AUTO INSURANCE: Bill 171 l Bill 189

Bill 171: Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014
Bill 171, the Fighting Fraud and Reducing Automobile Insurance Rates Act was introduced on March 4, 2014. Its the latest effort by the Ontario government to implement the Auto Insurance Anti-Fraud Task Force Report and to help achieve the Ontario Governments promised 15% average rate reduction by August 2015. Consumers need this bill passed if theres going to be any chance of getting rates down responsibly IBAO strongly supports this legislation and is urging the government and all parties to pass Bill 171 as soon as possible Were happy to see the government continue to implement these much needed reforms to fight fraud and lower rates for drivers; the faster fraud can be combatted, the faster premiums can be lowered That said, its important to understand that the reforms underlying the promised reductions will take time What Does Bill 171 Do? 1) Fixes prejudgment interest anomaly Prejudgment interest (PJI) is the interest paid to claimants on non-pecuniary, general damages (pain and suffering) due to collisions; its calculated from the date a plaintiff commences an action to the date a judgment is rendered, and is intended to compensate and ensure a plaintiff is kept whole while he or she waits for a judgment on his/her case The current PJI is an anomaly, fixed in legislation at 5%; all other forms of PJI in Ontario are set based on prevailing interest rates (currently, the rate is 1.3%) Bill 171 aligns the prejudgment interest rate with the interest rate for special damages (economic losses) at 1.3% IBAO Response: The current generous PJI is incenting certain bad actors who are abusing the system to delay dispute resolution as long as possible in order to take advantage of the generous interest rate. This measure alone will save millions of dollars and speed up dispute resolution without affecting a deserving victims benefits in any way. 2) Fixes Dispute Resolution System (DRS) Implements recently completed (Feb 2014) Cunningham Report which states the current system is broken. The Cunningham Report, if implemented, would ensure timeliness, accessibility by claimants, predictability and cost-effectiveness. The proposals would, if implemented properly, prevent backlogs and reduce the 16,000 case backlog currently in the arbitration system. Transfers DRS from FSCO to the Attorney General Appoints tribunal members subject to a periodic renewal and a fixed maximum tenure to enhance accountability

Limits a claimants access to the courts while a dispute is at the new tribunal this is being severely criticized by the Trial Lawyers, but is common practice for DRSs of this kind; as always, claimants may appeal to the courts if there is an error in law Most of the details of the reformed DRS are left to regulation

IBAO Response: Its vitally important to get on with the implementation of Justice Cunninghams report. The current system is delaying timely resolution of disputes for our customers and is unnecessarily expensive and inefficient. Passing Bill 171 will lower costs in the system which are ultimately paid by all of us, and will provide timely access to a workable dispute resolution system. 3) Fixes the Repair and Storage Liens Act to end abuse Bill 171 amendments to the Repair and Storage Liens Act are designed to reduce unreasonable storage costs for vehicles damaged in motor vehicle collisions Currently, vehicles involved in collisions may be taken to storage facilities that will begin to charge the owner of the vehicle immediately Unscrupulous shops are also charging exorbitant storage rates Current legislation allows a facility to hold a vehicle for 60 days before notifying the owner Often, and deliberately, the owner may not be aware that these exorbitant costs are accumulating Facilities can, and do, increase their revenues by waiting until the 60 day period has expired before notifying the owner Bill 171 requires facilities to notify owners right away and sets by regulation the fair storage rate IBAO Response: The changes to the Repair and Storage Liens Act are long overdue. 4) Health Clinic Licensing Bill 171 continues to shore up the requirement for health clinics that provide statutory accident benefits (SABS) to be licensed Bill 171 clarifies that a licensed clinic does not have to be owned by a regulated health professional It also amends the Act to deal with transition to the new licensing regime IBAO Response: Health Clinic licensing is vital to fighting fraud.

Bill 189: The Roadside Assistance Protection Act, 2014

On April 15, 2014, the Minister of Consumer Services, Tracy MacCharles, introduced the Roadside Assistance Protection Act to protect consumers from tow truck operators and owners who have been reported to be taking advantage of consumers. This bill does not create a licensing regime for tow truck operators. The government says that theyre still consulting on that, but to still expect action on that front in the future. The proposed legislation and supporting regulations would require tow truck operators and storage providers to:

Have permission from a consumer or someone acting on behalf of the consumer before charging for towing and storage services Publicly post prices and other information, like the operator's name and contact information Accept credit card payments from consumers Provide an itemized invoice listing the services provided and the total cost

Bill 189 also proposes to include tow trucks in the province's existing Commercial Vehicle Operator's Registration (CVOR) system to improve road safety through government monitoring and enforcement measures. Operators that violate the new rules will be subject to an administrative penalty regime. The specific consumer protections that the bill authorizes are in respect of: 1. Required disclosure of information to consumers. 2. Requirements that tow and storage services provided to consumers be authorized. 3. Deviating from estimated payment amounts. 4. The provision of itemized invoices. 5. Insurance requirements. 6. Publication of rates. 7. A Tow and Storage Consumers Bill of Rights. 8. Requirements that consumers be allowed to remove personal property from towed or stored vehicles. 9. The establishment of qualifications for tow and storage providers. IBAO strongly supports this Bill along with Bill 189. We urge all parties to do what is necessary to pass this legislation as soon as possible.

Auto Insurance 15% Rate Reduction Strategy

The government recently announced that rates have been reduced by 5.67% on average since August 2013. Whats the status of the promised 15% average reduction in auto rates? The government has set a target to reduce rates on average by 15% over two years ending August 2015: o 8% by August 2014 (the first 4% was achieved during the 4th quarter of 2013 and announced on January 15, 2014); o another 7% by August 2015 The reduction target is 15% on AVERAGE This means not everyone is guaranteed to see a 15% reduction The promised rate reductions are not instant and are going to take time It will depend on a number of factors: o Your insurer companies that can demonstrate they cant provide the reduction dont have to o Where one lives insurers price by territory claim experience and can justify different rates depending on where one lives o Ones individual characteristics its an average, so some may get higher reductions while others could get lower reductions The rate reductions, particularly in the second year, will depend on how successful the government is in reducing the cost of fraud, mostly in health claims

The government is working on licensing of health care clinics and regulating the towing industry, but this will take time The faster fraud can be combatted, the faster premiums can be lowered, but it cant be done overnight itll take time