Ontario Gov't mandates a 15% decrease to *Auto* Insurance Rates

[VifferFun]

Correct if I'm wrong but isn't that what just happened recently a few years ago. When the insurance industry promised us lower rates but in fact all we got was lower coverage. We now have an option to pay more for insurance to get the coverage we originally had.

Yes, that's a good observation. In September 2010 the Gov't (not the insurance industry) changed the benefits included in the standard insurance product. Just prior to the reform, many insurers needed double-digit increases just to get the premiums back up to adequate levels. When the reforms were implemented, it was tough to estimate what the actual claims savings would be. Would lawyers (who were already meeting prior to the reform) figure out loopholes in the new Statutory Accident Benefits package? Would claims actually decrease? Companies had guesses, but no one knew for certain. At best, the reform helped to reduce the increases, which is a decrease of sorts (but the policyholder probably wouldn't see it that way). In other words, if it weren't for the reform, your insurance premiums would have increased more than they did. Not much of a consolation

Now, with that being said, the insurance reforms are now about three years old. I'm not sure what my competitors have seen, but my employer has seen some cost savings due to the September 2010 reform. As a result, we have decreased rates over 10 percent in the last year or so. Part of the Government's argument for the mandated decrease is that companies should now be reducing rates to reflect the cost savings of the reform. This is why I think the mandated decrease is unfair if it is applied to all companies equally, since my company has already voluntarily taken decreases. If we are forced to reduce rates just the same as our competitors who have not decreased rates in the last year, then my employer will probably be more reluctant to take voluntary decreases in the future for fear that the Gov't may mandate further decreases, pushing us into inadequacy.

Studies have shown that strict Gov't regulation actually increases premiums and makes them more volatile. Illinois insurance is completely unregulated and they enjoy some of the most stable and lowest premiums of the USA. North Carolina used to be regulated like Ontario and they ran into affordability issues just like Ontario. NC eliminated the regulation and went to a free market and their situation drastically improved to look more like Illinois. It seems ironic, but without regulation insurers can adapt to the market MUCH more quickly, and thus be more competitive with lower premiums.

 

[spaceboy]

People think that Gov't programs automatically imply cheaper rates, but this is not true. I have done the analysis and if my employer were allowed to provide policies in Saskatchewan, our rates would be cheaper than the Gov't program there (SGI). Saskatchewan rates are cheap because it's Saskatchewan -- low population density, low propensity to sue, flat land with clear visibility, etc.

http://www.cbc.ca/news/canada/saska...rcycle-insurance-program-feedback-130709.html
A proposed 73 percent increase in motorcycle rates. Still want government-run insurance? Didn't think so.


I'm not sure what everyone is still going on about. You're getting a 95 cent product for a dollar, that sounds like a good deal to me.
There is a lot of good information posted by viffer in this thread. Read it and get informed.

 

[DownUnder]

No matter how much Insurance companies claim poor, NO ONE is going to believe them with the rates being paid in Ontario. If you were all losing money, how are you still making huge profits each year?

If there is an issue with fraud in Ontario how about cracking down on the fraudsters instead of raping the entire population...

 

[Two50noob]

No matter how much Insurance companies claim poor, NO ONE is going to believe them with the rates being paid in Ontario. If you were all losing money, how are you still making huge profits each year?

If there is an issue with fraud in Ontario how about cracking down on the fraudsters instead of raping the entire population...

Insurance companies run multiple books (EI House ins, Auto etc) some are more profitiable than others. They also make direct money from investing your premiums

They are also required BY LAW to make thouse profits

 

[eastcoast_gsx]

My motorhome vehicle liability policy went from about ~$260 to about ~$850 in one year (motorhome itself and contents are under house policy for losses not associated with driving it), after about 5 phone calls, escalated to the top, the answer I got was "we can't really figure out why, we just started rating them different it seems"... or for the layman "just because we can"

Thanks to you and your clan Viffer....

 

[-D-]

One of the obvious scams I see perpetrated on us is this example, you have 3 bikes or 3 cars, you live alone, you will sing a waiver stating that only you will drive those vehicles...why do you need a full policy on each? Why not cover you for the vehicle that you are operating at that time.

Viffer, thanks for the time you take in providing the detailed info.

 

[Two50noob]

One of the obvious scams I see perpetrated on us is this example, you have 3 bikes or 3 cars, you live alone, you will sing a waiver stating that only you will drive those vehicles...why do you need a full policy on each? Why not cover you for the vehicle that you are operating at that time.

Viffer, thanks for the time you take in providing the detailed info.

I agree with your point on the the multi-Vehicle thing. I wish that more companies would get seriouse about having discounts per vehicle. Not on fire of theft but on the comp side of it. Like a stable policy.

 

[Two50noob]

Thanks to you and your clan Viffer....

