The liberal Ontario government has published its 2015-16 budget, and several elements of the plan impact the insurance industry and its client base.
For one, the government has renewed its commitment to lowering auto insurance premiums by 15%, which it intends do accomplish by raising deductibles from $300 to $500, as well as lowering maximum interest rates and forbidding increases on premiums because of “minor, at-fault” accidents.
In addition, Finance Minister Charles Sousa announced that insurance companies will be required to offer discounts for drivers who install snow tires on their vehicles.
Because of these measures, the
Insurance Bureau of Canada (IBC) feels that the budget is a step in the right direction for the province’s drivers.
"It's clear that the government recognized that the auto insurance product needed reforms to work better for consumers," Ralph Palumbo, Vice-President, Ontario, IBC, said in a statement. "These reforms will remove excessive costs and this will result ultimately in lower premiums for Ontario's 9.4 million drivers. This shows, once again, the Ontario government's leadership and commitment to consumers."
At least one insurance company echoes this positive sentiment.
Unica Insurance Inc. applauded the Government of Ontario for its efforts to help keeps motorists safe during the winter months.
"We strongly believe in providing Canadians with products that will not only provide them with the protection they require, but at a price that delivers good value," said Martin Delage, President and COO of Unica Insurance. "The Government of Ontario's budget announcement related to an insurance discount on winter tires directly aligns with this."
Unica currently offers a 10% discount for consumers who make use snow tires on their vehicles, but it is unclear what price reduction will be mandated by the budget.
Finally, the 2015 budget makes dramatic changes to what is included in auto coverage. Whereas medical and rehabilitation benefits used to exceed $80,000, it now rests at $65,000. In addition, catastrophic incident benefits now face a limit of $1 million, reduced from $2 million.
Some advocacy groups have expressed outrage over these cuts.
“Our government, under the guise of protecting victims, is proposing to cut over a $1 million dollars in coverage for the most seriously injured among us while pretending that they are fiscally responsible,” said Rhona Desroches, FAIR Board Chair. “You don’t have to be an accountant to see that the government is doing the industry a big financial favour and doing it on the backs of some of the most disabled individuals in Ontario. It’s a disgusting and unacceptable way to treat these vulnerable individuals.”
In addition, FAIR disagrees with the impending changes to what constitutes a “catastrophic impairment,” and feels that this will further exacerbate the conflicts of interest that exist with the CAT panel.
“At one point only 75% of that Panel agreed that paraplegia or quadriplegia was a catastrophic injury,” Desroches said. “Now the potential that the industry will separate mental and physical injuries as if they were unrelated is another danger for injured victims and this too will lead to increased court challenges.”
FAIR is not the only critic of Sousa’s budget. NDP Leader Andrea Horwath has also been vocal about her opposition, and she similarly argues that the Liberals’ supposed reforms will only serve to benefit insurance companies, not consumers.
“It never trickles down to the drivers,” she told the CBC.
