In recent news, TD Canada Trust Bank sets aside $290 million for struggling insurance unit. The Globe and Mail has reported that the TD Canada Trust arm of property and casualty insurance has been hit with some significant financial loss. It claims that its losses can be attributed to trouble the unit has experienced in accounting for an increase in litigation and claims that come amid an Ontario government effort to lower automobile insurance costs.
Is this the beginning of many insurance companies reporting such financial losses? What is next for TD Canada trust automobile insurance in Ontario and for other major insurance companies?
So how exactly did TD get into this mess anyway? If we look back only about 18 months ago, we see that TD Canada trust insurance, formerly known as Meloche Monnex insurance; seem to offer the cheapest car insurance in Ontario available.
“For a period of time extending about one year or thereabouts, they were quite simply had the best rate the cheapest car insurance in Ontario”, said an industry expert.
By offering cheap Ontario car insurance, TD Canada trust insurance, was able to gain some significant market share from its competitors who also offered auto insurance in Ontario. But this gain in market share of consumers by taking from its competitors seems to have come at a significant financial cost to TD Canada trust automobile insurance.
This news begs the question; who else will be in financial trouble, what other insurance companies who claim to have cheap Ontario automobile insurance, will fall prey to a significant financial losses?
If we use history as a guide, there is a very apparent trend that occurs. A strong co-relation can be made between those larger insurance companies who offer the cheapest car insurance in Ontario in a given period of time, who are soon forced in to a future set of actions. These actions are usually by way of a significant increase in automobile insurance rates in Ontario that they then charge their client base. This is precisely how they pull themselves out of financial losses.
“What appears to be an amazing car insurance deal, for those folks who obtain cheap car insurance in Ontario, the immediate future is quite pleasing to the eye, but only to be setting the stage for a series of financial pain in future years. It is not uncommon for an insurance company who offers cheap automobile insurance in Ontario to subsequently raise their car insurance rates 20, 30, and even 40% within the next 24 months following,” said an industry expert.
It is likely that TD Canada trust will be faced with one of two or three choices. The most likely of the outcomes, will be that TD Canada trust car insurance will be forced to raise their rates across the board for all property and casualty insurance. It is highly likely that those consumers in Ontario who had recently purchased or are an existing client of TD Canada trust automobile insurance, will see their rates rise in the immediate future, especially upon receiving notice of renewal.
The case remains solid for those who use an automobile insurance broker. The unbiased, independent, objective advice and counsel provided by a good car insurance broker in Ontario, seems to be the best savings in the long run.
Chasing the cheapest automobile insurance in Ontario may save you some pennies today, but you’ve got to ask yourself at what future expense?
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