NDP Raise The Profile Of Auto Insurance As Ontario Gets Closer To An Election

At the Ontario legislature, Wednesday was set aside as Opposition Day which is a day the opposition parties are allowed to set the agenda.  Not surprising given the attention it has received, auto insurance was placed on the agenda.  Jagmeet Singh, MPP for Mississauga–Brampton South, on behalf of the NDP introduced a motion that FSCO mandate a 15% reduction in auto insurance premiums within the next 12 months.

The Liberal minority government supported this non-binding motion and perhaps not coincidentally on the same day the NDP voted in favour of the Throne Speech and Bill 33 - Supply Act, 2013.  Both votes were critical to the survival of the government.

The basis for the NDP motion is that according to data from the General Insurance Statistical Agency (GISA), the insurance industry's benefit costs dropped by $2 billion following the 2010 auto insurance reforms without any corresponding reduction in premiums.  The NDP contend that there is capacity in the system to drop rates.  In addition, the NDP note that a study was conducted by FSCO on profits in the industry following recommendations made by the Auditor General in 2011. That study has not been released and the NDP is concerned that profits in the industry are too high which is contributing to higher premiums paid by drivers.

The industry counters that rates are high because of fraud in the system and the mediation backlog at FSCO.  They would support rate reductions if both these issues were addressed as well as a number of other changes to the system.

The numbers do not lie.  There was a drastic reduction in benefit costs following the 2010 reforms.  Those reforms targeted abuse and fraud in the system.  So although fraud is a problem in the auto insurance system (as it is with every insurance system) it is likely not the problem is was prior to 2010.  The industry contends that the fraud costs the system $1.6 billion a year although they have not substantiated that figure post 2010 reforms.

So there probably is capacity to lower premiums although 15% may not be the right number.  Prior to the 2010 reforms, rates in the province were inadequate and many companies were carrying underwriting losses.  FSCO also has a statutory requirement to ensure that rates are adequate and therefore cannot approve rates that would create solvency problems for an insurer.

But the bottom line is that this is all political posturing leading up to provincial election expected within the next 12 months.  The government's public commitment to reduce premiums by 15% over the next 12 months could be interrupted by the election.  Whether it ever happens is very much up in the air.  However, auto insurance will become an election issue unless the government addresses the proposed premium reduction before the writ is dropped.  Auto insurance premiums are not paid to the government so a premium reduction does not impact on the provincial budget.  The government's only concern will have to be any reductions do not impact on solvency and the availability of insurance.

Insurance News - Wednesday, March 27, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, March 27, 2013:

• According to the Star, Liberals will support NDP call for 15% auto insurance cut.  No plan on how rates will be cut but this is a no brainer for the government.  Premium reductions won't be funded by the government.
• According to Finance Minister Charles Sousa, Ontario motorists may be allowed to pay an extra fee to drive solo in HOV lanes.  This must be part of the Liberals' plan to fund transit expansion.
• A new slate of maximum fees and disbursements payable for services, activities or functions under Nova Scotia’s Automobile Insurance Diagnostic and Treatment Protocols Regulations will take effect on April 1.  Yes fees are lower than those in Ontario.
• Inflation surges most in 20 years as gas prices spike.  February rise in CPI was 1.2% and the annual rate was 1.4%.  This is not expected to be a trend. 
• OnlineAutoInsurance.com study on territorial rating suggests that wealthier, less-diverse areas of New Jersey tend to see lower auto insurance premium.

Insurance News - Tuesday, March 26, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, March 26, 2013:

• On April 1, Chinese medicine practitioners and acupuncturists will have to be licensed in Ontario. This also means they meet they SABS definition of "regulated health professional" and will be able to complete treatment plans.
• Auto insurance and automated vehicles: So who is the consumer? 
• Keeping to the same theme: Your car may be invading your privacy. 
• Montana panel considers ending unisex insurance rates - this would be a reversal of a current trend on prohibiting rating based on gender.
• New Yorkers are calling their state lawmakers’ offices to blow the whistle on neighbours who are illegally registering their cars out of state to save money on auto insurance.
• You know you're ultra-rich when you hire fake ambulances to drive you through traffic.

Insurance News - Saturday, March 23, 2013:

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Saturday, March 23, 2013:

• Insurance Research Council online study finds that 24% of Americans think its alright to pad insurance claims a significant decline from past studies.
• Stolen car rate plummets in Massachusetts through the use of anti-theft devices.  It seems transponder keys, immobilizing devices and vehicle tracking systems things actually work.
• Florida files to block injunction of PIP reforms. It appears that Florida auto insurance reforms may be off the rails as opponents win a key victory in court.
• Alaska Bill on proof of insurance via cell phone advances past House Transportation Committee. This innovation appears to be catching on.
• Montana lawmakers vote to allow salvage of roadkill.  This doesn't sound like such a good idea to me.

