Average Car Insurance Cost

Want auto insurance cuts to your premiums? Government intervention may soon provide us with public auto insurance the way we are heading. In the last few days, the industry regulator posted approved rate changes on its Web site, along with the dates between now and mid-July when the changes will apply to renewals and new business. Thanks to the government, many of us now get automatic reductions to our auto insurance rates.

It approved rate reductions averaging 10.15 per cent at 31 companies. Their combined share of total premiums collected in 2002 was 55.5 per cent. 29 of the 31 insurers won approval to reduce rates by 10 per cent or more, so now it is up to you to shop around for a better car insurance deal.

ING Insurance Company Canada, the second-largest insurer with 7.8 per cent of the market, will have a 12 per cent reduction on renewals starting yesterday. One insurer had rates approved for the first time, while Trafalgar Insurance, with about 1.38 per cent of the market, was allowed a 4.5 per cent increase.

Mark Yakabuski, Ontario vice-president of the Insurance Bureau of Canada, said the average premium per private Ontario passenger vehicle was about $1,275 before the approved changes.
With only 55 per cent of the market covered, about half of their customers or a quarter of all drivers, could see a larger reduction in rates than 10 per cent while a roughly equivalent number could see a smaller reduction.
It won’t feel like a reduction for some, Yakabuski acknowledges. They will get a blend of the average 10 per cent reduction and any increases approved between the time of their last renewal and when the Liberals temporarily froze further increases.

The insurance regulator broke from its usual practice and did not mention that it had recently approved a 28.5 per cent average rate increase for the Facility Association, the industry-sponsored pool for the worst drivers. If the Facility’s rate change had been included, FSCO could not have announced an average reduction of 10 per cent, which was a key promise leading up to the last election.

“We specifically do not want the Facility Association included in these calculations,” said Sorbara. “We did not expect a rate reduction. In fact, we expect the Facility to be a special case. We want to try to get people out of the Facility and into regular insurers.”
The Facility lost more than $400 million in Ontario last year, and by December was insuring about 3.8 per cent of vehicles, according to its president, David Simpson. It would have collected a larger share of premiums, because its rates are so high.

Kingsway’s Star said his rates are about 15 per cent less on average than the Facility, yet has been losing money serving the same class of drivers. In the last three weeks, new applications for coverage at Kingsway have increasedfrom 115 a day to 190.
Opposition party critics predicted yesterday that the public will not see that the Liberals have lived up to their election promise. Conservative critic Bill Murdoch told the Star’s Caroline Mallan that he is suspicious that the auto insurance rate reductions will not be reflected in year-over-year premiums.
“It sounds good if you can believe it, if it works,” said Murdoch (Bruce Grey-Owen Sound). “I’m a little skeptical because they do say a lot of things and nothing seems to ever happen and it’ll be whether it affects the ordinary people out there.”

NDP critic Peter Kormos (Niagara Centre) said the Liberal contention that premiums will not rise by as much as they otherwise would have is not what they promised during last year’s election campaign.
“That’s a con game, that’s a scam; it’s the oldest gaffe in the book because the fact is, premiums are going up,” said Kormos, a long-time advocate of public auto insurance. “The Liberals promised premium reductions; the final observation is Liberals didn’t tell the truth about reducing premiums.”

Kormos said the appeal of public auto insurance is growing as provincial governments realize that their efforts to control premiums charged by private companies are not working.

“The conclusion is the private, for-profit auto-insurance sector cannot be regulated, cannot be reeled in,” he said.

“And that leads us, of course, as New Brunswick Liberals and Conservatives are being led, to public auto insurance.”

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