Insurance Bureau of Canada (IBC) announced recently that auto insurance premiums in Ontario are down 15% since November 2003.
The average auto premium in the province is now $1,279, according to the latest industry-wide data. This figure is calculated by dividing total premiums paid by the number of insured vehicles.
“Clearly, free market, private competition is alive and well in Ontario,” said Mark Yakabuski, IBC vice-president, Federal Affairs & Ontario. “Auto insurance rates, as posted with the Financial Services Commission of Ontario, are down by more than 13.3%. The fact that premiums actually being paid are down 15% shows that drivers are shopping around and finding even lower premiums.”
In addition, insurance availability is reportedly improving.
This is demonstrated by the number of drivers insured through Facility Association (FA), the last-resort insurer for drivers who can’t find coverage in the regular market. FA population is reportedly way down -to 36,868 vehicles in June of this year from 226,108 in March 2004. In terms of market share, FA has moved from 3.8% of the market to just 0.6%.
Yakabuski added, “The declining population of Facility Association is also a very positive sign. More and more drivers are finding a home in the regular market, showing that insurers are aggressively competing for business.”
Yakabuski also stressed that lower premiums are just one benefit of a competitive insurance marketplace. The average claims pay-out in Ontario is $8,878. By contrast, the average claims pay-out in B.C., where the product is reportedly delivered by a government monopoly, is just $2,391. “Very simply, you get a lot more for your money in Ontario,” said Yakabuski.
Lower prices and increased competition in the Ontario auto insurance marketplace are the result of government reforms to the product in recent years.
These reforms reportedly reduced some of the exorbitant costs that had plagued the system, such as fraud and unnecessary expenses created by some legal representatives. At the same time, benefits paid to help accident victims return to health were expedited.
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