Few topics get Ontarians more riled up than that of high auto insurance premiums.
However, for insurance brokers, it is a cautioning prediction from Neil Weir, vice president of claims at Gore Mutual, which is likely to provide cause for concern.
“If you read the Marshall report that was recently released by the Ministry of Finance, it does suggest that a reduction of 40% from where premiums currently are, for Ontario drivers, is actually feasible and without a tremendous amount of change to the actual auto product,” Weir said, referencing the fact that Ontario drivers pay 40% more for auto insurance than the Canadian average.
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“What does that mean for us? It means 40% less gross written premiums for primary insurers and potentially it means 40% less commission income for brokers out there. To me that really suggests we, as insurers, and yourselves as brokers, need to look to other products, other risks.”
Weir made public his analysis at a panel at Gore Mutual’s Fast Forward conference.
The Ontario government has been steadily reforming auto insurance and reducing premium costs by fully authorizing digital proof of insurance, addressing third party liability and pricing under mounting public pressure.
Weir said he believes attempts at premium reductions thus far have been unsuccessful and that if a major reduction is made the product will change, contrary to the Marshall report’s findings.
“The Marshall report was speaking to procedural changes with the idea of removing third party participants, assessment centres and independent medical examinations. Limit the certain amount of compensation the lawyers will take out of the system,” Weir said.
“But 40% is a massive reduction in automobile costs when you really aren’t touching any of the physical damage costs which are trending 4-6% increases every year.”
Equating Ontario’s auto coverage to other provinces wasn’t a sound measurement, Weir said, because Ontarians get more for what they pay for.
“If you really want to aim for such a significant reduction, you really do have to look at the benefits,” he explained. “Because it’s not a matter of apples and apples when you compare the Ontario product and system. We’ve got a very litigious tort system combined with a very rich asset management system and I don’t think there’s another province that combines both.”
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