States With the Highest Auto Insurance Rates

According to a new analysis from Insure.com, an insurance rate comparison site, the highest average annual auto insurance premiums are in Louisiana ($2,699), then Michigan is next ($2,520), followed by Georgia ($2,155). Below is the top ten ranked states.

Rank	State	Avg. annual premium
1	Louisiana	$  2,699
2	Michigan	$  2,520
3	Georgia	$  2,155
4	Oklahoma	$  2,074
5	Washington, D.C.	$  2,006
6	Montana	$  1,914
7	California	$  1,819
8	West Virginia	$  1,816
9	Rhode Island	$  1,735
10	Kentucky	$  1,725

No-fault has often been the blamed for high premiums.  Between 1971 and 1976, two dozen states adopted no-fault auto insurance.  Many states did grapple with rising rates under no-fault as well as strong opposition from stakeholders.  Only a dozen no-fault states remain -- Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania and Utah.  Interestingly, only Michigan and Kentucky are in the top 10 and it is commonly accepted that Michigan's unlimited medical coverage is the real culprit there.

The no-fault states you most hear about with respect to fraud and abuse besides Michigan are New Jersey (ranked 12th), Minnesota (ranked 27th), New York (ranked 33rd) and Florida (ranked 34th).  In fact, 7 no-fault states have average premiums below the U.S. national average of $1,510.  So no-fault can contribute to high rates but it is not the most common factor.

So what is?  Well taking a look at #1 on the list Louisiana, compared to the rest of the country, Louisiana drivers who get in accidents file more bodily injury claims than drivers in other states.  In addition, a greater portion of people filing insurance claims hire attorneys and lawsuits involving claims under $50,000 go before judges instead of juries. Some observers say elected judges are more likely to side with local people than insurance companies.  Finally, there is a high proportion of uninsured drivers on the road.


Wild weather and uninsured drivers keep rates high in Oklahoma. Hailstorms routinely pummel thousands of cars in a few moments, and their owners face decisions over whether to wait for the next time or file a claim -- if they have coverage, that is. Nearly one in four Oklahoma drivers is uninsured, the second-highest rate in the country.

In each state, the conditions that lead to higher rates end up being quite different - it could  be high comprehensive claims, a large number of uninsured drivers, large number of fraud claims, high collision and claim rates or a generous compensation system.

Insurance News - Wednesday, March 20, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, March 20, 2013:

• Study suggests long-haul truckers consuming caffeine to stay awake reduced the likelihood of crashing by 63 percent.
• Lawyer pleads guilty in $279 million New York no-fault auto insurance fraud case.
• Insurance Industry invites consumers to Vaughan Mills to provide feedback on the Ontario auto insurance system.
• Justice of the peace dismisses 68 driving charges after 71-second wait for prosecutor for a prosecutor to show up.
• Ontario is planning to expand the number of road violations subject to a denial of license plate renewal including driving without insurance.
• Nova Scotia Court of Appeal upholds finding of minor injury, limiting plaintiff’s general damages to $2,500.

Insurance News - Friday, March 15, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, March 15, 2013:

• Car insurance won’t kick-start election.  I would agree, all the public is angry about rates it's not a big enough issue to run a campaign on and unions have also expressed that concern. But you never know.
• Desjardins General Insurance posted net income of $185.9 million in 2012 compared to $128.2 million in 2011, a 45% increase. Return on equity (ROE) was 20.9%, up from 17.4% in 2011.
• Florida governor fears that Canadians stayed away due to driving permit fiasco, he indicated the law is in the process of being removed from the books.
• NICB is concerned that staged accidents targeting big rigs could turn deadly.
• A bill that sets the legal limit to driving "stoned" (5 nanograms of active THC per milliliter of blood) was passed by the Colorado House Judiciary Committee.

Insurance News - Wednesday, March 13, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, March 13, 2013:

• FSCO seems to be in the news a lot lately.  First the NDP asking about a study on the ROE benchmark used to review rate filings, then the PCs are proposing a file and use rate filing system for Ontario and of course the Provincial Auditor is due for a follow up audit this summer.
• Requiring accredited medical experts to examine whiplash claims part of U.K. insurers' proposals.  This sounds a lot like a DAC assessment.
• Only 32% of American driver understand their auto insurance coverages (only 27% of men).
• NDP is pushing for the province to release what it claims is a government-commissioned report on insurance industry profits. 
• The Progressive Conservative finance critic has come out supporting file-and-use rate approval system. 
• That awkward moment when your DUI mug shot appears next to your firm’s DUI defense ad.
• What's behind the high costs of Michigan auto insurance rates? - theft, fraud, and uninsured motorists.
• Ontario auditor general will revisit FSCO this summer regarding high premiums.

