According to the Consumers Association of Canada, it sees private auto insurance as ‘one of the biggest rip-offs that Canadians face,’ arguing that coverage should be in the hands of the government.
Yesterday’s
Globe and Mail story examining why auto insurance is higher in Ontario compared to the rest of Canada quoted CAC President Bruce Cran as saying “there are some things that should be run by private industry, and there are others that should be in the hands of government. Auto insurance is one of them.”
The
Globe story cited the CAC as deeming private auto insurance “to be one of the biggest rip-offs that Canadian face,” as the consumers group had found after years of study that a properly run public insurance system was the best choice – as the excessive layers of oversight in private auto insurance was ultimately hurting the economy.
“Everything you buy, every last piece of bread you eat, is carried in a vehicle that has to be insured,” says Cran. “So we all pay, whether we have a car or not.”
Ontario’s auto insurance industry is made up of more than 100 private companies that are overseen by the Financial Services Commission of Ontario.
According to the
Globe article, in 2004 the CAC learned that private insurers had paid $290-million in secret commissions to insurance brokers who steered business their way. This practice had a direct impact on consumers – instead of hunting for the best price for their customers, brokers sold the policy that offered them the highest commission. (continued.)
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Pete Karageorgos, the director of consumer and industry relations for the
Insurance Bureau of Canada, characterizes the comments made by the CAC’s president as “misguided and misdirected,” ignoring the role that fraud plays in the cost of insurance in Ontario , and previous statements from the CAC criticizing the public system in British Columbia.
“We know fraud is an issue,” says Karageorgos, “but what is more concerning is you have an association like the CAC whose credibility I question personally when I see them issuing press releases being critical of ICBC (Insurance Corporation of British Columbia) and how the government uses the funds from British Columbia drivers, and the lack of accountability and transparency there."
Karageorgos does credit the CAC with being concerned about lower rates for consumers, “but I feel they are misguided and misdirected – or you don’t even know on a day-to-day basis which direction they are going,” he told Insurance Business. “I’ve read criticisms that they have leveled to government-run insurers, like ICBC. They want it both ways.”
The
Globe article did acknowledge that Ontario – Toronto in particular – faced a considerable amount of auto insurance fraud, which adversely affected premiums.
The article drew comparisons between Ontario rates and those in Alberta, showing Ontario rates to be 45 per cent more than in Alberta, which placed second in the nation for highest auto insurance rates.
It also compared the numbers that were collected for the Manitoba auto insurance plan’s annual report, which showed a 21-year-old male with a clean driving record would pay $1,332 to insure a four-year-old Chrysler minivan in Winnipeg.
In Calgary, that same driver would pay $3,022. In Toronto, the bill would be $8,069.
