By: Luke Jones, Published on April 6, 2017 03:24 PM, Last Update on April 11, 2017 12:09 PM
David McGown, senior vice-president of strategic initiatives for the Insurance Bureau of Canada (IBC), says the group is fully aware that the auto insurance market in Ontario is broken. Speaking at the Swiss Re Canada Insurance Outlook breakfast, McGown did offer a glimpse of hope for the future.
McGown and the IBC have been staunch critics of the market for car insurance in Ontario. The criticism has not been unfounded, with Ontario drivers paying comfortably more on average for their coverage than any other market. Speaking at the breakfast, the executive said the average auto insurance claim in Ontario is nearly $12,000.
While auto insurance is a major problem in Ontario, McGown says developments between insurance companies and the government are starting to bear fruit. Pay-as-you-go coverage and app-based vehicle registration are currently in development and could yield significant changes in the market. The province will use these models as part of its mandate to modernize the regulatory system for insurance.
“In Ontario, we think the system has clearly been broken,” he said. “Ontario consumers pay premiums at least 24% higher than anywhere else in the country. Insurers are often the ones blamed for rates and this has a dampening effect on competition and innovation.”
McGown points out that while Ontario is in the worst state, other provinces also have auto insurance systems that need fixing.
“In Alberta, in Newfoundland and Labrador, regulators in our industry have yet to find the right balance between consumer pricing and benefits. This has a negative effect on consumer satisfaction and on profitability,” McGown said.
“So as an industry, what do we do? Well, first we need to realize this needs to be a shared responsibility between insurers, governments and consumers. Then we can do the hard work, collaborating to find solutions together.”
“Let’s look at Ontario because this is how collaboration has unfolded here. Our industry is working closely with provincial governments to support its effort to modernize the regulatory system. We’re providing expertise, suggestions and detailed feedback,” McGown said.