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The Reality of a 15% Car Insurance Reduction


Back in April, there was a lot of news about a proposed 15% drop in auto insurance rates in the Ontario budget proposal. The budget passed, but now your renewal has arrived and you don’t see this 15% reduction you had heard so much about. You’re probably wondering what happened.

The truth is that we would like to be able to offer our clients lower auto premiums. We are also insurance customers and know that Ontarians pay needlessly high premiums but the reality isn’t as simple as just making those cuts. As Ralph Palumbo, Vice President for the Insurance Bureau of Canada wrote in an open letter to Andrea Horwath when she asked for the cuts, “demanding a cut in auto insurance rates in Ontario by 15% isn't a solution.  It's a bandage... it won't fix a system that's broken.”  The broken system Palumbo refers to is the insurance industry’s vulnerability to insurance fraud which costs the system $1.5 billion annually, according to Randy Carroll, president of the Insurance Brokers Association of Ontario. This fraud includes dishonest medical clinics that file false claims and tow truck drivers working with repair shops that falsify repair bills.

"If we get the rates down before the fraud is out of the system it will just put undue pressure on insurers and will end up putting undue pressure on consumers," explains Carroll, and while fraud prevention measures were implemented in 2010, they were not as effective as hoped. But both the IBAO and IBC are working with the Ontario government to reduce fraud and bring costs down in order to make insurance rate reductions a reality.

If you have concerns about your insurance and would like to discuss ways you can reduce your rates yourself, feel free to give your insurance guy or gal at Josslin a call at your local number or 1-888-567-7546.