Auto insurance premiums are an easy target when it comes to public policy matters in Ontario as most people hate to pay more to drive a car.
So it was no surprise that the provincial government took aim at that issue in its budget last week. Among other things, the budget seeks to reduce premiums by 15 per cent through a number of measures, including a crackdown on fraud. Insurer profits are sure to come under the microscope as the government seeks to cut premiums.
But as a Law Times story on page 9 this week points out, determining the insurance industry’s financial picture isn’t an easy task. As hearings on the sector resumed last month before the legislature’s standing committee on general government, the Ontario Trial Lawyers Association was touting data that put the total cost of claims at $6.5 billion. The Insurance Bureau of Canada, meanwhile, says it’s $8.15 billion and maintains the industry earned a 5.5-per-cent return on equity in 2012, a number far below the 12-per-cent regulatory standard. The industry argues any premium cuts would wipe out profits while the lawyers’ association claims insurance companies have been making big money since the province reduced benefits in 2010.
So we have conflicting numbers on a signature policy in the budget. What are the true figures and will the budget changes make any difference to consumers? Those are questions the government should move quickly to answer.
While it’s an area of significant consensus for the general public, insurance is a hotly debated area for those with a bigger financial stake.
Consumers, of course, want good benefits for reasonable prices while companies prefer the opposite to ensure solid profit margins. But one issue where there seems to be a fairly solid meeting of the minds is on insurance fraud. So given the divide more generally, that’s an area where the government should focus its limited resources in order to make a difference by rooting out bogus claims. It’s not as though anyone can deny it’s a problem. Statistics show the cost of the average claim in Ontario is far higher than other provinces despite the fact that accident injury patterns don’t vary dramatically across Canada. Given some of the fraud cases we’ve seen, it’s clear that bogus and inflated claims are part of the problem.
Fortunately, a task force has been considering the fraud issue for some time. In a recently released report, the task force made a number of recommendations. They included regulating the health-care clinics often fingered as sources of fraud, better use of data analytic technology to identify suspicious cases, and increased investment in prosecutions. Obviously, none of these solutions is a panacea, but given the political minefield involved in auto insurance, they’re a good start for aggressively targeting the government’s efforts to cut premiums.
— Glenn Kauth
So it was no surprise that the provincial government took aim at that issue in its budget last week. Among other things, the budget seeks to reduce premiums by 15 per cent through a number of measures, including a crackdown on fraud. Insurer profits are sure to come under the microscope as the government seeks to cut premiums.But as a Law Times story on page 9 this week points out, determining the insurance industry’s financial picture isn’t an easy task. As hearings on the sector resumed last month before the legislature’s standing committee on general government, the Ontario Trial Lawyers Association was touting data that put the total cost of claims at $6.5 billion. The Insurance Bureau of Canada, meanwhile, says it’s $8.15 billion and maintains the industry earned a 5.5-per-cent return on equity in 2012, a number far below the 12-per-cent regulatory standard. The industry argues any premium cuts would wipe out profits while the lawyers’ association claims insurance companies have been making big money since the province reduced benefits in 2010.
So we have conflicting numbers on a signature policy in the budget. What are the true figures and will the budget changes make any difference to consumers? Those are questions the government should move quickly to answer.
While it’s an area of significant consensus for the general public, insurance is a hotly debated area for those with a bigger financial stake.
Consumers, of course, want good benefits for reasonable prices while companies prefer the opposite to ensure solid profit margins. But one issue where there seems to be a fairly solid meeting of the minds is on insurance fraud. So given the divide more generally, that’s an area where the government should focus its limited resources in order to make a difference by rooting out bogus claims. It’s not as though anyone can deny it’s a problem. Statistics show the cost of the average claim in Ontario is far higher than other provinces despite the fact that accident injury patterns don’t vary dramatically across Canada. Given some of the fraud cases we’ve seen, it’s clear that bogus and inflated claims are part of the problem.
Fortunately, a task force has been considering the fraud issue for some time. In a recently released report, the task force made a number of recommendations. They included regulating the health-care clinics often fingered as sources of fraud, better use of data analytic technology to identify suspicious cases, and increased investment in prosecutions. Obviously, none of these solutions is a panacea, but given the political minefield involved in auto insurance, they’re a good start for aggressively targeting the government’s efforts to cut premiums.
— Glenn Kauth
