Ontario government will miss pledge to cut insurance rates

Published: July 21, 2015

Updated: July 24, 2018

Author: Luke Jones

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Ontario Premier Kathleen Wynne and the Liberal government will miss its own pledge to lower Ontario auto insurance premiums by next month after a slight rise during the second quarter.

A small spike during the second quarter is in contrast with the first three months of 2015. In April the government announced that premiums had declined 0.95 per cent over the three month period ending March 31, while an average reduction of seven per cent had been achieved since the middle of 2013.

However, growth stopped through the last three months according to information provided by the Financial Services Commission of Ontario, the regulatory body that surveys the insurance sector within the province. The latest figures from Wednesday show that 52 per cent of the market increased on average 0.6 per cent over the second quarter, a number that includes some 26 companies.

The Liberal Party had pledged to reduce rates by 15 per cent by the end of next month, but the current number sits at 6.46 per cent since August 2013 and the goal is certain to be missed.

With the stated pledge in tatters, the New Democratic Party has jumped over Kathleen Wynne and the Liberal government.

"Kathleen Wynne promised rates would be heading south, instead they're heading north," said NDP’s Jagmeet Singh. "She doesn't seem to know whether she's coming or going when it comes to keeping her promise of lower insurance rates."

It now seems as though the pledge was always likely to play into the hands of the NDP. It was the Democrat Party that all but forced Wynne into making the pledge, with the opposition giving support of the 2013 provincial budget in exchange. The Liberals got their budget pushed through as a result, but auto insurance rates were unlikely to fall by 15% in two years, giving the NDP an easy target.

Whether the Liberal Party has done well to reduce premiums by just over six per cent or failed miserably in its targets is up for debate. Ralph Palumbo of the Insurance Bureau of Canada claimed the 6.46 per cent drop off is not “insignificant”.

"Some companies have asked for rate increases because they need those increases to cover their costs," Palumbo said in an interview.

"Now I know that people may not believe that, but the regulator has looked at those rate filings and they've agreed that rates have to go up in many cases because the costs in the system are not coming down."

PC finance critic Vic Fedeli does not share the optimism and thinks the provincial government only made the pledge to help push through the 2013 budget.

"They never intended to follow through," said Fedeli. "They had no plan to achieve their target."