Ontario auto remains under cost pressure, A.M. Best says

A study released by rating agency A.M. Best on Ontario auto insurance suggests that the market’s loss ratio had risen by 10 percentage points to a high of 91.4% by the end of 2001. Auto insurers operating in Ontario brought in an average 9.5% increase in rates last year based on direct premiums written. The rating agency notes that Ontario auto represents nearly a quarter of all premiums written in Canada.A.M. Best ascribes the worsening losses in Ontario auto insurance to the regulatory environment insurers have to contend with. “A cumbersome arbitration system, savvy legal involvement, increasing jury awards and fraud have added to the increasing claims costs.”Although legislative reform to the auto product is currently in the works, the rating agency believes that these measures may prove inadequate in stemming rising losses. “Ontario insurers will continue to be challenged to achieve rate adequacy to offset rising medical loss costs. And without a strong group of companies leading the industry to disciplined underwriting and pricing, the market will remain fragmented.”