Ontario auto insurance rates dropped 4.66% on average since August, government says

Auto insurance rates in Ontario have dropped 4.66% on average since August 2013, Ontario’s Ministry of Finance said Wednesday.

Its announcement came a day after a news report citing unnamed sources that said rates had decreased 4% since the Liberal government announced plans for a 15% on average reduction within two years (by August 2015) in its 2013 budget.

Rate filings approved during the fourth quarter of 2013 declined on average by 3.98% and during the third quarter of 2013 by 0.68%, which together make up the average reduction announced Wednesday.

“Our government is working hard to ensure a fair and affordable auto insurance system for Ontario’s nine million drivers,” Charles Sousa, Ontario’s finance minister commented in a statement.

“The average decline in rate approvals since August is proof that our Cost and Rate Reduction Strategy is working. We are on track to meet our goal of an average eight per cent reduction by August 2014, and by continuing to fight fraud and reduce uncertainty in the system, we’re confident we’ll get there.”

The government said it will also propose legislative amendments in the spring session based on recommendations of the Dispute Resolution System Review. The final report from that review is due in February. 

“The government’s approach to reforms appears to be working and auto insurance rates are continuing to fall,” Ralph Palumbo, vice president for the Ontario region with the Insurance Bureau of Canada commented in a statement. “That’s good news for Ontario’s 9 million drivers.”

IBC noted that rates have dropped for a fourth consecutive quarter, and second year in a row. 

“Insurance companies are cutting rates and offering discounts to good, responsible drivers. That’s the direction we want rates to go,” Palumbo said   “The industry supports the government’s crack down on fraud, and its hard look into other cost reduction initiatives, including provincial oversight of the towing industry and collision repair shops. Some insurers are also looking at adopting new technologies like usage-based insurance, which monitors the way you drive, linking it to the price you pay.”

The announcement from the government is based on rate filings set and approved by the Financial Services Commission of Ontario quarterly, and not all companies were ordered to file new rates, IBC noted. Its latest report includes 32 companies that filed, and among he approved filings, the average decline roughly 6%, with the largest decline being 14%, IBC said. 

Claims costs in Ontario, however, are still much too high, Palumbo noted., and more will need to be done through collaboration with the insurance industry, drivers and government, to keep rates down.