Expect “sustained negative press” as auto reform churns through the system, auto insurers cautioned

Ontario’s auto reforms probably won’t make their mark until the third quarter of 2010, insurance company executives said at a luncheon sponsored by the Conestoga Chapter of the Insurance Institute of Ontario.Due to the delay, the industry must now be prepared to endure “sustained negative press” for the better part of 2010, one observed. Maurice Tulloch, executive vice president and chief operating officer of Aviva Canada, said he didn’t expect to see the Ontario government’s proposed reforms to the Ontario auto product implemented until mid-2010 or 2010 Q3.The Ontario government introduced reforms to the auto product in November 2009, but many details are yet to be worked out. The government said it intends to enact its reforms in the summer of 2010.In the meantime, Ontario’s insurance regulator has approved an average rate increase of 6.2% in 2009 Q3 when weighted by market share. David Crozier, vice president of commercial insurance at The Economical Insurance Group, suggested more increases are likely to be on the way as insurers continue to reign in their expanding claims costs before the government’s proposed reforms kick in.  “The public, already enamoured with our industry, does not fundamentally understand how long it takes for changes to work through our system — 12, 18, 24 months and potentially longer,” Crozier said. “So they are going to be met with continuing rate increases despite the fact [that they will say to themselves]: ‘Wait a minute. Didn’t I just read in the paper this has been solved?’ “That’s going to be a challenge for all of us. If you marry this lack of awareness with a fundamental distrust or dislike that many have for us…you can understand that we have a recipe for sustained negative press. We have to do our best to work in that environment.”John Taylor, president of the Ontario Mutual Insurance Association, said the industry now has a new, major partner in the auto insurance business — the Ontario government. The industry should not be backing off now that the reforms have been announced, Taylor cautioned. He said insurers need to be conducting an “ongoing dialogue” with the government, particularly as the reforms are being implemented in 2010.