Thursday’s Liberal budget promise to cut auto insurance premiums by 15 per cent may sound good, but local brokers wonder how it will ever become a reality.
“It’s a great topic for discussion, but I don’t know how they’re going to do it,” said Al Vance, a broker for Ives Insurance.
The Liberals unveiled a $127-billion spending plan Thursday. The auto insurance reduction – said to amount to about $225 per policy — is one of the highlights.
Vance said he and colleagues have been talking about the proposal since word of it broke earlier in the week. Seeing it included in Thursday’s provincial budget without details about how it will be implemented got him brainstorming about how any reduction might be achieved.
“The only thing I can see is if they reduce accident benefits,” he said.
Vance wonders if the government’s plan is to create a “two or three-tier system” where customers can choose lower levels of coverage for things like home care following a crash.
Taking it out of insurance companies’ profits won’t work, because there isn’t enough fat there to cut. “I’m not defending the insurance companies. I just don’t know where it’s going to come from.”
Tony Bitacola said the government reduced accident benefits two years ago. “Rates didn’t drop,” he said. In fact, keeping the same benefits meant higher rates, he said.
Bitacola said he has been employed in the insurance industry for 30 years. He has seen auto insurance rates drop once in that time. Six months later, they were right back to where they were.
“I just can’t see this happening,” he said. “I think it’s impossible.”
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