July 18, 2004 by Canadian Underwriter
Rate applications approved during the first and second quarters of 2004 amount to an average drop of 7.3% in Ontario auto rates, according to the Financial Services Commission of Ontario (FSCO). This comes on top of the rate freeze in effect for most of the last quarter of 2003, under auto legislation from the new provincial Liberal government.
The rate freeze and mandated rollbacks followed successive quarters of high single-digit rate hikes, FSCO adds. The result is that auto rates at the end of the second quarter of 2004 are just 0.98% higher than at the end of second quarter 2003, compared to an almost 19% jump between second quarter 2002 and 2003. At the same time, because new rates become effective at renewal, approved rate increases have not all filtered through to actual rates at this time.
While some insurers have filed the 10% rate decrease as mandated by the government, FSCO notes that the financial health of insurers and their ability to meet claims commitments must be taken into account.
The Liberals recently came under fire in the media for not hiring extra staff to deal with the increased flow of rate submissions following their new legislation, however, according to the FSCO release, rate submissions have been approved for insurers representing 97.85% marketshare in the first two quarters of this year 55.51% in the first quarter and 42.34% in the second quarter. This includes initial submissions for two companies: S&Y Insurance Co. and Pafco.