Ontario’s ruling Liberal government may have mandated a 15 per cent auto insurance premium cut by 2015, but the reality for drivers in the Greater Toronto Area is that number won’t be reached, says one broker.
“The GTA will never see 15 per cent,” says Prince Manickam, an associate broker with IBMG Canada in Toronto, Ont. “They will see 4 per cent or maybe 5 per cent. Certain parts of Ontario will see 15 per cent, but we haven’t seen any reduction yet.”
In the meantime, clients have been calling asking for their 15 per cent cut – and it places brokers in the position of being the bearers of bad news.
“It is frustrating,” Manickam told Insurance Business. “People are asking, ‘Where’s my 15 per cent?’ telling us ‘the government has promised the cut and you aren’t giving it to us.’ We are the bad guys. The paralegals and the lawyers are the good guys.”
The mandated 15 per cent auto insurance premium cut – which was part of a deal with the New Democratic Party to pass the 2013 spring budget – has set an August target of 8 per cent for this year, and another 7 per cent for 2015.
“They are talking 5 per cent or 6 per cent discount in some places right now – I have not seen that,” says Manickam. “I have seen Allstate reducing their premiums; I have seen The Co-operators reducing their premium already – even more than 15 per cent.” (continued.)
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Most companies haven’t reduced their auto premiums as of yet, says Manickam. However, insurers have increased the property premium by 60, 70 or even 80 per cent, to find money to pay for the 15 per cent premium target, he says.
Canada’s largest P&C insurer
Intact raised property premiums for its clients by 15 to 20 per cent in January, citing last summer’s extreme weather for underwriting losses in 2013.
The government has introduced some of the recommendations from last year’s anti-fraud task force, hoping that curbing insurance fraud – particularly in the GTA – will free up money for insurers looking to reduce auto premiums.
The latest announcement from Queen’s Park will see legislation designed to speed up arbitration between accident victims and insurers, and the licensing of medical clinics to prevent double-billing and false claims.
What may be contributing to the problem is the media message that drivers should be going to a paralegal first, and not their insurance provider, when involved in an accident, says Manickam.
“The actual victims of these accidents, they don’t call their insurance company or broker first,” says Manickam. “These people, many who don’t speak English as a first language, or who may not be educated, talk to a paralegal first. The paralegals and lawyers are advertising everywhere.” (continued.)
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It is those advertisements that reinforce the message that people who are involved in accidents should automatically choose legal representation to ensure their rights are protected, he says, placing the insurance industry in a bad light.
“Everybody thinks the insurance company is cheating you, and they portray themselves as the ‘lifesavers,’” he says.
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