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Old 05-30-2012, 11:52 AM   #1
hockeyfan27
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Claims costs to blame for high Ontario auto insurance premiums

On May 28, the Insurance Bureau of Canada’s Ralph Palumbo, Vice President, Ontario made remarks to the Ontario Standing Committee on General Government. The key message: auto insurance rates in Ontario are too high.

Palumbo pointed to the steady rise of premiums in the province. Four years ago, he said auto insurance premiums were on average 25 percent higher than those in Alberta, the province with the second highest rates. Today, the average premium in Ontario is more than 45 percent higher than the average Alberta premium, and almost twice as high as premiums in the Maritime provinces.

“The average private passenger auto annual premium in Ontario as of April 2012 was $1,534. That compares with $1,051 in Alberta, $989 in Newfoundland & Labrador, and in the 800s in the other Maritime Provinces,” Palumbo said.

The reason behind the increases in premiums is claims, he said.

“If the problem was the factors that insurers use to classify risk, like the use of territory or any other rating factor, then we would see premium increases in other private sector insurance markets like Alberta, but we don’t. Something very unique is happening in this province.”

He added that the benefits package has been – and still is – so rich, it’s vulnerable to significant inflation.

“Some of that inflation is the result of fraud, but a large part is due to the mentality on the part of too many health care professionals, medical suppliers, claimants and lawyers that goes: if the money is there, we should use it. Quite simply, the benefit t maximums in the auto insurance product have become targets,” Palumbo stated.

Palumbo’s submission identifies four reasons why claims costs in Ontario have risen, namely:
  1. Backlog of more than 30,000 unresolved claims cases awaiting dispute resolution at FSCO. “I cannot stress strongly enough how this backlog is a major risk to insurance premium stability. Claimants don’t know what their benefits will be and insurers don’t know how much their claims are going to cost,” he said.
  2. The number of catastrophic injury claims is rising faster than other claims. He explained that from 2004 to 2010, the number of all no fault injury claims rose 28 percent whereas the number of large claims has more than doubled. Hospitalizations from motor vehicle accidents have fallen 12 percent, he said, but “still – and this is a mystery – auto insurers are being presented with many more catastrophic injury claims.”
  3. Bodily Injury claims costs are increasingly rapidly. “Latest available figures show that the frequency of these claims has been rising, as has the average claims cost. When you consider that BI [bodily injury] claims represent more than $2 billion in costs each year, it is very concerning that the volume and average cost of these types of claims appear to be rising so rapidly.”
  4. There is persistence of fraud in the Ontario auto insurance system. Palumbo said while steps to prevent fraud have been taken by governments and insurers, fraud still exists.
Palumbo said addressing the cost of auto insurance in Ontario started on the right track with the sweeping reforms made in 2010, “ but more needs to be done. “

“The habit of abusing Ontario’s benefit rich auto insurance system has grown up over more than 20 years. It will take a firm commitment to ongoing reform and to ongoing efforts against fraud and abuse to turn that habit around,” he said.

reposted from ILSTV.com May 30, 2012 in Auto & Trucking, Canadian Insurance
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Old 05-30-2012, 11:58 AM   #2
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How can claims be to high when insurance companies are still making huge profits?
I remember a year or two ago their profits well into the billions.

I don't disagree, there is a problem with fraud and claims, but at the same time, how can rates be justified while making billions?
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Old 05-30-2012, 12:42 PM   #3
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Insurance companies in Ontario are soo full of shit... they're just taking everyone to the cleaners. The worst part is the Ontario government is just standing by letting it happen.

After all the BS that we recently went through with the insurance companies now being able to offer less protection (since last Sept. you're able to choose less coverage then before) the prices were supposed to go down. But what happened? You now get LESS coverage @ the same price point.

And then when you actually need to call on your insurance policy for a legitimate reason they try to **** you

Ontario, is such a fail.
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Old 05-30-2012, 12:56 PM   #4
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I know there are some companies who are posting profits but for the last three years there has been a loss when looking at the industry results from all companies.

2008 -$82.5 million
2009 -$3.3 million
2010 -$47.6 million

http://www.maxbimmer.com/forums/show...13#post1546713

2000-2002: big losses all around
2003-2007: were good years, big profits
2009-2010: losses increasing again

What is concerning is that even though the rates were increased (like nuts in 2008) and continue to go up, the profits have dropped back down; meaning the claims are exceeding the rates charged. So the 2 options are: stop conducting business in Canada or raise rates. If more companies pull out, there is less market competition and rates will get even more ridiculous.

I'm still waiting to see 2011 numbers which should be interesting.

Please don't get me wrong, I'm not defending the rates. I'm not on their side. I personally HATE the fact the my own policy has gone up 20% since 2 years ago (same cars, same address, same record).

