Monday, 4 March 2013

Would The NDP Really Trigger An Election Over Insurance Rates?

Andrea Horwath grabbed headlines last week when she threatened to trigger an election if the Liberal government does not provide Ontario drivers with a 15% cut in the auto insurance rates.  So would the NDP leader actually go through with her threat?


On the surface it doesn't seem to make a lot of sense that the NDP would trigger an election over auto insurance premiums.  The promised 15% reduction would translate to $270.00 annually or $22.50 monthly for a driver that was paying $1,800 in annual premiums.  It seems hardly worth triggering an election that will cost taxpayers approximately $100 million for these types of savings.

So why would she consider going through with her threat?

Well as long as Tim Hudak continues to carve out the political right for his party, the Liberals and NDP will be battling for voters on the left and centre.  Premier Wynne has already made some inroads at the expense of the NDP by making peace with teachers in the province.  A recent Forum Research poll suggests that the NDP support may have peaked and has begun to drop. So strategically a spring election may be something that the NDP may now want.

The NDP would not be campaigning solely on their commitment to cut auto insurance rates.  They have also called for $30 million to eliminate homecare waiting lists, a guarantee that no seniors would have to wait more than five days for homecare, closing a $1.3 billion in corporate tax loopholes and spending $200 million to create jobs for youth. 

It is likely that pocketbook issues will be the focus of the next election campaign in Ontario.  Reducing auto insurance premiums puts money back in the pockets of voters without dipping into provincial tax revenue.  It comes out of the pockets of insurance companies.  There is some political appeal to making promises that cost the government nothing.

The NDP suggest that $2 billion was saved by the industry following the 2010 reforms but with no corresponding rate reductions.  The industry cites other issues such as fraud, uncertainty over the sustainability of the 2010 reforms and rising third party liability claims as the reasons why premiums have remained high in Ontario. 

The Liberal government has stated that addressing fraud is the most effective way of reducing costs in the system and passing saving on to consumers.  The recent Ontario Throne Speech included a commitment to implement the recommendations of the Auto Insurance Auto-Fraud Task Force and work to reduce auto insurance premiums.

How this will play out will become more apparent after the Wynne government presents its budget to the Legislature later this spring.

see news video here.

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