Provinces tackle changes to auto insurance biz
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Ontario Premier Ernie Eves is warning the auto insurance industry his government will act if drivers don't get a break on rates. The cost of car insurance has gone up almost 30 per cent over the past two years. CTV.ca News Staff  Ontario Premier Ernie Eves is warning the auto insurance industry his government will act if drivers don't get a break on rates that have risen almost 30 per cent over the past two years. Like premiers in the Maritimes, Eves has been pushing for auto insurance changes in recent weeks, with an election call looming. In Charlottetown for the premiers conference, Eves offered his blueprint for change that he says will bring skyrocketing costs under control. "All drivers are hit in the pocketbook when auto insurance premiums increase," Eves said. "We will take measures to restore rate stability and we will undertake any action necessary -- including capping, freezing or rolling back rates --to ensure that drivers see the impact of these changes on their premiums." Eves promised to bring rates down, though didn't give a timetable. The Liberal opposition countered by pledging a 10 per cent rate cut within 90 days of taking office. "As soon as a new Ontario Liberal government is sworn into office, we will freeze rates,'' Liberal Leader Dalton McGuinty said. The province's New Democrats are promising a publicly-run system, like that in British Columbia. They say that eliminating profits and duplication in the industry would yield an immediate 20 per cent cut in premiums. Eves released a discussion paper on the issue, which said cost-saving measures could include rate caps, rate freezes or rate roll-backs. According to The Canadian Press, the report calls on public consultations on the following issues:
Insurers say the reason that premiums are increasing is because of rising claim costs, which have jumped 15 per cent annually, according to the Insurance Bureau of Canada. IBC says repair bills for damaged cars have been going up 10 per cent per year. Medical and rehabilitation costs for people injured in accidents are also up 15 per cent per year. But the main reason for soaring premiums according to the industry: payouts for lawsuits are up an astounding 50 per cent. Countrywide debate over soaring rates The Alberta government recently said it was working on new rules for auto insurance that might include a ceiling on the amount of companies pay for injury claims. Lawyer Robert Young, who handles personal injury actions, is a critic of the plan. He said placing a cap on claims wouldn't help consumers, but would boost the profits of insurance companies. "This is basically a scare tactic by the insurance companies to shock the clients. They're motivated by profit and they want higher profits," Young said. In contrast, the Alberta government believes that if insurance companies are paying out less in claims, the savings will be passed along to consumers. In Nova Scotia, soaring insurance premiums have become a key election issue as voters prepare to go to the in early August. On Wednesday, Premier John Hamm has introduced an insurance cap of $2,500 for minor traffic injuries, saying he hopes the limit will help reduce insurance rates. NDP finance critic Graham Steele doubts savings will be passed on to consumers. He said a similar cap that is already in place in New Brunswick is failing. New Brunswick Premier Bernard Lord implemented the $2,500 cap after the June 9 election in his province and asked insurance companies to voluntarily come in line. New Brunswick officials acknowledge that as of a July 1 deadline, only three out of the 70 companies in the province have reduced rates. Lord has suggested auto-insurance reductions may have to be legislated. Angry New Brunswick voters almost ousted Lord from office last month over car insurance premiums. With a report from The Canadian Press |
