When considering whether or not Ontario will experience further auto insurance reforms, it’s important to remember that the province has already seen a major sweeping reform package become law. The majority of these reforms influenced accident benefits that are covered in individual policies. Medical and rehabilitation costs could be increased, for instance, based around an individual consumer’s choice. On the surface, this sort of adjustment seems to be quite fair. It should have allowed individuals to have more control over the way that they bought insurance.
Insurance Bureau of Canada
However, as early as July 2011, there were claims that auto insurance rates were spiraling out of control. According to the Insurance Bureau of Canada’s Ontario Region, these claims were not founded. The General Insurance Statistical Agency and the Financial Services Commission of Ontario both produced data that suggested that auto insurance rates were trending at the rate of inflation as opposed to the previous allegation that they were uncontrollable. At the time, the Bank of Canada considered a 1-3% range sufficient to contain inflation rates.
The Insurance Bureau of Canada naturally has a lot of backing. Around 90% of all property and casualty insurance firms are represented among its body. This sort of discussion would suggest that further reforms are not necessary. In fact, this might suggest that the current policy is sustainable. However, not everyone is completely convinced that the previous reforms are so desirable.
Critics have suggested that the Insurance Act’s new provisions might have reduced coverage while costs did not decrease. Drivers initially called for a revision of the policy when rates climbed around 9% in 2009. The reforms were intended to stabilize the rates of auto insurance, but many people have said that reducing coverage was the method used to insure that stabilization occurred. Home care benefits have been cut from $72,000 to $36,000. Standard policies now provide $50,000 in medical benefits. Before the reforms took place, they were offering $100,000.
Cost of Fraud
Some people who criticize the policy have also remarked that insurance companies have had a lot to gain from the reforms. Others have brought up that the Auto Insurance Anti-Fraud Task Force hasn’t cut back on fraud to the degree that motorists were promised. When considering the cost of fraud in Ontario, estimates place the cost of fraud at over $1 billion each year. This can cause serious damage to the insurance market. Naturally, in many cases throughout history, insurance rates are raised as a way of making back profits that are lost through fraudulent activity. This trend might suggest that rates could continue to climb if something isn’t done about fraud.
Additional Benefits A Waste?
Technically, there are additional benefits accessible to motorists in Ontario who wish to pay for them. On the other hand, critics bring up the fact that many people do not purchase these advanced options. According to some reports, since the reforms were enacted, less than 2% of drivers in Ontario have actually chosen to pay for the extra benefits that were made available. While it might be assumed that many motorists simply don’t choose to purchase them, it isn’t difficult to believe that there are those who couldn’t afford them. Some people might feel this is a sad state of affairs, since the reforms were supposed to make things fair for consumers.
There are some people who will clamor for the old policies to be brought back, and the reforms to be stricken down. Other people will cling steadfast to them. Whether or not additional reforms will go through in 2012 might actually depend on the results of future elections. Politicians had initially hoped that the reforms would be a major election issue, but the Liberal Party of Ontario was elected once again. The Insurance Bureau of Canada notably congratulated their reelection.
Do Reforms Work?
Opponents of future reform might come from both sides of the aisle. There are those who will unsurprisingly suggest that the reforms are working well. On the other hand, there are critics who might feel that the laws are too much in favor of insurance companies and do little to protect the consumers. Others might complain that it represents legislative oversight on behalf of the Ontario legislature. Either way, if these critics get together, there might be additional reforms in 2012. These additional reforms could restore parts of the older policy, and increase benefits that drivers have lost.
There is also the possibility that future reforms could focus heavily on fraud, since fraudulent activity costs insurance companies so much money. If companies were able to save money that otherwise would be spent on fraudulent claims, then there is a chance that these savings would be passed on to the consumer. Regardless of what future reform efforts do, there is sure to be a political showdown between various factions that represent both insurance companies and the government. One might hope that motorists won’t be forgotten when this showdown happens.
Insurance fraud has cost companies millions of dollars every year. Regardless if a future reform will be in effect, it would be wise to compare quotes online at www.kanetix.ca to get the best possible deal on your insurance. If a reform does come, you should prepare to cut down some of your expenses by getting a low car insurance rate.
Incoming search terms:
- cost of fraud
- home insurance fraud
