Ontario’s two-year plan to reduce auto insurance rates by 15% across the province involves a number of changes and initiatives that will, working together, slowly create an overall drop in what Ontario drivers pay for their car insurance. Each of these initiatives is meant to be a long-term solution that will help to keep rates down for the future as well. Among the areas of focus are oversight of insurance-related industries in an effort to reduce fraud and new requirements for insurance companies.
Insurance Fraud Reduction
A large portion of the rate reduction plan focuses on bringing down the level of insurance fraud in Ontario. Some plans have already been put into action, while others are still being worked out. Among them are plans to oversee the industries that handle injuries and repairs from auto accidents to insure tighter control over costs. These plans follow on recommendations from the Ontario Anti-Fraud Task Force.
Licensing of Health Clinics. Medical clinics handling treatment of those injured in car accidents would be licensed to do so and be subject to stricter oversight. This would ensure that injury claims are being processed in accordance with the law and avoid the problem of falsified or inflated claims. The cost reduction would be passed on from the insurance companies to their customers over time.
Oversight of Towing Companies. Towing costs are currently very high in Ontario, adding to the high cost of claims for insurance companies. The plan would put stricter oversights on the towing industry that would help to control costs and also to cut down on fraud in this area as well.
Oversight of Collision Repair. Fraudulent claims including inflating of damage claims is a common part of insurance fraud problems. Stricter oversight of the collision repair companies who are billing insurance companies for their work would help to bring down the cost of claims and thus pass savings on to the consumer.
The Bottom Line: Reducing insurance fraud through these and other potential measures will mean insurance companies pay less on claims. That will save them money and give them the ability to pass on savings to their customers.
Requirements for Insurance Companies
The government also plans to enact a few plans to require insurance companies to continue to offer fair rates and discounts to their customers. They’re also looking at changing some definitions that could result in savings.
Required Re-filing of Rates. The plan will give the Financial Services Commission of Ontario the power to require insurance companies to re-file rates. This means that they will have to submit their rates for approval, ensuring that customers are being rated fairly and within the bounds of Ontario laws.
Requirement for Good Driver Discounts. The plan calls for insurance companies to continue to offer discounts to good drivers, ensuring that those who are driving safely and keeping a clean driving record will be rewarded with the rates they deserve.
Dispute Resolution Improvement. Disputed claims are a big cost to insurance companies, and among the recommendations the government is looking at is a plan to resolve disputes more swiftly and clear up the backlog of cases.
Potential Changes to Catastrophic Coverage. The government is looking at potential changes to the definition of catastrophic coverage, which could impact the amount insurance companies pay out on claims. Some changes have already been made in this area in recent years.
The government is also looking at a number of other possibilities to bring down the cost of auto insurance in Ontario; new reports are likely to have an impact on future legislation. The tracking of the changes and their impact on insurance rates will likely impact what other changes to the insurance industry are implemented in the coming years.
How Will These Changes Be Tracked?
The government plans to track the changes and the rate reductions to see how quickly and effectively the cost savings are being passed on to consumers. They are looking to see a 3-5% reduction by January of 2014, and to reach 8% by August of 2014. The full 15% reduction should be in place in two years.