Insurance News - Monday, March 11, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, March 11, 2013:

• New study says bans on texting while driving probably aren't having much impact. Drivers are still texting despite the bans.
• Daylight savings time which began this week is linked to a rise in auto accidents.
• I'm sure it's not the first time but New York man charged with DUI while riding on a stolen lawnmower. 
• How Google cars could change the car-buying game. 
• A Slurpee brain freeze was blamed for this five car crash in Texas, how is that for a distracted driver?
• Which technologies are insureds most willing to adopt for lower auto insurance premium?
•  This guy crashed his Ferrari the day he bought it, and it was caught on video:

Insurance News - Thursday, March 7, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, March 7, 2013:

• Another U.S. state, in this case Arkansas, approves use of electronic proof of auto insurance coverage. 
• Web-connected cars bring privacy concerns who should get access to all the data?
• New drivers across the GTA are entrusting their training to unlicensed driving schools.
• Isn't this exactly what Toronto drivers need?: Volvo Debuts Cyclist Detection With Full Auto Brake.
• No teacher of the year candidate: Henry Carr teacher clocked doing 146 km/h on Hwy. 401 with 12 students in van.
• New Forum Research poll shows Wynne’s Liberals would win 53 seats, Hudak's Tories would win 36 seats and Horwath's NDP would win 18 seats.
• Why Premier Wynne should be calling an election sooner rather than later, before the honeymoon is over.
• NDP has introduced a bill that would prohibit an Ontario premier from proroguing the Legislature without the approval of the members. Not a bad idea but it would only impact minority governments.
• Ontario Conservatives continues push to let private insurers compete with workers' compensation program.

Insurance News - Tuesday, March 5, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, March 5, 2013:

• Ohio to raise minimum car insurance coverage for first time since 1969 but still well below the Ontario $200,000 minimum for third party liability coverage.
• Ontario appeal court upholds decision in Zefferino v. Meloche Monnex, regarding whether the insurer offered the insured optional statutory accident benefits.
• Fallout from Arch Insurance withdrawal: IBC surveys carriers on market for taxi insurance in Ontario.
• A Centre for Addiction and Mental Health study indicates Canadians drink more than 50% above global average with more binging.
• Legal reprieve gives quadriplegic man a second chance and auto insurance benefits.

Would The NDP Really Trigger An Election Over Insurance Rates?

Andrea Horwath grabbed headlines last week when she threatened to trigger an election if the Liberal government does not provide Ontario drivers with a 15% cut in the auto insurance rates.  So would the NDP leader actually go through with her threat?

Maybe.

On the surface it doesn't seem to make a lot of sense that the NDP would trigger an election over auto insurance premiums.  The promised 15% reduction would translate to $270.00 annually or $22.50 monthly for a driver that was paying $1,800 in annual premiums.  It seems hardly worth triggering an election that will cost taxpayers approximately $100 million for these types of savings.

So why would she consider going through with her threat?

Well as long as Tim Hudak continues to carve out the political right for his party, the Liberals and NDP will be battling for voters on the left and centre.  Premier Wynne has already made some inroads at the expense of the NDP by making peace with teachers in the province.  A recent Forum Research poll suggests that the NDP support may have peaked and has begun to drop. So strategically a spring election may be something that the NDP may now want.

The NDP would not be campaigning solely on their commitment to cut auto insurance rates.  They have also called for $30 million to eliminate homecare waiting lists, a guarantee that no seniors would have to wait more than five days for homecare, closing a $1.3 billion in corporate tax loopholes and spending $200 million to create jobs for youth. 

It is likely that pocketbook issues will be the focus of the next election campaign in Ontario.  Reducing auto insurance premiums puts money back in the pockets of voters without dipping into provincial tax revenue.  It comes out of the pockets of insurance companies.  There is some political appeal to making promises that cost the government nothing.

The NDP suggest that $2 billion was saved by the industry following the 2010 reforms but with no corresponding rate reductions.  The industry cites other issues such as fraud, uncertainty over the sustainability of the 2010 reforms and rising third party liability claims as the reasons why premiums have remained high in Ontario. 

The Liberal government has stated that addressing fraud is the most effective way of reducing costs in the system and passing saving on to consumers.  The recent Ontario Throne Speech included a commitment to implement the recommendations of the Auto Insurance Auto-Fraud Task Force and work to reduce auto insurance premiums.

How this will play out will become more apparent after the Wynne government presents its budget to the Legislature later this spring.


see news video here.

Auto Insurance Scams Caught on Dash Cameras

March is Fraud Prevention Month so here are some videos on the subject of fraud.










 

Insurance News - Friday, March 1, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, March 1, 2013:

• IBC met with the NDP today to discuss auto insurance premiums and initiatives that can reduce rates including implementing anti-fraud measures, implementing reforms to FSCO DR system and revising the catastrophic impairment definition.
• Andrea Horwath says she had a productive meeting with industry leaders but warns of election if auto insurance premiums aren’t cut.
• Auto insurance battle under way in the North Carolina legislature as insurers look to opt out of rate making process administered by their Rate Bureau.
• Check out Shepstone v. Cook, an Ontario Superior Court decision dealing with the verbal threshold. The Court ruled that shoulder & low back pain was not a permanent serious impairment.