Ontario Auto Insurance
If you are currently purchasing Ontario auto insurance, unfortunately you are paying one of the highest auto insurance premiums in Canada. Ontario drivers are clearly frustrated with this situation. As a result, Ontario auto insurance premiums are now receiving more scrutiny from the provincial government, regulators, insurance organizations, brokers and other insurers as well.
So why are your auto insurance premiums so high?
Contributing factors include:
Fraud - According to the Insurance Bureau of Canada (IBC), losses from auto insurance fraud in Ontario could be as high as $ 1.6 billion per year. This estimated amount likely includes fraudulent accident claims, injury treatment plans at for-profit medical rehab clinics, fees charged by tow truck drivers, and work done in auto repair shops. This is not to say that there is more than a small percentage of people involved in fraudulent claims, however, those who do are clearly contributing to the problem. In this regard, please note that the insurance industry is reporting a higher than average number of fraudulent activity taking place in the Greater Toronto Area (GTA).
Medical Benefits - Non-at-fault accident benefits averaged $ 28,978 per claim in Ontario in 2011. This compares to an average of just $ 3,568 in Alberta and 7,377 $ per claim in the Atlantic Provinces. With such a big difference in the average amounts paid in claims, it's not hard to see why Ontario auto insurance rates are higher than those in other provinces. For Ontario, this contributed to a total compensation cost of $ 4.1 billion for personal injury and tort claims in 2011.
Mediation of Minor Injury Benefit Claims - As part of Ontario's 2010 auto insurance reform, the minor injury benefit limit has been increased from $ 30,000 to $ 3,500. Unsurprisingly, this resulted in more mediation requests from providers - at one point there was a backlog of over 30,000 claims awaiting review caused by the fact that around 80% of claimants claims fell under the minor injury guideline and through dissatisfaction with the imposed limit of $ 3,500 in defined benefits. Not only has this added to the cost of claims, but added a lot of pressure to a system that was not designed to handle such a large number of mediation requests.
Insurer Profits - Consumer groups have long argued that insurer profit margins are one of the main reasons Ontario auto insurance rates are so high. However, the statistics cited by the IBC do not support this conclusion. From 2008 to 2010, the insurance industry reportedly lost over $ 2 billion in auto insurance in Ontario. In 2011, the insurer's profit estimate was only $ 233.2 million (a relatively small amount compared to total premiums of $ 10.3 billion for the year). On the other hand, the OTLA (Ontario Trial Lawyers Association) replied that the insurance industry had, in fact, earned more than $ 2 billion since 2010. The OTLA maintains that the accounting practices of insurers give a distorted picture of actual earnings.
So how do you fix the problem?
The recent re-election of a Liberal majority government in the province could have several consequences for the future of auto insurance in Ontario. The liberal law presented in March 2014 as the "Law on the fight against fraud and the reduction of insurance rates" proposed the following measures, in particular:
The licensing by the Financial Services Commission of Ontario (FSCO) to health care clinics that bill insurers for accident rehabilitation services. These clinics must be approved by FSCO as of Dec. 1. 2014.
Increased powers for FSCO to investigate and potentially prosecute fraud cases. This would be in addition to the establishment of a provincial fraud investigation unit.
Proposed changes to the rules with the aim of:
expedite the resolution of outstanding insurance claims.
to help reduce legal fees and other costs incurred by insurance companies.
Reduce the amount of interest paid on claims
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