Ontario Auto Package Offers Tax Cut

The Ontario government has formally proposed additional changes to the auto insurance system on the heels of implementation of Bill-198. The program 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 benefits claims only on income reported to Revenue Canada, defining the threshold for severe and permanent injuries, and tort access for excess medical expenses. Furthermore, the provincial government says it will invest in an auto insurance “fraud squad” with the aim of reducing fraud by $100 million. And, the government plans on introducing a new “choice” system for coverage, providing consumers with more options, namely opting out of some coverage to lower rates. Such a plan, however, relies on the governing Conservatives being re-elected in the coming fall 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. “The reform package introduced today is excellent news for Ontario consumers,” says Mark Yakabuski, Ontario vice president for the Insurance Bureau of Canada (IBC). “Insurers will now have the tools to better control sharply escalating costs for healthcare and legal expenses.