While Ontario auto insurers come to grips with the reality of lowering rates 15 per cent by 2015, one company has been reducing premiums since 2012, and will do so again this October.
Co-operators General Insurance Company is once again lowering insurance rates for private passenger automobile clients in the province, effective October 15.
“Ontario drivers pay a lot for their insurance, so we're very pleased that we've been able to reduce our rates significantly over the past couple of years,” said Kathy Bardswick, president and CEO of The Co-operators. “While auto insurance is highly regulated and policies are standardized to some degree, there are a number of choices drivers can make to suit their particular needs and preferences.”
Altogether, the insurer has reduced its premiums in Ontario by 12 per cent since the start of 2012 – something Leonard Sharman hopes the government will take into consideration when they look to The Co-operators to reach the 15 per cent goal. (continued.)
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“We’ve cut premiums by 10 per cent in 2012 and 2 per cent this year,” Sharman, a spokesperson for The Co-operators, told InsuranceBusiness.ca. “We’ve been in a position to realize some savings the past few years and pass them along to the consumer – and we’re hopeful the government will take that into consideration when they want that 15 per cent.”
The announcement by Queen’s Park on Friday that the provincial government was setting a goal of 15 per cent lower premiums for Ontario drivers received an immediate response from the industry.
“Mandating a 15 per cent premium decrease without pairing that with an expense reduction will have a profound impact on the industry,” said Randy Carroll, CEO of the Insurance Brokers Association of Ontario. “It just doesn’t work. Regardless of the type of business that you are running, you cannot reduce revenue without implementing cost reduction measures and expect to succeed.”
Ralph Palumbo, vice president Ontario, Insurance Bureau of Canada, echoed Carroll’s concerns. (continued.)
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“While the government has approved insurance rate reductions they still haven’t outlined how they will address some key cost reforms we need to see implemented.” said Palumbo. “Reducing costs is the only way to reduce premiums."
The Co-operators' press release states it was in a position to pass on savings to its clients due to the positive impact of the auto insurance reforms in Ontario.
“The further reduction in 2013 reflects continuing positive experience with the ongoing auto insurance reform efforts in Ontario,” according to the release. “The Co-operators looks forward to working with the government to find further cost savings in the coming years.”
Carroll is pleased that the policyholders will benefit from these reductions, but hopes that the savings can be realized without creating greater harm in the industry.
“On behalf of the six million policyholders that our brokers represent, we welcome lower premiums in this province,” Carroll told InsuranceBusiness.ca. “We understand that they are needed but they need to be achieved in a responsible fashion.”
The Co-operators Sharman agrees that for many insurers, 15 per cent will be a difficult row to hoe. (continued.)
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“It is a very competitive marketplace out there, and it will be a difficult pill for some to swallow,” he said. “We don’t believe here is another 15 per cent out there to be reduce, from our perspective. We were able to reduce premiums because of our success in dealing with dispute resolution; we have very small numbers going to arbitration – and those savings were passed along the last couple of years.”
The impact of The Co-operators rate reductions on individual clients will vary, depending on a number of factors including where they live, the vehicles they drive, their driving records, as well as the amount of coverage and deductibles selected.
