Insurance Bureau of Canada responds to OTLA study on auto insurance costs in Ontario
Published: October 22, 2015
Updated: July 24, 2018
Author: Luke Jones
CATEGORY: Car Insurance
The Insurance Bureau of Canada has hit back at the recent Ontario Trial Lawyers Association (OTLA) study that showed consumers in Ontario are overpaying for their auto insurance coverage. The IBC issued a press release criticizing the study and saying the resulting paper does not present the full picture.
Ralph Palumbo, a spokesman for IBC, said "This trial lawyer study isn't fair, it isn't serious, and it isn't factual."
"This trial lawyers' study is misleading Ontario consumers. It is not an academic study. There are a number of factors contributing to the cost of auto insurance, including not only distracted driving and fraud – but also the exorbitant fees that trial lawyers are themselves demanding of innocent accident victims," said Ralph Palumbo, a spokesman for Insurance Bureau of Canada (IBC).
"We are committed to bringing down the cost of premiums for Ontario's drivers," Palumbo added. "The insurance industry is working closely with the Ontario government to implement their latest reforms, which will help return more money to Ontario consumers. And we'll continue to look for more ways to ensure that Ontarians have affordable auto insurance."
The OTLA recently updated a study carried out by York University Schulich School of Business Professors Fred Lazar and Eli Prisman and revealed that Ontarians paid a combined $704 million more than they should have for auto insurance in 2014. In 2013 the figure stood at $840 million, meaning motorists in Canada’s most populated province have paid $1.5 billion in unnecessary premium costs to insurance companies in the last two years alone.
The Insurance Bureau of Canada is largely dismissing the study and says that the OTLA made plenty of omissions to paint an inaccurate picture. For example, the IBC’s press release reveals that the study did not take into account some 25 per cent of Ontario auto insurance providers, while personal injury lawyer’s contingency charges are also not considered; these can be high as 40 per cent says the Bureau.
Admittedly, it is difficult to decide which side of this particular argument is correct, but it seems fair to say that both the OTLA and IBC make valid points. For example, it is wishful thinking to believe a study conducted by two people could take into account every factor, so the IBC is correct to defend those issues. However, the Trial Lawyers Association has definitely pointed to a problem in the auto insurance industry, namely that consumers in Ontario are paying too much for their coverage.