Competition ‘healthy’ in auto insurance: Ontario premier

IBAO Convention 2013 – Ontario Premier Kathleen Wynne suggested Wednesday to a room full of brokers that the ruling Liberals are committed to maintaining competition in private passenger auto while reducing fraud.

“Competition in this industry is healthy for both drivers and for brokers,” Wynne said during the Insurance Brokers Association of Ontario (IBAO) annual convention in Toronto.

“So we’re going to make it possible for you to do what you do best, to support your industry in the valuable services that you provide. We’re going to be very careful not to do anything that would threaten the viability of the marketplace and not threaten the competition that is in place.”

Wynne made her remarks during the open portion of IBAO members’ general meeting.

Last August, IBAO had expressed some concern about the Ontario government’s plan to reduce private passenger auto premiums by 15% over two years.

At the time, amendments to the Automobile Insurance Rate Stabilization Act (AIRSA) came into effect. Ontario law now  “establishes an industry-wide target reduction” over two years, by 15%, of the “average of the authorized rates that may be charged by insurers.”

IBAO officials expressed concerns there was a risk that the result of that policy “could result in future availability and affordability concerns” for Ontario private passenger auto owners.

Then on Wednesday, an IBAO member from Brampton expressed concern, in posing a question to Wynne, that some carriers could retract from offering auto in certain areas.

“This is an issue that was raised to me by your leadership right from the outset of this discussion,” Wynne replied. “It’s the thing that worries me the most because I don’t want to see the marketplace threatened that way. My understanding is, that in a limited way, that is starting to happen in some very restricted areas … I want to be careful not to trigger that. I hear you on the urgency of taking action on these issues but we are moving as quickly as we can.”

Wynne assured brokers in the audience that she understands that more needs to be done to reduce fraud.

“In order to address a 15% target, we know that more needs to be done and we are considering other actions that could help reduce costs,” she said. “We are working on developing a province-wide licensing system for the towing industry which will see us consult with our municipal partners, with the Association of Municipalities of Ontario and the City of Toronto. We are looking at storage liens and collision repair practices.”

Last spring, the New Democratic Party had demanded a mandated reduction, by 15%, in private passenger auto rates as a condition to voting in favour of the budget. Had the budget not passed, the minority Liberal government would have fallen.

“When the 15% reduction was first raised by the NDP and became part of this negotiation around getting the budget passed, I was adamant that we were not going to rush into making a promise on an immediate 15% reduction,” Wynne said Wednesday. “That is where the NDP wanted us to go, and we said that is not prudent, that is not practical.”

Wynne noted her government has introduced some anti-fraud measures, such as a new anti-fraud hotline.

“We added information about insurance fraud to The Driver’s Handbook so that people right at the beginning of their driving career understand what’s happening in the system,” she said.

“We are requiring companies to offer lower rates to consumers with safe driving records and we will explore options, in cooperation with brokers, that could allow for the responsible use of telematics.”

.@Kathleen_Wynn Premier of Ontario continues speaking @IBAOntario‘s #IBAOConvention13: https://t.co/WgsR1bzIz5

— Steve Wilson (@InsuranceMedia) October 23, 2013