Industry response to Ontario budget mainly positive, while political opposition remains

Industry response to the Ontario government’s budget, tabled Thursday, was mainly positive, with the Insurance Bureau of Canada welcoming the potential fraud tackling measures and other reforms, but opposition response has signalled that changes may not come quickly.

Don Forgeron, IBC’s president and CEO, told Canadian Underwriter that the group is pleased with the budget’s points that could address fraud in the system, if legislation is passed.

“They (the government) appear in the short term committed to making some changes, but more importantly, they appear committed longer term as well by utilizing a number of measures,” he said, referring to the intention of finding outside experts who can make recommendations on fixing parts of the system, including dispute resolution.

The government’s plan outlined in the budget also called on the Superintendent of Financial Services to have the authority to bring insurers in for rate filings, rather than waiting on insurers themselves to bring potential changes forward.

Read more: Ontario budget proposes changes to rate-filing process, regulation to reach 15% reduction target

That could be a concern for the industry, but the rules for rate filings haven’t changed, Forgeron noted, meaning that insurers who can’t afford to make cuts to their rates wouldn’t necessarily make them.

Forgeron said he sees that part of the budget as just an unnecessary step. “If costs are removed from the system, there’s no need to force insurers to lower their rates,” he added. 

The government’s legislation will also include calling on the Financial Services Commission of Ontario (FSCO) to revise the current return on equity benchmark for rate filings of 12%, although it’s not yet clear how the legislation will mandate that, how much the benchmark would be reduced, or a timeframe for when a new figure would be used. 

Forgeron also noted that the government’s proposal to have further consultations on the catastrophic impairment definition unnecessary, since it’s already been studied extensively.

The budget also called for more study on regulating the towing industry, which Forgeron said is something that needs to be moved on now.

In a statement, the Insurance Brokers Association of Ontario also said it was pleased with some of the budget’s measures, but that it may also be setting some drivers up for disappointment.

“While the proposed reforms are welcome, we are very concerned that consumer expectations for a 15% reduction will be very high,” IBAO’s CEO Randy Carroll commented in a statement.  

The issue now is getting legislation passed so that the changes can actually be made.

In a statement following the tabling of the budget, IBC said it is now calling on the provincial NDP party to support the government’s legislation.

Ontario NDP leader says budget’s auto insurance measures lack accountability

Provincial NDP leader Andrea Horwath said the Liberal government’s proposed measures lack accountability and don’t offer a real guarantee to Ontario drivers.

In a press conference Thursday, Horwath said she and her party will be “talking to Ontarians” about the government’s proposed measures before deciding whether to support the government.

The party will possibly make calls to constituents, or host town hall meetings to consult with Ontarians, she said.

The 15% reduction target was originally proposed by the NDP, in a longer list of measures the party wanted included in the new government’s budget if the Liberals wanted NDP support.

PC Party says budget proposals pander to NDP

Also Thursday, Ontario PC Party leader Tim Hudak reiterated that his party would not vote in favour of the budget. Hudak and PC finance critic Peter Shurman said that rejecting the budget wasn’t about voting against line items, but rather voting out a government.

Hudak also called the 15% cut idea generally “bumper sticker politics” not backed by a real strategy or plan. 

The PC’s refusal is around many more issues that auto insurance, although the party’s auto insurance critic has said that the budget measures pander to the NDP.

In a statement earlier in the week, after Liberal Finance Minister Charles Sousa announced some proposed legislation changes around auto insurance (in advance of the budget release) the PC’s Jeff Yurek said that the government was making an irresponsible move. 

“I think this is an irresponsible move by a government desperate to hold on to power,” Yurek commented in the statement.

“We all recognize that rates are too high but auto insurance is a complex system.  But as I’ve said from the start, we can only achieve real, sustainable premium reductions by having a plan that addresses the underlying issues.”

Yurek said that mandating a 15% cut to rates would lead many Ontario drivers to turn to the Facility Association, the insurer of last resort.