Ontario Liberals support NDP motion for 15% reduction in auto insurance rates

Ontario Premier Kathleen Wynne said Wednesday that the Liberal government would back the New Democratic Party’s motion to reduce auto insurance rates in the province by 15%, but reiterated her party’s focus on anti-fraud reforms. 

Jagmeet Singh, the NDP’s consumer affairs critic, put forward a motion Wednesday calling upon the government to “to direct FSCO (the Financial Services Commission of Ontario) to gradually reduce average, industry-wide, private passenger auto insurance premiums by 15%.”

Supporting the motion is non-binding for the government. Wynne also didn’t commit to meeting the NDP’s specifics in the government’s upcoming budget, according to published reports.

NDP leader Andrea Horwath set out the 15% reduction figure in her list of priorities for the Liberal government’s budget for 2013. The party argues that the reduction should be made within 12 months (or by March 2014).

Today’s news is promising but we want to see the 15 percent reduction clearly outlined in the budget thestar.com/news/queenspar… via @torontostar

— Jagmeet Singh (@jagmeetNDP) March 27, 2013

The Liberal government has previously echoed the opinion of the Insurance Bureau of Canada that implementing the recommendations of the Auto Insurance Anti-Fraud Task Force is the best way to reduce costs for consumers.

Reductions must be tied to reforms: IBC

In a statement following Wednesday’s news that the Liberals would support the NDP motion, IBC said it’s pleased the government is acknowledging that “reducing costs is the key to reducing premiums.”

Any reductions made to auto insurance rates must be tied to larger reforms, Steve Kee, a spokesperson for IBC told Canadian Underwriter following reports of the Liberals support for the motion.

In its statement, IBC also said that it has commissioned an actuarial study to look at the profit margin for Ontario auto insurance in recent years, including 2012.

“This is important because of wild speculation recently in the marketplace, perpetrated in part by the Ontario Trial Lawyers Association,” Ralph Palumbo, vice president for Ontario at IBC said in the statement.  

“They’ve claimed the industry has made billions off the backs of consumers and it’s just not so. So we’ve asked an independent expert to do an analysis.  We expect the results of this review in a week.”

Gradual timeline key for IBAO

While the NDP’s Jagmeet Singh said his party isn’t wavering from its one year timeline for the 15% cut, a “gradual” timeline is key for Randy Carroll, CEO of the Insurance Brokers Association of Ontario. It makes the 15% target more realistic, he told Canadian Underwriter.

It’s difficult to say what an achievable timeline would be, especially since some necessary changes require legislative changes, he noted. Most importantly, any reductions mandated must be “responsible,” he said.

Following Wednesday’s motion, he said, hopefully the industry and political leaders can get back to the “task at hand” – namely, implementing the recommendations from the Anti-Fraud Task Force’s final report.

Brokers in the province have been “feeling the pain” on the auto issue for the past five or six years, he said, and it’s time leave the 15% discussion behind and focus on the task force recommendations.

Those recommendations, along with a timeline for a mandated rate reduction, will hopefully make their way into the provincial budget, he added.