Yea Viffer is a real bad guy....

 

[VifferFun]

No matter how much Insurance companies claim poor, NO ONE is going to believe them with the rates being paid in Ontario. If you were all losing money, how are you still making huge profits each year?

If there is an issue with fraud in Ontario how about cracking down on the fraudsters instead of raping the entire population...

The insurance industry is not making huge profits every year. The average return on equity is 10.5 percent over the last 35 years. While that isn't bad, it isn't obscene either. If insurance companies weren't profitable, they wouldn't exist. Why would someone risk their investment with an insurance company that has the potential to perform horribly (or even fail) when they could just invest in "risk-free" Gov't bonds? This document has some useful information. You might find the following document interesting -- pages 14-16 discuss the return on equity:

http://www.ibc.ca/en/Need_More_Info/Facts_Book/documents/IBC-Facts-2013-section1.pdf

 

[VifferFun]

My motorhome vehicle liability policy went from about ~$260 to about ~$850 in one year (motorhome itself and contents are under house policy for losses not associated with driving it), after about 5 phone calls, escalated to the top, the answer I got was "we can't really figure out why, we just started rating them different it seems"... or for the layman "just because we can"

Thanks to you and your clan Viffer....

I agree -- that's a ridiculous increase (although it seems like you were getting a steal at only $260 for motorhome liability). Did anything about your risk profile change (move to a new location, claims, etc.)? You must have got hit with a combo of factor increases. Which company?

 

[VifferFun]

One of the obvious scams I see perpetrated on us is this example, you have 3 bikes or 3 cars, you live alone, you will sing a waiver stating that only you will drive those vehicles...why do you need a full policy on each? Why not cover you for the vehicle that you are operating at that time.

Viffer, thanks for the time you take in providing the detailed info.

I find that a bit frustrating too but there's currently nothing in the insurance product (defined by the Gov't) that will allow anyone to sign such a waiver that would hold up in court. Even policyholders who sign an OPCF28A exclusion (i.e. a high-risk operator in your household signing an I-will-not-drive waiver so that the vehicle owner's rates aren't jacked) can't be thrown to the dogs if they're an idiot and drive anyway. With the advancement of technology, this might change in the future when insurers can track the usage of vehicles more accurately using on-board diagnostic chips that plug into your OBDII port.

 

[Mongrel]

Private companies can already spread the risk quite well, but there are certainly arguments for (and against) Gov't insurance programs. The biggest benefits are that the Gov't can subsidize insurance rates through general tax revenues, or have a less-risky group (such as 30-50yo operators) pay higher premiums to subsidize lower premiums for a high-risk group (such as 15-24yo operators). The biggest drawback is that the policyholder no longer has the option to shop around. If the Gov't decides they will no longer write sport bikes or levies a 400% surcharge, then tough luck -- State Farm is not there to write you. If the Gov't is known for terrible claims service and you would prefer spending an extra $100/yr for a policy with a company known for outstanding service, tough luck -- you're stuck. I'm not saying that Gov't insurance is bad, but these are possibilities.

People think that Gov't programs automatically imply cheaper rates, but this is not true. I have done the analysis and if my employer were allowed to provide policies in Saskatchewan, our rates would be cheaper than the Gov't program there (SGI). Saskatchewan rates are cheap because it's Saskatchewan -- low population density, low propensity to sue, flat land with clear visibility, etc.

I dont know of any province where they have public monopoly car insurance, and where the motor vehicle dept will license a bike for use as a legal vehicle but where the provincial insurance company will not cover that same bike.

I don't think government programs automatically imply cheaper rates - I did qualify my statement with words like "generally" - but a true monopoly tends to mitigate the the nightmare that is a half-monopoly, and that in the specifica case of car insurance, governments will have tools they cannot give out to private companies.

 

[Mongrel]

That's an unusual circumstance. When Intact bought Jevco, it sounds like they simply rolled all of the Jevco clients onto the Intact rating algorithm en masse (which was probably allowed by FSCO because the Intact algorithm was already in effect for their own policyholders and hence approved). Since different companies target different risks, this resulted in some large premium increases and large premium decreases (although you won't hear about the decreases much, but they do exist). Intact would have expected that the vast majority of people with large increases would have just walked away, so it wasn't a money grab. It's purely speculation on my part, but I suspect that Intact wanted Jevco's auto business but wasn't really interested in the motorcycle business, otherwise they could have retained the Jevco motorcycle rates for a few years until they figured out a transition strategy.

I'm not entirely sure that was the case. It may not have been gaming outright, but they may have been counting on inertia (people being too lazy to switch) more than was reasonable. I've seen a couple surveys - one on these very boards - recently asking why people left Intact. So someone is clearly asking around, which is not typical.

