September 23, 2014 by Harmeet Singh, Online Editor
OTTAWA – The Ontario government’s target of a 15% reduction in auto insurance rates is “absolutely not” doable, the Insurance Bureau of Canada’s vice president of policy development said Tuesday during the National Insurance Conference of Canada.
“Absolutely not, and I think the government fully knows that although the government has not come out and said it,” Barbara Sulzenko-Laurie said during a panel discussion when asked whether the reduction is achievable.
“But certainly in our conversations with the superintendent of insurance, he’s indicated to us that no one in FSCO believes that there’s 15% that’s in the system (to be reduced),” she said, referring to the auto insurance regulator, the Financial Services Commission of Ontario.
“When we’re talking to the political side, they don’t admit it, but they sort of smile knowingly in response to the question,” she added.
The mandated rate decreases are already proving unsustainable, Bob Tisdale, president and COO of Pembridge Insurance Company also said in his presentation at the same NICC panel Tuesday in Ottawa.
“Our three companies took some of the largest rate decreases in the industry in Ontario as the Ontario government tries to reach its 15% rate reduction,” he noted.
“And FSCO, five months later, has approved rate increases for two of our three companies,” he said, referring to increases effective in October.
Recent figures from the General Insurance Statistical Agency also show cost-per-vehicle increases across almost all sub-coverages in Ontario auto, Sulzenko-Laurie noted.
The Ontario government’s introduction of Bill 15, which includes several reforms to the auto insurance industry, is a good start to addressing flaws in the system, although it does fall short in removing high costs, she noted.
“(W)e’re taking it as a sign that the government will continue to work to implement further impactful reforms over the coming months,” she said.
“The point that we’re trying to make to (the government) is that is that as politically embarrassing as it may be to not meet the 15% target, it’s going to be a lot more politically embarrassing if they have to oversee rising premiums during their time in office,” Sulzenko-Laurie said.
Speaking generally during her presentation, she also noted that governments are highly-conscious of auto insurance becoming an eventual election issue.
“My experience after nearly 14 years of working for stable and competitive auto insurance markets has lead me to believe that when governments don’t act in the face of an auto insurance problem, their biggest stumbling block is simple fear,” she said during her presentation.
“They fear the brutal environment of auto insurance politics and what it can do to them.”