Ontario government announces plan to reduce auto insurance rates by 15% within two years

The Ontario government has announced the next steps in its plan that it says will reduce auto insurance rates by an average of 15%, a measure it included in this year’s budget.

The government said Friday it’s aiming to make the average reduction within two years, with an average 8% reduction target by August 2014.

According to the government’s statement, its steps to make the reduction include:

• Providing the Superintendent of Financial Services with authority to require insurers to re-file rates
• Continuing to crack down on fraud, including licensing health clinics that invoice auto insurance companies
• Reducing unexpected costs by making the Superintendent’s Guidelines on accident benefits binding
• Exploring other cost reduction initiatives, including provincial oversight of the towing industry and addressing collision repair practices
• Continuing to require insurers to offer discounts for consumers with safe driving records
• Helping ensure that all regions of Ontario benefit fairly from cost savings.

The government will take further action “as necessary,” its statement said.

“To ensure greater transparency and accountability, independent experts will report on how quickly savings are passed on to consumers and the effectiveness of the marketplace in providing affordable premiums to consumers,” it also noted.

The government said it will also expect a report in January 2014 from the Financial Services Commission of Ontario to show an approved rate reduction of 3% to 5%.

The Hon. J. Douglas Cunningham also has been appointed to lead a review of Ontario’s auto insurance dispute resolution system and make recommendations on transforming the current system.

IBC, IBAO respond

In a statement released Friday, the Insurance Bureau of Canada said that the government’s plan does nothing to address costs in the system before insurers are expected to lower premiums.

“The Ontario government’s commitment to combatting fraud, such as licensing health care clinics and providing clear direction around the 2010 reforms, is a good first step however it will still be some time before these measures are in place producing savings,” its statement said.

“On a positive note, the government has signaled its intent to implement further reforms in order to resolve long-standing problems that plague the current auto insurance product. That is a welcome development.”