Ontario Government rate reduction target lacks identified cost savings to support promised decreases

OTTAWA, Aug. 23, 2013 /CNW/ - Today, the Ontario government announced that it will be mandating an 8% reduction in auto premiums within one year and a further 7% reduction in the second year.

While the Insurance Brokers Association of Ontario (IBAO) supports lower premiums on behalf of the six million policy holder's their brokers represent province-wide, the association is reminding the Ontario government that these changes need to be achieved in a responsible fashion. Otherwise, insurers may exit certain segments of the market which would have unintended consequences for consumers.

Last fall, the Ontario Anti-Fraud Task Force presented 38 recommendations in their report. The key recommendations still to be implemented include the licensing of health clinics and tow truck regulation. IBAO believes that when these recommendations are implemented, rate reductions that consumers deserve will follow.

"Our expectation of today's announcement was that we would see progress made in identified cost reductions resulting from fraud but what we heard were more promises of change and not enough action," said IBAO CEO Randy Carroll. "There is an inherent risk that the result of today's announcement could result in future availability and affordability concerns for consumers in this province. Regardless of the type of business that you are running, you cannot reduce revenue without implementing cost reduction measures and expect to succeed, it just doesn't work."

The Anti-Fraud Task Force report estimated that fraud cost Ontario drivers as much as $1.6 billion in 2010. "The affordability of auto insurance for our customers is of prime concern to the IBAO," added Carroll. "IBAO is urging the Ontario government to enact the Anti-Fraud task force recommendations and implement them as soon as possible."

The Insurance Brokers Association of Ontario (IBAO) is a 'not for profit' association that represents and serves the interests of over 12,000 independent Property & Casualty Insurance Brokers in the Province of Ontario. For information about IBAO, visit www.ibao.org or www.ibao.org/news to receive timely news and information updates. You can also follow IBAO on Twitter or join the IBAO Facebook Fan Page.

SOURCE: Insurance Brokers Association of Ontario (IBAO)

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