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Auto insurance fee cut will cost

Guthrie Insurance

Ellen Van Wageningen, The Windsor Star | May 04, 2013 | Last Updated: May 04, 2013 - 7:08 UTC

It is hard not to be skeptical about the Ontario government's budget pledge to reduce the average auto insurance premium by 15 per cent.

The last major changes made in 2010 to put a lid on rising rates have resulted in most Ontarians paying the same for less coverage.

The latest proposal will take both a well-coordinated effort to reduce auto insurance fraud and significant changes to the coverage offered, said Lubo Li, senior director of the services and emerging industries division at J.D. Power & Associates.

The same day the budget was tabled, J.D. Power announced the results of its annual Canadian Auto Insurance Customer Satisfaction Survey.

"One of the challenges we've seen is: do we have the flexibility to meet the emerging trends?" Li said.

For example, nowhere in Canada are auto insurers offering lower cost coverage tailored to snowbirds and students who need it only for a certain number of months, he said.

Ontarians pay some of the highest auto insurance premiums in North America. The reason cited by the industry and a provincial task force that studied the issue in 2011 is a high rate of fraud, something the latest proposals are supposed to address.

Li said he suspects Ontario's relatively generous benefits are the main reason for the fraud, which insurers blame for as much as 10 per cent of the cost of each policy.

In Windsor, the average annual cost of auto insurance for those who own their vehicle is $2,661, according to Kanetix, which provides rate comparisons for consumers.

Auto insurance rates on average nudged down 0.26 per cent in 2012, so Ontario is going in the right direction while rates in all other provinces covered by the J.D. Power survey this year went up, Li said.

The average premium paid by Ontarians surveyed was $1,700. It was $1,200 in British Columbia and the Prairies, $1,100 in the Maritimes, and $800 in Quebec. Quebec's public insurer, which only covers bodily injury, was rated as better than average when compared with private insurers, while B.C., Manitoba and Saskatchewan's public insurers were rated as inferior to the other major insurers in those provinces which provide enhanced coverage.

"I know people are frustrated with the free market and the high premiums we have to pay in Ontario, but if they think government insurance is the option look no further than B.C., Manitoba and Saskatchewan," Li said.

They have kept costs down but reduced choice and give customer service a lower priority, he said.

Yet in Ontario where the consumers have more choices than anywhere in Canada, customer ratings of the top 20 providers aren't that much different from the rest of the country, according to the J.D. Power survey.

The survey measured customers' assessments of interactions with the company, price, policy offerings, billing and payment, and claims.

The top rated company in Ontario and the Maritimes was Grey Power, which targets those over 50 years old with good driving records.

"Since we first started measuring customer experience back in 2008 in Canada, the industry has improved tremendously," Li said.

The latest survey shows the one issue that ticks off customers across the country is a hike in the price they have to pay.

Source: The Windsor Star

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