Tuesday, August 20, 2013

Auto Insurance Rate Cuts In Ontario - Really

News recently about the NDP government and proposed push on auto insurance policy premiums rate cuts of 15% (fifteen percent) across the board for Ontario drivers. The opposition claims that this, of course, is nothing more than a political move – a typical political promise just to get in power and run the provinces of Ontario. While it may be a tactful move on the NDP, threats of this nature really hit a nerve with many Ontario drivers. Ever since Ontario introduced auto insurance reform in 2010, there has been nothing but backlash.

Looking back, the basis of the auto insurance reform was largely due to the industries cries and pleas to the Ontario government to act on and put in place measures to reduce the rampant car insurance scams – or outright fraud – that was occurring throughout the province, but notable in certain regions and cities of Ontario.

Looking at the financial reports of the publicly traded insurance companies prior to 2010, it was evident that many, and likely nearly all – insurance companies were running financial losses. These losses, once one takes a closer look, were largely based on car insurance claims payouts that were significantly higher than the projected payout rates.

In summary, more fraud correlated to more and higher payouts for claims within in turn forced the car insurance companies in Ontario to drive up policy premiums for Ontario drivers and consumers. One of the misconceptions was that Ontario car insurance companies are greedy…. Whilst this may be the case, they certainly we're making much – if any – profit on Ontario drivers, thanks to rampant fraud within claims.

Since 2010 we see reports that car insurance claims fraud has been reduced. This is good news for everyone and has led to stabilized, and in some cases reduce car insurance rates. But can the industry really sustain a 15% across the board rate cut? Looking at the current financial statement of car insurance companies in Ontario, this is right about the level of profit they earn. So a 15% rate cut would mean these companies would be forced to operate without profit – or cut payouts on claims.

Sometimes governments make bold statements without digging deeper in to the underlying issues. Sound all too familiar?

As an Ontario consumer – a driver – your best bet for a better rate on your car insurance is to shop around. Try a Quote App like that of insure metoo.com. It takes about 3 or 4 minutes to complete, and they serve up about 8 quotes for you to choose from. Hopefully some of these quotes are better rates.

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