Ontario auto insurance customers may have overpaid by billions

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The results of a new study have shown that drivers in the Canadian province may have been charged far too much.

A new study conducted by the Schulich School of Business on behalf of the Ontario Trial Lawyers Association has revealed that drivers in Ontario, Canada, may have been paying billions of dollars too much for their auto insurance coverage.

The research showed that from 2001 to 2013, drivers across the province paid between $3 and $4 billion too much.

The study has pointed to the profit benchmark that was established by the auto insurance regulator for the province. That benchmark was set at 11 percent return on equity. According to the study, that percentage is too high. The paper’s authors have explained that there should be a cap on that percentage that should be no greater than 5.5 percent, keeping the low interest rates in mind.

The results of this auto insurance study have caused the association to ask the government to cap profits.

auto insuranceThe Ontario trial lawyers have now called to the provincial government, based on the results of the insurance study, to decrease the current profit cap. They are hoping that the auditor general will conduct its own investigation into the vehicle insurance situation within the province. The current Liberal government has previously promised to reduce the insurance rates by an average of 15 percent from where it had been in the summer of 2013. That promise was made for August of this year.

The study, which was conducted by two professors at Schulich, estimated that the average family in Ontario had been paying between $100 and $120 too much for their coverage in 2013. Although the vehicle insurance industry, as a whole, has shown profits that have been somewhat on the weak side, the individual insurers have been earning a great deal more than the 11 percent return on equity that is permitted by the provincial government, said the profs.

At the same time, the accidents benefits from auto insurance have been slashed by the government quite regularly, said Steve Rastin, the president of the lawyers’ association.

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