We’ve heard lots of media noise about Ontario’s new auto insurance reforms – more cost, less coverage.
But if you are interested in more light and less heat, consider 3 critical messages needing to receive some airplay:
1. Rapidly rising medical costs: Car insurance premiums are not just about repairing glass and metal. Almost half of all automobile insurance premiums relate to healthcare/disability coverages. Everyone knows healthcare costs are spiralling throughout the country – the value of injury claims resulting from vehicle collisions has risen 72% over the last 6 years in Ontario.
And the trend is rapidly getting worse. For every Accident Benefits premium dollar in Ontario to the end of June, insurers paid out $1.41 for medical therapy, home assistance, and lost wages. That is clearly unsustainable.
2. Cost-benefit analysis: There are over 100 licensed automobile insurance companies in Ontario. In a free-market economy, any mature sector with that level of competition has by nature squeezed inefficiencies out of the system. Simply put, competition washes excess costs out of product delivery.
If the price is not compatible with consumer expectations, then the “bells and whistles” of any product must be reduced or eliminated. Even with the September 1st changes, Ontario continues to have the broadest, most generous system of vehicle collision Accident Benefits in the world.
3. A compromise solution: Radical change to Ontario’s untenable system was in view as the government involved various stakeholders – including healthcare practitioners, consumers and the insurance industry – to provide input. Let’s call the reform what it is: a compromise. And nobody is happy with the result. Insurance defence lawyer Lee Samis recently summarized: “What we’ve got now is not what we want, and more importantly not what our customers want.”
But as of September 1st everybody has to live with this and make it work – at least for now.
Tags: Automobile, claims, coverage, damage, driving, economy, fraud, insurance, ontario, premium, rating, risk
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pl
September 29, 2010 at 1:04 pm
It is still pretty scarry, Hopefully with recent increased
auto rates , the dollar amount $1.41 will decrease . Insurance Companies will not survive increased amounts.what else can be done.?
SD
September 29, 2010 at 2:52 pm
The majority of consumers sure are not happy about the auto reform. Most are expecting a reduction in premium due to the message that the media has sent and instead they are getting a reduction in coverage and in most cases, an increase in premium.
HG
September 29, 2010 at 2:59 pm
Yes we survive the 1st month of the auto reform. We hope that the changes with help to reduce the amounts paid for injuries claim. If we can reduce the percentage paid out then and only then consumers may see a reduction in premium. Personnally I do not see the rates going down.
jp
September 29, 2010 at 4:37 pm
it will be interesting to see when the first change to the new auto reform takes place.
Donald
September 29, 2010 at 5:34 pm
If I read this blog correctly I pay more money but get less coverage, and the Government involved various stakeholders, and none of them got what they wanted? I guess that means that I am purchasing a product constructed from compromise after compromise. Did they even ask a doctor what an assessment would cost if I broke both of my legs in a car accident…somehow I don’t think $2,000 is going to cover it.
LR
October 6, 2010 at 10:13 am
It will be interesting to see what happens when the first claim takes place with the new auto reform and actually see what is paid out, especially with the new assessment amount and see if it will be challanged.