Claire Wilkinson, president of the OTLA. “Everybody who drives a car in Ontario has to buy insurance, the government regulates how much is charged in premiums, but even the financial commission and the government don’t know how much profit they make.”
Lazar’s report said the increase in profits is likely the result of a widening gap between reductions in claims coverage costs and premiums. In 2011, average claims decreased by 27%, but “premiums, on the other hand, barely declined.”
Lazar says it’s difficult to be certain as auto insurers don’t publicly report such things as their actual operating expenses.
Premier Kathleen Wynne promised in 2013 that Ontario’s Liberal government would lower car insurance premiums by 15%. That hasn’t happened, and in fact, rates have risen and it appears the government is “unlikely to achieve its target reduction,” the OTLA report states.
Meanwhile, the Insurance Bureau of Canada contested the report, saying insurance claims rose 4.5% annually – or by 19% between 2012 and 2016 – and that the OTLA are “falsely claim(ing) insurers are making excessive profits.”
“Regulators are going to review insurance rates when they come in for a filing, to make sure they’re not excessive and impair the solvency of the company. That’s part of the transparency we have around rates,” IBC spokesman Steve Kee said.
Ontario has the second-priciest car insurance premiums in Canada, next to British Columbia.
Finance Minister Charles Sousa told CTV the province is taking steps to “increase consumer protection, combat fraud and ensure those injured in an accident get the care they need when they need it.” He insisted Ontario has reduced insurance rates by as much as 11%, but still falls 4% short of the target set in the 2013 Liberal budget.
“We have to do better,” he told the media outlet.
The OTLA plans on putting pressure on the Financial Services Commission of Ontario as well as the political parties in the upcoming election for greater transparency and reporting of the profits by the automobile insurance industry.