Newspaper article The Canadian Press

Liberals Plan to Cut Auto Insurance Rates by 15 per Cent in Two Years

Newspaper article The Canadian Press

Liberals Plan to Cut Auto Insurance Rates by 15 per Cent in Two Years

Article excerpt

Liberals lay out auto insurance rate cuts

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MISSISSAUGA, Ont. - Ontario will order auto insurance companies to cut premiums by an average of eight per cent by next August, and by a total of 15 per cent within two years, Finance Minister Charles Sousa announced Friday.

The NDP had demanded a 15-per-cent cut in one year in exchange for supporting the minority government's budget, but Sousa defended his plan as more practical and achievable.

"We are compelling these insurance companies to reduce their rates," he said.

Regulatory changes in 2010 reduced benefits in some areas, saving the industry hundreds of millions of dollars, and the province will appoint a watchdog to make sure customers see some of those savings in the form of lower rates, added Sousa.

"We believe there are cost savings in the system right now for immediate reductions," he said. "We have to make certain that those savings can be passed on."

However, the Insurance Bureau of Canada said it will need to see more steps taken by the government to reduce costs for the industry before premiums can be chopped by 15 per cent.

"We're hoping they quickly introduce a new definition of catastrophic impairment," said IBC spokesman Ralph Palumbo.

"If you want to see some rate reductions, that's the place to start, to make sure that unnecessary costs in the system related to catastrophic injuries are taken out so that money goes to people who really need it."

Lawyers who work with car accident victims were not impressed to hear the Insurance Bureau talk about redefining catastrophic injuries after pay outs for that category were reduced three years ago.

"They already cut (catastrophic coverage) rates in 2010 down from $100,000 to $3,500, saving billions of dollars over the last two years, and now they're talking about cutting yet again," said Sanda Zisckind of the Diamond and Diamond law firm. …

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