Jury still out on FSCO’s auto insurance recommendations: IBC

The Insurance Bureau of Canada (IBC) says the Financial Services Commission of Ontario (FSCO) clearly recognizes the scope of the problem with Ontario auto insurance, which is encouraging, but there are still questions as to whether or not FSCO’s recommendations to the government represent the correct approach.
FSCO’s recognition that there is a serious cost issue can be seen in the executive summary of the report, “Declining profitability, significantly lower earnings and loss cost increases will accelerate in 2009 in the absence of structural changes to stabilize costs,” notes James Geuzebroek, spokesperson for the IBC.
“They clearly recognize the problem,” he adds. “As for whether the prescribed cure will do the trick, there would appear to be some areas of concern there. But we are continuing to look at it.”
The IBC’s focus is always on affordability for Ontario drivers, who currently pay more than drivers in any other province, Geuzebroek says.
He says Ontario auto insurers are paying out more in claims and related expenses than they are collecting through premiums. “That is unsustainable, so something needs to be addressed quickly,” he says.
“There might be some recommendations in here where the effect would be rising costs. Obviously we would prefer to see any recommendations that would control costs.”
IBC did not comment on individual recommendations.
In its 2008 submission to FSCO, IBC proposed establishing a maximum limit of $25,000 for non-catastrophic claimants for medical/rehabilitation and provider-initiated assessments.
Recommendation 22 of FSCO’s final report to the government is as follows: “Reduce the cap for medical and rehabilitation benefits for non-catastrophic claims to $25,000.”