The first round of discounts as a result of the Ontario Government’s Cost and Rate Reduction Strategy are hitting car owner’s pockets. Average auto insurance rates have dropped 4.66 per cent so far this year, according to the Finance Services Commission of Ontario.
The Strategy is part of an agreed-upon deal between the NDP and Liberal provincial government. The NDP demanded the Liberals cut auto insurance premiums by 15 per cent, or risk losing their support for the proposed budget. As a result, Ontario drivers will enjoy an average discount of 15 per cent over the next few years, with a deadline of eight per cent this August, and the remaining discounts to occur next year.
It’s estimated that the 15 per cent discount will equal $225 in savings for drivers.
The FSCO has posted this chart, indicating which insurance companies are offering lower rates as part of the implementation:
What Does This Mean For Drivers?
It’s a great time to compare the market, as you could be in for a discount on your own rate. However, the discount is being rolled out as an average – not all drivers will see the same decrease in their premiums.
The discounts are made partly possible due to new fraud measures taken by the Ontario government, which are estimated to cost the province $2 billion a year.
Should The Discount Be Higher?
However, NDP MPP Jagmeet Singh says the measures are too little, too late. In an interview with Money Wise, he says there’s no need to roll the discount out in stages, as the government has already enjoyed a flush of cash from cutting insurance benefits in 2010.
“It’s a raw deal – we should have seen those savings right when the insurance industry realized they were getting an extra $2 billion in one year,” he says. “Once the legislation changed the benefits, that’s a change that’s going to exist forever. Once they realized those savings in the first year, they should have passed on the savings. That’s the government’s job.”
He challenges the claim that Ontario insurance companies take a yearly loss, and that the province’s loss ratio, which pits incoming premium payments with paid out claims, s the most profitable of all in Canada.
“(What) they’re doing is, they’re allowing an insurance company to factor in its national financial viability, so it’s factoring in their entire book of business nationally. That shouldn’t be the measure by which we gauge a company when we’re regulating them in Ontario, we should only look at what’s happening with that company in Ontario,” he says.