October 23, 2003 by Canadian Underwriter
An auto insurance rate freeze announced by the brand new Ontario Liberal government today is not unexpected, says the Insurance Bureau of Canada (IBC). Insurers are prepared to cooperate with the rate freeze, but hope to work with the new government on long-term solutions to the challenges facing the auto insurance industry.
The government had campaigned on the promise of a rate freeze, notes IBC Ontario region vice president Mark Yakabuski, but insurers hope the change will not have to be made through a change in legislation. “Taking this through the Legislative Assembly is not needed at this time and could delay the process,” he notes. “Because the Financial Services Commission of Ontario (FSCO) must approve all rate changes, a policy statement from government to the Superintendent of Financial Services concerning the rate freeze should be sufficient in light of the industry’s co-operation.”
He adds that some insurers could see their solvency negatively impacted by a rate freeze, given the solvency concerns recently raised by the federal Office of the Superintendent of Financial Institutions (OSFI).
Insurers also look forward to other reforms promised by the Liberals during campaigning along with the rate freeze, the Liberals did acknowledge that claims costs are a concern. “The industry’s wants to meet at the earliest opportunity with the Honorable Greg Sorbara, the new Minister of Finance, to discuss how we can assist the government in reducing auto insurance rates by an average of 10% from current approved rates.”