Premier Kathleen Wynne tightened her embrace of the NDP, backing a motion by the third party calling for a 15-per-cent cut in auto-insurance premiums.
Liberal support for the non-binding motion, which was passed by the legislature over Progressive Conservative opposition Wednesday, was a symbolic gesture. But it was designed to signal to Andrea Horwath’s New Democrats that the government is taking seriously their demand that average auto-insurance rates be slashed by 15 per cent within a year.
The NDP proposal is controversial, as it would have the government unilaterally impose a cut to premiums. Industry members warn such cuts could cause some companies to pull out of Ontario or lay off staff.
The Liberals have hopes they may satisfy the NDP through other means, such as by cracking down on fraud in hopes insurance companies’ resultant savings will translate into lower premiums. Ms. Wynne left the door open to this softer approach Wednesday.
“My support for this motion is an acknowledgment that this is an issue that needs to be addressed, it’s an issue that I have had concerns about for more than a year,” she said. “The specific mechanism may not be exactly the one that is in the NDP’s motion.”
Finance Minister Charles Sousa said he was looking at options to bring premiums down.
“The motion is calling for a reduction, a gradual reduction to achieve 15 per cent, and that’s what we’re working towards,” he said.
But the NDP says this isn’t good enough. They argue there is no guarantee larger industry profits will be passed on to consumers, much less that the 15-per-cent target will be hit.
“Talk is one thing, the symbolic support of a motion is one thing, but what the people of Ontario deserve is a real commitment and real action,” Ms. Horwath said.
The government has brought in a series of auto-insurance reforms, including a reduction in benefits, since 2010. In that time, industry profits have grown and premiums have, on average, held steady or fallen slightly. The NDP maintains companies can afford to pony up more of its revenue to cut premiums.
Companies, however, say profit margins are volatile: ledgers fluctuated over the past decade and included some years where the industry posted an overall loss in the province.
The Insurance Bureau of Canada is pushing the government to do more to tackle fraud and clear a backlog of unresolved disputes between companies and claimants. Such things could ultimately lower premiums, but the industry group expressed reservations about meeting specific targets.
“I think everyone recognizes there is a need for reform and we need to find a workable solution,” said spokesman Steve Kee. “I would not put a time frame and I would not put a number on it.”
The Tories characterized the NDP move as sheer populism based on an arbitrary figure.
“What we need to do is look at a plan to get there. This is just bumper-sticker politics. … I don’t know where they got that 15 per cent,” said MPP Jeff Yurek.
Liberal support for the motion was just the party’s latest goodwill gesture as it seeks NDP backing for its budget, expected next month. Two weeks ago, for instance, Mr. Sousa penned a letter urging his federal counterpart to crack down on tax-dodging companies, one of the NDP’s budget demands.
Ms. Wynne must secure the NDP’s support to pass her budget and avoid an election.