Insurance.com, the largest independent online auto insurance agency in the United States, found that car insurance rates across the nation declined 3.5 percent in 2009 to $1,803 (U.S) per year. After dramatic rate increases of eight percent in 2008, the rate cuts this year allowed savvy auto insurance shoppers to save money on premiums by purchasing new policies.
In Ontario, however, car insurance rates are on the rise. With some plans increasing by up to 30 percent next year, Ontario drivers want answers. Unfortunately, there is no easy solution to this problem.
Why is this happening in Ontario?
It would be easy to blame the insurance companies, but it’s also baseless. The car insurance industry is one of the most competitive financial sectors in Canada. There is no oligopoly, no dominate company; it is a fierce industry with the top 10 companies accounting for approximately 60% of the market. In fact, in Ontario, the car insurance companies, as a whole, reported a loss for last year. Probably the most significant cause (but not the only one) for the premium increase in Ontario is more related to the increase in insurance payouts due to the rising cost of health treatments and personal injury settlements.
If the Insurance companies have to pay more out, they will, of course, have to take more in. Record breaking multimillion dollar settlements and inflation in the health care sector have directly impacted their bottom line, and therefore consumer premiums.
The government of Ontario is currently moving forward with reform measures that, in their understanding, should lessen the burden on consumers. However, the success of these measures is yet to be determined.