I post this stuff so people have actual facts and good information to form their own opinions, not some baseless tinfoil hat theory rant about insurance company/government conspiracy as a reason for increases.
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Old 05-30-2012, 01:04 PM   #5
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Quote:
Originally Posted by NOTORIOUS VR View Post
Insurance companies in Ontario are soo full of shit... they're just taking everyone to the cleaners. The worst part is the Ontario government is just standing by letting it happen.

After all the BS that we recently went through with the insurance companies now being able to offer less protection (since last Sept. you're able to choose less coverage then before) the prices were supposed to go down. But what happened? You now get LESS coverage @ the same price point.

And then when you actually need to call on your insurance policy for a legitimate reason they try to **** you

Ontario, is such a fail.
LOL, Sorry my post wasn't a direct dig at you. (I started writing it before you posted) I understand your anger. Personally I'm more upset with the oil industry, profits well beyond any insurance company and not a signal year of losses, yet their product still gets more expensive.

Again, I'm very interested in the 2011 results as it will speak to the effectiveness of the insurance reform set in place in Sept 2010.

What was your experience with a company failing you?
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Old 05-30-2012, 01:06 PM   #6
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Quote:
Originally Posted by T.Dot_E30 View Post
How can claims be to high when insurance companies are still making huge profits?
I remember a year or two ago their profits well into the billions.

I don't disagree, there is a problem with fraud and claims, but at the same time, how can rates be justified while making billions?
You said it better then I could Trev.

Insurance is upsurd! absolutely upsurd. You have to live way out of the city, or atleast have an address there to get semi normal rates.
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Old 05-30-2012, 04:17 PM   #7
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Quote:
Originally Posted by hockeyfan27 View Post
LOL, Sorry my post wasn't a direct dig at you. (I started writing it before you posted) I understand your anger. Personally I'm more upset with the oil industry, profits well beyond any insurance company and not a signal year of losses, yet their product still gets more expensive.

Again, I'm very interested in the 2011 results as it will speak to the effectiveness of the insurance reform set in place in Sept 2010.

What was your experience with a company failing you?
no worries... didn't take it as such.

BUT... one would think that someone would be smart enough to end all this non-sense. I mean it cannot be that out of everywhere in North America that Ontario is the only one with problems like this, and that no one is able to come up with a solution.

It's just pure greed IMO, that and lazy ass BS fat asses at the top lining their pockets.

I'm sorry but the Insurance situation has been a disaster for FAR too long... everyone is just paying out the nose and the law makers just sit back and let it happen, and then go on to create more useless laws instead on focusing on issues that matter to the general population.

Just pisses me off.
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Old 05-30-2012, 11:40 PM   #8
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all bs. The US had way higher fraud. makes us look like play school...yet they dont have the premiums we do or use it as an excuse to bend us over without lube.

all smoke n mirror bs. this place sucks
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Old 05-31-2012, 10:49 AM   #9
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Originally Posted by 5style View Post
You said it better then I could Trev.

Insurance is upsurd! absolutely upsurd. You have to live way out of the city, or atleast have an address there to get semi normal rates.
I live in Pickering, which I wouldn't consider "way out of the city", and pay slightly below the average premium noted in the article I posted. (and for the record, I get no additional discounts beyond what is publicly available) My rate when I lived in Scarborough was $200 higher. There is no need to misrepresent your address.

Quote:
Originally Posted by NOTORIOUS VR View Post
one would think that someone would be smart enough to end all this non-sense. I mean it cannot be that out of everywhere in North America that Ontario is the only one with problems like this, and that no one is able to come up with a solution.

It's just pure greed IMO, that and lazy ass BS fat asses at the top lining their pockets.

I'm sorry but the Insurance situation has been a disaster for FAR too long... everyone is just paying out the nose and the law makers just sit back and let it happen, and then go on to create more useless laws instead on focusing on issues that matter to the general population.

Just pisses me off.
The reason we changed from a tort system to our current not-fault system was that the tort system favoured the affluent. You had to sue to get money and if you couldn't afford to sue, you didn't get compensated. It is the people who couldn't afford to sue who needed compensation for lost wages the most. "No fault" was an attempt at a solution. Unfortunately, they swung too far the other way and now the system is too easily abused. At some point, I hope sooner then later, they will address the flaws of the current system.

Quote:
Originally Posted by SiR View Post
all bs. The US had way higher fraud. makes us look like play school...yet they dont have the premiums we do or use it as an excuse to bend us over without lube.

all smoke n mirror bs. this place sucks
At least 50% of the facts I make up are almost true, I don't appreciate you saying it's "all bs".
I'd love it if you could post the source for those fraud facts for me to take a look at. I'll send you a free bottle of lube when you do
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Old 05-31-2012, 11:25 AM   #10
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Thanks for posting those numbers, I didn't realize that was the case.

