Ontario drivers overcharged $3 billion on insurance

[tay]

Ontario drivers were overcharged $3 billion over a decade by highly profitable insurance firms while accident benefits were slashed, a personal injury lawyers' group says.


The insurance industry denies the allegation.



The average family should have paid $100 to $120 less for auto insurance in 2013, a study for the Ontario Trial Lawyers Association shows.



While the auto insurance industry, as a group, has reported very weak profits, individual companies have earned far more than the 11 per cent return on equity allowed by the Ontario government, the analysis by two York University professors found.



Meanwhile, accidents benefits have been repeatedly cut by government, the lawyers’ association president Steve Rastin told a press conference in Toronto.



“Families in the province are paying more and getting less,” Rastin said.



The lawyers group wants the Ontario auditor general to investigate.



The report by professors Fred Lazar and Eli Prisman says Ontario drivers paid about $840 million too much in 2013 alone.






more




Ontario drivers overcharged $3 billion on insurance, study says | Toronto Star

 

[mentalfloss]

I'd believe it.

The problem is with evaluating the premium and not Accident Benefits though as Ontario still has the highest coverage rates in the country.

 

[Tecumsehsbones]

I see a couple of potential problems here. One, as the article notes, is slack enforcement. The other is the limit on "profits" that an insurance company is allowed to take. The problem there is that Picassos for the office, luxury furniture, executive condos, and expense accounts are all "business expenses" and not part of profits.

Some folk might claim that the government has no business regulating what companies charge and what profits they make. But I figure that when the government mandates insurance, it should have a say in what insurance companies do. That could solve the second problem. Slack enforcement? Well, this lawsuit might could improve the first problem.

 

[mentalfloss]

According to this article, the government's previous study to determine regulations on premiums underestimated the profitability of insurance companies. This new study suggests a different methodology.

Lazar found the KMPG study which the FSCO used to set a return on premiums rate for the industry was flawed, as it underestimated industry profitability.

The FSCO sets a return on premium benchmark of six per cent in the auto industry. That is the equivalent of a 12 per cent return on equity, the study said.

Lazar recommends return on equity as a more appropriate tool to measure industry profitability. He says Ontario should set return on equity of 5.7 per cent, about half the level it is now.

http://www.cbc.ca/m/news/business/o...or-auto-insurance-a-year-study-says-1.3028074

 

[Tecumsehsbones]

According to this article, the government's previous study to determine regulations on premiums underestimated the profitability of insurance companies. This new study suggests a different methodology.

Lazar found the KMPG study which the FSCO used to set a return on premiums rate for the industry was flawed, as it underestimated industry profitability.

The FSCO sets a return on premium benchmark of six per cent in the auto industry. That is the equivalent of a 12 per cent return on equity, the study said.

Lazar recommends return on equity as a more appropriate tool to measure industry profitability. He says Ontario should set return on equity of 5.7 per cent, about half the level it is now.

http://www.cbc.ca/m/news/business/o...or-auto-insurance-a-year-study-says-1.3028074

I pretty much agree with that. I've always thought that industries whose profits are directly or indirectly guaranteed by the government should be limited to 4-7% profit. The big 20%, 30%, 50% profits are for those who take the risk of losing it all.

 

[captain morgan]

Has the Ontario gvt agreed to guarantee (directly or indirectly) the industry?

The only insurance co.s that I am familiar with that would have such an arrangement would be gvt controlled insurers like in BC and Manitoba

 

[Tecumsehsbones]

Has the Ontario gvt agreed to guarantee (directly or indirectly) the industry?

Yep. By requiring insurance.

 

[Spade]

State (government) insurance as Saskatchewan and BC implemented results in marked savings for the insured.

 

[captain morgan]

Yep. By requiring insurance.

Law requires that I have a driver's license... Are the local car washes now indirectly supported by gvt?

Hell, any company/individual in business is required to have a business license and or formal entity in place to do business, are they also constrained from the profit levels they can achieve?

 

[Spade]

No, no licence is required for the pedestrian poster.

 

[captain morgan]

It was only a matter of time before gubmint gouged that

 

[Spade]

Perhaps, but after a good night's sleep, I even love paying taxes.

 

[captain morgan]

Fantastic... Schedule an afternoon nap and you'll be in fine form to pay mine to.

 

[WLDB]

I still havent paid a penny.

 

[taxslave]

State (government) insurance as Saskatchewan and BC implemented results in marked savings for the insured.

Not for everyone. Certainly for bad drivers and new drivers who get something of a break paid for by good drivers. This is maintained by forcing everyone to buy government insurance. To go along with this they)ICBC) also dictate rates that body shops can charge. Even right down to how the washrooms must look.

 

[tay]

Auto insurance rates are down by an average of just under seven per cent in Ontario, much less than the 15 per cent reduction promised by Finance Minister Charles Sousa two years ago.

The latest figures from the Financial Services Commission of Ontario, released Thursday, show rates fell half a point in the quarter ended Sept. 30, to 6.96 per cent for the province’s 9.4 million drivers.

Sousa took credit for the drop, saying reforms to benefits, anti-fraud measures and mandatory discounts for motorists with winter tires have helped cut costs for drivers.

But he acknowledged “there is more work to be done.”

Critics said that line is wearing thin given that the Liberals pledged the 15 per cent cut to win NDP support of their 2013 budget during the minority government years.

“It really comes down to this — the Liberals are not committed to making this a priority,” said New Democrat MPP Jagmeet Singh

“They’re not hesitating to reduce costs for insurance companies and reducing benefits . . . they’re just not tying them together with rate reductions.”

The Insurance Bureau of Canada said it’s “good news” that auto premiums have stabilized and declined.

“We continue to work on solutions aimed at bringing down the cost of premiums for Ontario's drivers,” spokesman Steve Kee told the Star.

He called on insurers to use more “efficient practices that help lower costs and enable faster claim payments.”

The Financial Services Commission of Ontario, which handles auto insurance rate filings, cautioned that drivers may experience rate changes that are higher or lower than the average.

Rates can depend on a number of factors, such as the type of vehicle a person drives, where they live, their accident history and whether or not they drive to work.

Ontario car insurance rates drop, but far less than promised | Toronto Star

 

[MHz]

Raise the speed limit until it balances out.

 

[Ludlow]

Ontario drivers were overcharged $3 billion over a decade by highly profitable insurance firms while accident benefits were slashed, a personal injury lawyers' group says.


The insurance industry denies the allegation.



The average family should have paid $100 to $120 less for auto insurance in 2013, a study for the Ontario Trial Lawyers Association shows.



While the auto insurance industry, as a group, has reported very weak profits, individual companies have earned far more than the 11 per cent return on equity allowed by the Ontario government, the analysis by two York University professors found.



Meanwhile, accidents benefits have been repeatedly cut by government, the lawyers’ association president Steve Rastin told a press conference in Toronto.



“Families in the province are paying more and getting less,” Rastin said.



The lawyers group wants the Ontario auditor general to investigate.



The report by professors Fred Lazar and Eli Prisman says Ontario drivers paid about $840 million too much in 2013 alone.






more




Ontario drivers overcharged $3 billion on insurance, study says | Toronto Star

yeah that's shocking

 

[Jinentonix]

yeah that's shocking

Not for those of us who live in Ontario and have been paying attention since at least 2005

 

[skookumchuck]

State (government) insurance as Saskatchewan and BC implemented results in marked savings for the insured.

Really? Then why when i moved from Alberta back to BC in 1989 did i pay double the same level of insurance rate for the same vehicles? I had zero tickets or claims.