A new Ontario Trial Lawyers Association says policyholders have paid far too much over five years.
Ontario, Canada auto insurance customers may have been overpaying by as much as $5 billion on their premiums. This figure accumulated over the last five years, said a new Ontario Trial Lawyers Association report.
Claims continued falling as car insurance company profits grew significantly in that time.
At the same time that auto insurance customer were making fewer claims, insurers were making more money. In fact, according to the report, insurer profits rose to $1.5 billion in 2016. That represented an increase of nearly 60 percent over a period of four years. The report was written by Professor Fred Lazar, from York University’s Schulich School of Business.
For the average car insurance policyholder in Ontario, Canada, that equates to an additional $143 in premiums each year, said the OTLA report. That same report went on to criticize the Canadian province for its “lack of transparency.” This criticism aimed specifically at the data “reported by the government for automobile insurance companies.”
Insurers are not obligated to disclose its profits to auto insurance customers or the public.
“The insurance industry is not required to disclose the profit it makes,” said Claire Wilkinson, OTLA president, as reported by the Toronto Sun. “Everybody who drives a car in Ontario has to buy insurance, the government regulates how much is charged in premiums, but even the financial commission and the government don’t know how much profit they make.”
Professor Lazar’s report suggested that the reason car insurance companies are more profitable is because of one primary trend. The gap between premiums and the decreasing claims coverage costs is growing.
For instance, even though the average claims cost fell by 27 percent in 2011, “premiums, on the other hand, barely declined,” said the report. This indicates that auto insurance customers are paying more for their coverage even though the costs they are associated with is decreasing, as Live Insurance News has reported. As a result, the report proposes that drivers in the province have overpaid in premiums by as much as $1.5 billion over the last five years.
