Auto Insurance Cuts in Canada

Auto insurance rates are set to be cut in Canada, and perhaps other countries following the government’s lead. However rates won’t be lower for all drivers.

Only about a quarter of Ontario motorists are in line so far to see their insurance premiums cut by the 10 per cent that the Liberals promised in the last election. Another quarter will see smaller cuts in what they are paying – or would otherwise have paid – as a result of rate changes at 31 companies announced yesterday by the industry regulator, the Financial Services Commission of Ontario.

But drivers insured by 28 other companies, including the third-largest insurer, a mutual insurance company, will have to wait another three months for their news. For many it may not be good.

“This is dictatorial and it is completely wrong,” says one insurance company director of FSCO’s pressure on insurers that did not fall in lockstep by applying for a 10 per cent rate reduction.

But, with only a part of the picture revealed so far, Finance Minister Greg Sorbara declared it a “very good day for drivers in Ontario. “I am pleased that with 55 per cent of the industry reporting we are slightly above our target of an average 10 per cent rate reduction,” he said. “We expect to continue to be at or near our target (as other rates are approved.)”

Rates had soared nearly 20 per cent in two consecutive years, but insurers still lost money on Ontario auto business last year. “At least their (consumers’) rates are going to begin to come down,” said Sorbara.

On Nov. 26, Sorbara announced a 90-day freeze in insurance rates as a first step toward fulfilling the Liberals’ election pledge on auto insurance rates. Yesterday, 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.

At last some good news for car insurance consumers of Canada.

This is all good news for more competitive auto insurance premiums in the future, albeit somewhat selectively, but it is a step in the right direction for the drivers of the world who fund these insurance giants.

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