Ontario’s car insurance industry is undergoing significant change:
-the provincial government is overdue on its promised 5-year product reform update.
-rates are rising sufficiently to warrant media attention – often with a cumulative annual impact of +10%.
-a few insurers are “dumping” policyholders, even though they may not have had a claim.
Does this make it the right time to shop for a new auto insurer?
1) The rate process – no insurance company can raise auto rates in Ontario on auto without government approval (Financial Services Commission of Ontario – FSCO). This year, every insurance company in Ontario has had at least one rate increase application before the government, and most have two and three. But the process is rigorous – they can’t increase rates unless FSCO is convinced it is warranted.
2) The primary driver – in Ontario, claims for injury are the key issue: for every dollar of premium, insurers are paying out as much as $1.20 in claims. In addition to outright fraud, the Toronto Star recently reported (James Daw, Oct.3/09) many claims for injury see a significant chunk of the payout go directly for medical assessments, rather than to direct treatment. Additionally, the Star quoted observers noting “certain clinics, lawyers and paralegals have learned to “game” Ontario’s complicated system of checks and balances, to maximize insurance payouts – ultimately driving up the cost….”
3) Get advice – does your broker immediately shop to reduce the price? You know you are served by a professional only if the process also involves a discussion about “pros and cons”.
So is this the right time? The situation is fluid and a little complicated. It may be that when uncertainty is most rampant, your best option is to stay with your current insurer – but get advice to understand the big picture.