The Insurance Bureau of Canada (IBC) has launched a new campaign to help consumers understand their auto insurance policies and start a discussion on reforms.
“It’s all about public awareness,” said Ralph Palumbo, IBC’s VP for Ontario in a statement. “We want to promote awareness for Ontarians on what drives up their auto insurance costs, what goes into pricing their policies. Quite simply, claims costs drive premiums. Until we can get costs under control we will continue to have premiums that we all agree are too high.”
IBC says the average private passenger auto insurance premium is $1,534 per year in Ontario. In Alberta, it’s $1,051. In Newfoundland and Labrador, an annual premium averages $989 while in the Maritime provinces, it’s $800.
“Insurance premiums are driven by claims costs and right now costs have been driven through the roof in Ontario as a result of fraud and abuse in the system,” Palumbo said. “Recently, in the news we have seen cases of staged collisions, fraudulent private, for-profit health care clinics and others looking to capitalize on the rich benefits available to Ontario drivers. One criminal gang netted an estimated $25 million. This has to stop.”
Between 2006 and 2010, IBC said the number of collisions in Ontario dropped by 7 percent but the cost of no fault injury benefits rose by 118 percent. Or, as IBC stated, looking at it another way:
Let’s look at the numbers another way:
- There are 62,000 collision injuries in Ontario every year, of which most are minor – strains, sprains and whiplash.
- More than 8,600 health care facilities are enrolled in the provincial online billing system to provide services to these injury victims.
- And every month, these providers submit 27,000 treatment and assessment proposals to insurers.
- So if we do the math for a year, 62,000 injuries, which are mostly minor, are generating 324,000 treatment and assessment proposals on an annual basis.
- That’s 5.2 proposals per claimant.
In 2010, there were $9.4 billion in earned premiums of which $8.7 billion were paid out in claims. That’s 93 cents of every dollar. Factor in taxes, overhead and salaries and there was a loss of $1.87 billion in Ontario auto, IBC added.
IBC’s two-tiered campaign seeks to stimulate feedback from drivers and other stakeholder groups on how to bring down the cost of auto insurance premiums in the Ontario and to make it easier for consumers to understand their own insurance policies. A travelling mall display will highlight the cost of auto insurance fraud in the province. To demystify insurance, IBC will use TV and internet spots as well as billboards and a mail drop to clarify the auto insurance system in Ontario.