Ontario MPP Jagmeet Singh may say that drivers are “tired of waiting” for their auto insurance cuts, but the industry is tired of being characterized as profit-hungry billionaires, says the Ontario representative of the
Insurance Bureau of Canada.
“Insurers have done more than their share,” the IBC’s Ralph Palumbo told Insurance Business. “He’s (Singh) on it about profits again. He’s wrong. When he says ‘the industry is making billions’ it is just crass political opportunism. It is just disappointing, as he is misleading the public.”
Singh, who was the driving force behind the agreement to win NDP support for the minority Liberal government budget last spring, questioned the commitment of the auto insurance sector to the 15 per cent reduction target (
see related story).
“Eight months after the budget promised a 15 per cent reduction in auto insurance, some drivers are still seeing hikes despite healthy industry profits,” said Singh, who represents the Greater Toronto Area riding of Bramalea-Gore-Malton. “Drivers are tired of waiting.”
The New Democrat MPP added that Ontario’s auto insurers are “nowhere near 15 per cent, and they’re nowhere near the 8 per cent that they promised in one year. It’s unacceptable.”
Singh also told reporters that the insurance sector is “in my opinion, not being forthright with the people of Ontario.” (continued.)
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It is that type of language and posturing that Palumbo feels creates an environment where a dispassionate discussion on the true state of insurance in the province cannot happen.
“You can’t have a thoughtful debate on auto insurance with the NDP,” he said. “Where did (the NDP) get the 15 per cent target? Where is their policy on auto insurance? How do they plan on making it affordable?”
According to Palumbo, Singh has cited testimony in the legislature from a standing committee to support his position that the insurance industry is raking in huge profits.
“He (Singh) claims there were experts that came to the Standing Committee on General Government to say that the industry was making billions of dollars,” said Palumbo. “I can tell you the Ontario Trial Lawyers’ Association said that the industry was making a 25.2 per cent return on equity; they had some guy who was not an actuary, he was not a member of the Canadian Institute of Actuaries – he may have been an associate, but he certainly wasn’t a full member.”
Regardless of the man’s credentials, Palumbo said the numbers provided before the standing committee simply weren’t accurate.
“It wasn’t long after that the General Insurance Statistical Agency issued a province-by-province report on profitability, and what they said was that the actual return on equity in Ontario was 6.4 per cent in 2012,” he said. “It turns out the trial lawyers and Mr. Singh were off by about 300 per cent!” (continued.)
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What has been described as a ‘deal with the devil’ by some of Ontario’s auto insurance brokers – when the minority Liberal government needed NDP votes to pass their budget and avoid a non-confidence vote and election – there remains a sense of optimism in the industry that the governing Liberals are making a genuine effort to curb the costs of insurance, through the recently introduced anti-fraud measures and the expected amendments to streamline the mediation and arbitration process.
“The government is doing something, with its anti-fraud measures and the amendments to mediation/arbitration,” said Palumbo. “Yes, insurance companies aren’t perfect, but it is almost impossible to have a reasoned, fact-based discussion on how rates are set, or the product.”
It is a frustration borne out of companies striving to meet the new rates demanded by FSCO, and the public perception of insurers.
“We’re not looking for love here – we get it. People are skeptical about insurance companies, and motives and profits,” said Palumbo, “but the facts are the facts, and unfortunately they are inconvenient truths for the trial lawyers and Mr. Singh. And when we look at a day when rates are coming down, when you look at the companies doing all they can to bring rate relief to consumers, it is disappointing.”
