Provincial elections touch on insurance issues

Insurance fraud, cat events and the use of credit scoring among key concerns.

Provincial elections are underway across the country this fall. The Manitoba election took place October 4 and NDP leader Greg Selinger was re-elected with a 46% majority vote. Voters go to the polls in at least three other provinces in the coming days and weeks. While insurance may not be the main topic on many platforms, a few political leaders are addressing some issues related to the industry, including fraud and extreme weather.

Ontario holds its election October 6, and insurance fraud is equally important to the Liberals, Tories and NDP.

Pema Lhalungpa, spokesperson for Ontario’s PC party told Canadian Insurance Top Broker that Ontario drivers pay the highest insurance rates in Canada–about 40% higher than Alberta, the next highest province. One of the reasons for this is organized crime schemes, which drive up auto insurance rates.

“The biggest reason for skyrocketing insurance rates is Dalton McGuinty’s indifference to false insurance claims, which account for $1.3 billion of the $9 billion in premiums Ontario drivers pay each year,” said Lhalungpa. “As a result, Ontario’s drivers are stuck with an average increase of $142 in false claim-related premiums.”

If elected, Ontario’s Tories plan to fight fraudulent claims by: creating the Office of Financial Crimes Prosecution–a special unit of crown attorneys dedicated to fighting false claims; creating a $10 million Fraud Investigation Fund (cost-shared with the insurance industry) to investigate false claims and provide monetary awards to Ontario residents who provide information leading to a conviction for false claims; fining insurance companies that do not report suspicions of fraudulent behaviour; and implementing a tough new regulatory system for the tow-truck industry that preys on people who were in a car accident.

Meanwhile, the Liberals aim to continue improving Ontario’s newly implemented Auto Insurance Anti-Fraud Task Force.

The NDP said if elected, it would also support the Task Force. NDP leader Andrea Horwath was quoted in the media October 3 as saying that reducing rates and improving the product is necessary. If the NDP comes into power, Horwath promised to speak to insurance company executives and improve the system.

Coverage Concerns in the Maritimes

Newfoundland & Labrador holds its election October 11. The Liberals are focused on extreme weather events, which pose a significant issue, according to leader Kevin Aylward. Hurricane Igor, for example, forced affected homeowners to file thousands of claims to private insurance companies totaling approximately $65 million in the ensuing weeks and months, he said.

“In our province in particular, where many properties straddle ocean coastline and are vulnerable to storm surges, the insurance-related implications of extreme weather are palpable,” Aylward told Canadian Insurance Top Broker. “Newfoundlanders and Labradorians have a proud culture linked to the sea; however, should the insurance industry be forced to significantly raise premiums in extreme weather-prone areas (or deny coverage altogether) certain communities could be exposed to negative risks.”

The Liberals believe government needs to prepare a detailed report on Hurricane Igor and the effects of major storms in order to assess the strengths and weaknesses of response capabilities, as well as a comprehensive evaluation of how future storms could affect the province financially where insurance companies are not involved.

Meanwhile, Conservatives in Newfoundland & Labrador continue to support the recent amendments to the Insurance Companies Act. The first amendment enables Government to prohibit insurance companies from refusing to provide homeowners insurance for reasons unrelated to the risk they are taking and to prohibit unfair practices in the determination of the premium to be charged, such as credit scoring. The second change streamlines and harmonizes all classes of insurance, and the third focuses on protecting consumers from fraud, stated the Tories.

Also, right-wing Fraser Institute released a report on October 3 arguing that government-run auto insurance monopolies in BC, Saskatchewan, and Manitoba led to increased costs and high auto insurance rates in Canada.

“Government-run auto insurance monopolies are less efficient than auto insurance provided by a regulated, competitive market,” said Neil Mohindra, director of the Fraser Institute’s Centre for Financial Policy Studies.

The Saskatchewan provincial election takes place November 7. On October 3 in Prince Edward Island, Liberal Premier Robert Ghiz was re-elected to a second majority term.


This article was originally published October 4 and updated October 6.

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