One Brampton based MPP is suggesting that industry profits be used to help drive down the price of auto insurance premiums in Ontario, where rates are the highest in Canada. Bramalea-Gore-Malton MPP Jagmeet Singh says the government should put the idea into action in an attempt to reach its promise of a 15 per cent reduction in premium prices.
Singh is the deputy leader of the New Democratic Party, which is has been critical of the liberal government’s failure to reduce auto insurance rates by 2013 by the promised amount. He argues that the strategy of looking to create savings for providers is not working as insurance companies are not passing those savings on to the consumer.
Since making the pledge in 2013, auto insurance premiums in Ontario have fallen by 7.1 per cent, according to Finance Minister Charles Sousa. However, during the fourth quarter of 2015 rates increased by 0.15 per cent, leading to fresh criticism after Premier Kathleen Wynne said the original promise was always a “stretch goal”.
“The profit margins right now of the insurance companies, when it comes specifically to the auto insurance product, are phenomenal and it’s out of those profits that the government should bring the premiums down,” said Singh.
Singh pointed out that auto insurance rates can be set by the Financial Services Commission of Ontario (FSCO) and that the government should target lower rates that insurance companies must comply with. He also suggests that the profit margins acquired by insurance providers through benefits would cover the 15 per cent reduction.
The Ontario Trial Lawyers’ Association (OTLA) in conjunction with York University in Ontario found that consumers have paid over $1.5 billion over the odds for auto insurance through 2013 and 2014.