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Auto insurance reductions slow in coming; Province cites delay in processing; may take a year for new rates to kick in
The Ontario government is defending a delay in cutting auto insurance rates, blaming an administrative backlog in processing insurance company rate filings.
The Liberals said yesterday all new rates will be approved by July 15 -- three months after the April 15 date they initially set for lower rates to take effect.
"It will take some time for people to see those, but already as of April 15 people are seeing decreases in their rates, and we're continuing to work to bring in other reforms so we can continue to see rates go down," said Diane Flanagan, spokeswoman for Finance Minister Greg Sorbara, who is on vacation.
When the Ontario government was sworn in last Oct. 23, Premier Dalton McGuinty immediately froze insurance rates for 90 days, promising that rates would fall on average by 10 per cent when insurers filed new rates on Jan. 23 as the government required.
But that was the first time all of the province's 61 insurance companies filed rate changes at once, which resulted in a mass of paperwork, and many of the filings were complex, Flanagan said.
"Some of the filings were more complicated than the Financial Services Commission of Ontario expected," she said.
More staff were hired through an actuarial firm to process the documents, Flanagan added.
Rate decreases averaging about 10 per cent were approved April 15 by the government for firms representing 55 per cent of Ontario's auto insurance market.
However, the remaining 45 per cent of the market won't get approval to drop rates until July 15. Approval must be granted before customers of those companies see rate decreases, and only when they get their renewals.
Mark Yakabuski, Ontario vice-president of the Insurance Bureau of Canada, said most insurers have already begun to factor in those lower rates as they send out renewals.
"Those approvals, in most cases, have already taken place," he said. "The quarterly publication of new rates that have been approved in the last quarter won't come out until July 15, but many of those will already be in effect."
Yakabuski said that in November, the average auto insurance premium was $1,488, but that fell to $1,389 by April -- a decline of close to seven per cent.
The reforms have also led to rising competition in the auto insurance market, meaning more options and lower rates for consumers, he said.
However, not all consumers will see lower rates. Some rate hikes were already approved last September by the previous Tory government, and any rate cuts would be applied to those earlier increases, Flanagan said.
"People are very frustrated," said Mark Arsenault, director of public and government affairs at the Canadian Automobile Association.
"What's happening is some people might not see a rate decrease for a year or longer period depending on when the company's decrease was approved and when they submitted for their insurance renewal."
A report yesterday by the London Free Press said that many motorists will have to wait until the end of October to see decreases -- a delay in savings of about $575 million, according to the newspaper's calculations.
New Democrat finance critic Michael Prue said the additional delays only hurt drivers who already are paying too much for auto insurance.
"The promises were unrealistic to begin with," he said.
"There was no way they could effect that kind of reduction in the time frames they were talking about. To compound that, they did not hire sufficient staff to process the applications."
Depending on when people renew, it could be next summer before some people see the promised decrease, Prue said.


Auto insurance reductions slow in coming; Province cites delay in processing; may take a year for new rates to kick in
The Ontario government is defending a delay in cutting auto insurance rates, blaming an administrative backlog in processing insurance company rate filings.
The Liberals said yesterday all new rates will be approved by July 15 -- three months after the April 15 date they initially set for lower rates to take effect.
"It will take some time for people to see those, but already as of April 15 people are seeing decreases in their rates, and we're continuing to work to bring in other reforms so we can continue to see rates go down," said Diane Flanagan, spokeswoman for Finance Minister Greg Sorbara, who is on vacation.
When the Ontario government was sworn in last Oct. 23, Premier Dalton McGuinty immediately froze insurance rates for 90 days, promising that rates would fall on average by 10 per cent when insurers filed new rates on Jan. 23 as the government required.
But that was the first time all of the province's 61 insurance companies filed rate changes at once, which resulted in a mass of paperwork, and many of the filings were complex, Flanagan said.
"Some of the filings were more complicated than the Financial Services Commission of Ontario expected," she said.
More staff were hired through an actuarial firm to process the documents, Flanagan added.
Rate decreases averaging about 10 per cent were approved April 15 by the government for firms representing 55 per cent of Ontario's auto insurance market.
However, the remaining 45 per cent of the market won't get approval to drop rates until July 15. Approval must be granted before customers of those companies see rate decreases, and only when they get their renewals.
Mark Yakabuski, Ontario vice-president of the Insurance Bureau of Canada, said most insurers have already begun to factor in those lower rates as they send out renewals.
"Those approvals, in most cases, have already taken place," he said. "The quarterly publication of new rates that have been approved in the last quarter won't come out until July 15, but many of those will already be in effect."
Yakabuski said that in November, the average auto insurance premium was $1,488, but that fell to $1,389 by April -- a decline of close to seven per cent.
The reforms have also led to rising competition in the auto insurance market, meaning more options and lower rates for consumers, he said.
However, not all consumers will see lower rates. Some rate hikes were already approved last September by the previous Tory government, and any rate cuts would be applied to those earlier increases, Flanagan said.
"People are very frustrated," said Mark Arsenault, director of public and government affairs at the Canadian Automobile Association.
"What's happening is some people might not see a rate decrease for a year or longer period depending on when the company's decrease was approved and when they submitted for their insurance renewal."
A report yesterday by the London Free Press said that many motorists will have to wait until the end of October to see decreases -- a delay in savings of about $575 million, according to the newspaper's calculations.
New Democrat finance critic Michael Prue said the additional delays only hurt drivers who already are paying too much for auto insurance.
"The promises were unrealistic to begin with," he said.
"There was no way they could effect that kind of reduction in the time frames they were talking about. To compound that, they did not hire sufficient staff to process the applications."
Depending on when people renew, it could be next summer before some people see the promised decrease, Prue said.


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