Whether or not those people are employed by Intact and were directed to ask such questions, well, I don't pretend to know. If it was official, or quasi-official, I don't think it's out of line to infer that the level of rage about the increases caught them (somewhat) off guard.

 

[Mongrel]

I agree with your point on the the multi-Vehicle thing. I wish that more companies would get seriouse about having discounts per vehicle. Not on fire of theft but on the comp side of it. Like a stable policy.

In many US states the insurance is tied to the driver and not the vehicle. I wonder how much of a difference that would make here.

 

[Mongrel]

For the record, I'm not against trying full deregulation here either, just so long as it's a TRUE deregulation - i.e. the mandatory requirement to purchase insurance is removed as a condition for licensing.

In practice however, I don't think that would happen. Not in Ontario. And after the NDP fiasco, I don't think we'll see talk of public insurance again, at least not for a long while. So I would prefer to move in the direction Quebec went, with full and comprehensive regulation for all elements of the industry (basically one step outside of public insurance).

 

[FAIR]

In September 2010, the government approved reforms to Ontario's auto insurance system to address claims costs without investigating the impact these changes would have. These reforms reduced costs for insurers, decreased consumer coverage (down to $3500 from $100,000 for rehab) and ensured that many MVA victims no longer have timely access to necessary medical treatment. These ill-conceived changes that favor insurers have created a download to the taxpayer and a backlog within our court systems. That ensures that those injured in an auto accident in Ontario have less access to necessary treatment and a long wait for justice in a province that puts the interests of big business ahead of the interests of taxpayers. There are now 10,510 injured accident victims in Ontario waiting for hearings to get the benefits they were promised. Consumers have every right to be angry about the way they are treated by their insurer when half of all claims are denied (28,239 claims denied last year). There is an organization out there that is bringing the issues to light - Fair Association of Victims for Accident Insurance Reform. We need to speak up with consumer concerns or we will be left with no benefits for those most injured on our roads.
http://www.fairassociation.ca/the-independent-medical-examination-imeie/ See http://www.canadianunderwriter.ca/news/fsco-clears-auto-insurance-mediation-backlog/1002556748/ .

 

[GateKeeper]

I find that a bit frustrating too but there's currently nothing in the insurance product (defined by the Gov't) that will allow anyone to sign such a waiver that would hold up in court. Even policyholders who sign an OPCF28A exclusion (i.e. a high-risk operator in your household signing an I-will-not-drive waiver so that the vehicle owner's rates aren't jacked) can't be thrown to the dogs if they're an idiot and drive anyway. With the advancement of technology, this might change in the future when insurers can track the usage of vehicles more accurately using on-board diagnostic chips that plug into your OBDII port.

Really now......don't the insurers have us over a barrel already, someone wants to give them even more ammo to screw us with.....

Talk about Big Brother watching......

No Thanks.......

.

 

[fastar1]

With the advancement of technology, this might change in the future when insurers can track the usage of vehicles more accurately using on-board diagnostic chips that plug into your OBDII port.

The best that can achieve is to redistribute costs according to some different less-than-perfect risk model than we already have, since costs won't change. Some will see rate hikes, some will see reductions.
If insurers really wanted to cut rates overall they'd discount drivers with dash cams instead of OBDII readers.

 

[VifferFun]

I dont know of any province where they have public monopoly car insurance, and where the motor vehicle dept will license a bike for use as a legal vehicle but where the provincial insurance company will not cover that same bike.

The Gov't insurer might not refuse a vehicle outright, but they could make it prohibitively expensive (such as the huge increase in Saskatchewan Motorcycle premiums that another member pointed out).

I don't think government programs automatically imply cheaper rates - I did qualify my statement with words like "generally" - but a true monopoly tends to mitigate the the nightmare that is a half-monopoly, and that in the specifica case of car insurance, governments will have tools they cannot give out to private companies.

I don't know why people think there is anything remotely close to a monopoly in the insurance market of Ontario. I believe there is upwards of 200 insurance companies licensed to provide auto insurance in Ontario. If that's not a competitive market, then what is?

 

[VifferFun]

I'm not entirely sure that was the case. It may not have been gaming outright, but they may have been counting on inertia (people being too lazy to switch) more than was reasonable. I've seen a couple surveys - one on these very boards - recently asking why people left Intact. So someone is clearly asking around, which is not typical.

Whether or not those people are employed by Intact and were directed to ask such questions, well, I don't pretend to know. If it was official, or quasi-official, I don't think it's out of line to infer that the level of rage about the increases caught them (somewhat) off guard.

the Jevco/Intact theory is all pure speculation on my part based on the premium changes people have reported.

The survey on this board about people leaving Intact was actually created by me. Since it's a competitive market and all insurance companies want to attract profitable business, I wouldn't mind trying to bring in some of the good business that Intact is losing by offering them rates more comparable to what Jevco was charging.