Gore Mutual CEO cautions against premature auto rate reductions

Insurers applying for and receiving auto rate reductions prior to Ontario’s reform implementation may be creating an unrealistic consumer expectation that auto insurance rates are now on the decline, Kevin McNeil, president and CEO of Gore Mutual said.
McNeil spoke at the Young Brokers Council Annual Conference in Toronto on June 4.
“One area I am worried about as an insurer, companies are now filing for rate reductions with FSCO, and from what I’m hearing through the grapevine, those rate reductions are going to be in the neighbourhood of 3 to 5%,” he told the crowd of young brokers.
According to the Financial Services Commission of Ontario, rate applications approved during 2010 averaged +5.37% – some of the approved rate changes were as high as +20 or +30%.
One year earlier, in 2009, the average approved rate application was +8.77%.
“If there is any kind of public expectation that after the September 1 implementation date that rates are going to go down, the consumer will be sitting there thinking that they’ll be getting a break in 2011 with their auto insurance,” McNeil. “And then they get their renewal and it’s up 5%, 10% or 12%, because that could still happen,” McNeil continued.
“And that’s why I’m worried. That could lead to a public uprising and next year is an election year in Ontario.”
A public outcry may lead to a government intervention, which would lead to markets closing, and finally to issues of availability, McNeil warned.