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Monday, July 23, 2012

Auto Insurance in Ontario: We are being conned by the system

Photo: Toronto Star


ALBERTA:                     $1,087
MANITOBA:                   $943
ONTARIO:                   $1,432
(GTA                            $1,763)
QUEBEC:                         $717
NEW BRUNSWICK:      $813
NOVA SCOTIA:             $807
PEI:                                   $757

You like these stats? It is important to note here, that our accident and injury rates are the lowest in the country. I really like the Quebec average premium as compared to Ontario’s. Anybody who’s ever driven in Montreal has to wonder what’s going on here. It’s such an obvious con job, I’m starting to wonder how powerful the machine behind it really is. Even Bob “Red” Rae and Mike “The Devil Himself” Harris couldn’t tackle the problem. Where is Superman when you really need him?

I’ve read dozens of articles (click here for a recent Toronto Star piece) and heard many interviews with government officials and industry insiders. I know there have been several studies done on the subject. I’ve never heard a rational explanation and never heard anybody propose a workable solution. There have been a few regulatory attempts to solve the problem by various administrations, most recently by Premier “Dad” McGuinty. They always fail to lower premiums and all we hear afterwards are excuses.

The people who are supposed to be on the inside always talk around in circles. They blame fraud, high repair costs and fraud. Oh, did I mention fraud already? But fraud is responsible for 10 – 15% of the costs. Let’s see now, 10,400,000 registered vehicles in Ontario. Average premium per vehicle: $1,432. That’s $14,892,800,000 in premiums. If we take a 12.5% average fraud rate, it would mean that $1,861,600,000 is being stolen from us every year.

Where is Ontario’s Attorney General on this? Recently the cops bragged about arresting 36(!) people for insurance fraud in the GTA. To me it proves their dismal failure in the attempt to control the problem.

The industry claims it spends $10 billion, out of the $14.5 billion it collects, in payouts. It would be interesting to see where the money goes exactly, both the payouts and the money they keep. It is obviously excessive beyond any reason.

I think we’re being conned by all parties: the fraudsters, the insurance companies, the regulatory bureaucracy and law enforcement agencies. Time to stop the bleeding and shake up the system: either drop the mandatory insurance requirement or go with a public system.

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