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Ontario auto premiums show decrease


July 19, 2005   by Canadian Underwriter


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Auto insurance premiums in Ontario have fallen 15% since Nov. 2003, leaving the average auto premium in the province at a rate of $1,279 a figure reached by dividing total premiums paid by the number of insured vehicles according to the Insurance Bureau of Canada (IBC).
“Clearly, free market, private competition is alive and well in Ontario,” Mark Yakabuski, vp of the IBC, federal affairs and Ontario. “The fact that premiums actually being paid are down 15% shows that drivers are shopping around and finding even lower premiums.”
Auto insurance rates, as posted with the Financial Services Commission of Ontario, are down by more than 13.3% and, in addition, IBC findings indicate insurance availability is improving.
Enhanced results are demonstrated by the number of drivers insured through Facility
Association (FA), the last-resort insurer for drivers who can’t find coverage in the regular market. FA population is way down – to 36,868 vehicles in June of this year from 226,108 in March 2004. The FA market share has further moved from 3.8% of the market to just 0.6%.
“The declining population of Facility Association is also a very positive sign,” Yakabuski adds. “More and more drivers are finding a home in the regular market, showing that insurers are aggressively competing for business.”
Lower premiums are furthermore, another benefit offered by a competitive insurance marketplace. The average claims pay-out in Ontario is $8,878. By contrast, the average claims pay-out in B.C., where the product is delivered by a government monopoly, is just $2,391. This, Yakabuski, says infers that in Ontario, policyholders get a lot more for their money.
Lower prices and increased competition in the Ontario auto insurance marketplace are the result of recent government reforms, which reduced some of the exorbitant costs such as fraud and unnecessary expenses that have plagued the system.


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