Ontario Auto insurance changes – premium reduction?

Finance Minister Dwight Duncan announced over 40 changes to Ontario’s auto insurance system last Monday. 

Will this package bring premiums down??  Or even freeze vehicle insurance rate increases over the longer term?? 

The short answers: no and no.

The main changes are:

• offering choice for non-catastrophic medical and rehabilitation costs.  Policyholders can opt to drop to a limit of $50,000 from the current $100,000.  These limits include medical assessments.
• eliminating “objectionable quoting practices” like using financial credit scoring to measure and price risk.  But there is a counter-effect that is not widely understood: those getting – and about to lose – a lower price for having a good credit record won’t see this helping premium affordability.
• medical assessment cost control which would limit the cost of assessments to $2000 and eliminate rebuttal examinations.

Some context: Ontario’s system remains among the most generous in Canada.  The obvious trending indicators point to the problem: it is not the cost of repairing vehicle, but the costs associated with healing and rehabilitating injured bodies.

My observation as an insider: the Ontario system takes very good care of injured motorists – there is no better system on the continent.  But the intentional default in favour of getting quick treatment for injured people leaves the system open to abuse and outright fraud. 

Recent news articles have documented a relatively small faction of lawyers, paralegals, and health-delivery players “gaming” the system – sometimes in concert – to drive up costs that ultimately do not benefit those who are injured.

The question is, if we want the best, are we prepared to pay for the best??  And if we want lightning-quick response, with liberal benefits to injured motorists, can we deal with the inevitable abuse of the system??  Only then will we see cost containment reflected in our premiums.

Knowledge is the first step in managing risk.

Knowledge is the first step in managing risk.

We recommend that our insureds consider carrying at least $5 million in coverage for personal liability on automobiles, boats, recreational vehicles and all owned properties. Higher limits are available.

Visit us online: www.kibl.com

Advice you can trust when it matters most.

KNOX INSURANCE BROKERS LTD.
705 CASSELLS STREET, NORTH BAY, ONTARIO P1B 4A3
P. 705.474.4000