OSFI says “there are no assurances” that Ontario auto insurance reforms will help reduce frequency, claims costs

The financial woes of Canada’s private auto insurance system are squarely on the radar of Canada’s federal solvency regulator, the Office of the Superintendent of Financial Institutions (OSFI).
“On the auto side, many of you know that Ontario auto has been on our radar for awhile,” said OSFI managing director Penny Lee, a speaker at the 2009 IBC Financial Affairs Symposium.
“We actually [believe] the inherent risk for Ontario auto is above average.
“And there are no assurances that the impending regulatory reforms will be sufficient to help with claims activity or claims costs.”
Ontario’s insurance regulator, the Financial Services Commission of Ontario (FSCO), has recently submitted to the province’s finance minister 39 recommendations for reforming the province’s auto product.
The industry is still trying to determine the impact of the recommendations, but many say the impact on auto insurers’ claims costs will be “a wash” at best.
Lee also noted uncertainty will prevail for some time as the auto industries in Alberta and in the Atlantic provinces await final outcomes on court challenges to caps on claims payments for minor auto injuries.
“Uncertainty will persist,” Lee said. “And if caps are struck down, and if [the impact of such decisions on claims] are retroactive, this will be a big blow to the industry.”