Eves’ government announces additional auto insurance reforms

As expected, the Ontario government has formally proposed additional changes to the auto insurance system on the heels of implementation of Bill-198.Premier Ernie Eves today announced the program which includes a reduction in the premium tax from 3% to 2%, which the government says should save policyholders up to $90 million. Other features include basing income replacement benefits claims only on income reported to Revenue Canada, defining the threshold for severe and permanent injuries and tort access for excess medical expenses. The government says it will also invest in an auto insurance “fraud squad”, with the aim of reducing fraud by $100 million.The government also says it will design a new “choice” system for coverage, with more options for consumers to opt-out of coverage to lower rates. We’re committed to giving families new options to choose insurance packages that are more affordable and that are customized to meet their needs — so that they won’t have to pay for expensive extras they may never use,” says MPP Rob Sampson, who has spearheaded the auto insurance reform process. Such a plan, however, would rely on the governing Conservatives to be re-elected in the expected upcoming fall provincial election.Other provisions are less clear in terms of their implementation, such as “requiring insurers to achieve savings in administration and other costs of up to $100 million”. But the government is promising the reforms will lead to premium reductions of up to 15% for good drivers.