Quote:
Originally Posted by hockeyfan27 View Post

2008 -$82.5 million
2009 -$3.3 million
2010 -$47.6 million


2000-2002: big losses all around
2003-2007: were good years, big profits
2009-2010: losses increasing again
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Old 05-31-2012, 01:57 PM   #11
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I blame Brampton and I live in the damn city .. everyday I see an accident to or from work.
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Old 05-31-2012, 02:20 PM   #12
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Ins companies are in bed with the gov't. there was a time when good customers got rewarded and their prem's went down. now. just as the banks were here to serve society and not the other way around. they just say we raised it a bit compared to others who insure with us. WHAT A LOAD OF SHITE! how can an ins company give you a quote but then tell you they will discount your prem if you have multi vehicles on the policy. gee isn't that twice the risk now? then if you insure your house you get additional discount. So they admittedly are saying we are spiking your prem 20-25% and then avg it down if you give us more $$$. What incentive do I have and why should I give MORE of my hard earned $ to my ins co. when they keep hiking my rates and think they are doing me a favor by trying to sell me on the Illusion they are doing me a huge favor by giving me additional savings. TOTAL BS. what this is saying to me is they have a HUGE margin of profit to work with. otherwise who could they justify the discount. Bottom line the more $ u give them the MORE THEY make, you save SHIT. The ins company's are legally defrauding the canadian public just as the banking system in Canada is doing. we are slaves to the system. Remember, if you can go that far back, banks didn't charge service fees and YOU dealt with a rep. They got paid to do that job and for giving them your money you got interest. NOW? you go online and they make it like it is more convenient for you by making you do the bank tellers job and then adding salt to your AHOLE and ramming a pole up it by releasing record profits quarter over quarter. Geeee....oh wait...they must be victims of fraud and that is why they don't pay you anything and charge YOU for holding your money. Another crock of shit. Sorry..but I don't buy into that and I've been around a bit to long to swallow it.

oh and one last thing....the ins co. are NOT losing money in spite of fraudulent claims. What they are doing is losing profits and to compensate, throwing on the backs of honest do good citizens. and the bad people know this and because of this know it wouldn't matter. why did the gov't lift the price freeze on ins co. because it was in the gov't vested interest. which goes back to my first few words. they are sleeping together.

never believe these 3 statements: the chq is in the mail. I'm from the gov't - here to help you. and I promise I won't c*m in your mouth.
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Old 05-31-2012, 02:47 PM   #13
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Quote:
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how can an ins company give you a quote but then tell you they will discount your prem if you have multi vehicles on the policy. gee isn't that twice the risk now? then if you insure your house you get additional discount. So they admittedly are saying we are spiking your prem 20-25% and then avg it down if you give us more $$$.
Well I'm sure if this is what your saying but its the same amount of money for more. example with me

car insurance is $155
if i get life insurance its then $27 for life and car goes down to $130 .. essentially I'm only paying $2 for another product.

as for insurance making money ..

lets say everyone gets into one accident in there lives .. I pay $130 per month which ends up being $15,600 in a total of 10 years. I had an accident with my 330xi back in 2004 that cost that much to fix. How much did the insurance make off me really? what about people that sue or get paid out for there whole car?
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Old 05-31-2012, 06:37 PM   #14
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Originally Posted by hockeyfan27 View Post
I live in Pickering, which I wouldn't consider "way out of the city", and pay slightly below the average premium noted in the article I posted. (and for the record, I get no additional discounts beyond what is publicly available) My rate when I lived in Scarborough was $200 higher. There is no need to misrepresent your address.



The reason we changed from a tort system to our current not-fault system was that the tort system favoured the affluent. You had to sue to get money and if you couldn't afford to sue, you didn't get compensated. It is the people who couldn't afford to sue who needed compensation for lost wages the most. "No fault" was an attempt at a solution. Unfortunately, they swung too far the other way and now the system is too easily abused. At some point, I hope sooner then later, they will address the flaws of the current system.



At least 50% of the facts I make up are almost true, I don't appreciate you saying it's "all bs".
I'd love it if you could post the source for those fraud facts for me to take a look at. I'll send you a free bottle of lube when you do
When I lived in mississauga, it was 160$ a month, I pay 80$ now. Thats a $80 dollar difference a month. I think address is VERY influential.

Also, I started with $460 a month, which is why I never had money to put into my car.
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Old 05-31-2012, 07:58 PM   #15
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I used to think auto insurance was rip off until I bought a motorcycle.
Just because its a sports bike I have to pay a premium. BS!
On top of that, those mother F**kers say its now manditory to insure my bike all year round. Are the insurance companies smoking crack? Who the f**k rides a motorcycle in the middle of winter?

HockeyNut, I think you are an asset to this board with your knowledge on insurance companies. I just hate the ppl you work for
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