NDP presses for auto premium reductions in Ontario budget

The Ontario New Democratic Party continued Thursday to press the ruling minority Liberal provincial government to force insurance carriers to reduce personal auto premiums by 15%, while government members are focusing on implementing additional anti-fraud measures and the Insurance Bureau of Canada questions the NDP’s math.

 “So we’re saying a 15% reduction,” Gilles Bisson, NDP Member of Provincial Parliament for Timmins-James Bay, said Thursday in the legislature.

“The government, what are they saying? ‘Oh, yeah. Let’s do some more for those poor auto insurance companies. They’re hurting so bad. Let’s help them along. They need another break because they’ve got to make more money.'”

Bisson was referring to the government’s pledge to implement the 38 recommendations of the Auto Insurance Anti-Fraud Task Force, which released its report late last year.

Background: Ontario anti-fraud task force calls for licensing clinics, greater power for FSCO in final report

“We’re implementing the recommendations of the Auto Insurance Anti-Fraud Task Force,” said Vic Dhillon, parliamentary assistant to consumer services minister Tracy MacCharles and MPP for Brampton West, in the legislature.

“New regulatory amendments being introduced will help prevent auto insurance fraud and protect consumers by requiring insurers to provide claimants with all reasons for denying a claim, giving claimants the right to receive bimonthly detailed statements of benefits paid out on their behalf, increasing the role of claimants in fraud prevention, making providers subject to sanctions for overcharging insurers for goods and services, and banning them from asking consumers to sign blank claim forms.”

But NDP leader Andrea Horwath said in the legislature Thursday that changes so far have resulted in “$2 billion in extra profits” to the insurance industry.

An NDP spokesperson told Canadian Underwriter Friday that figure is the reduction in accident benefit payments due to the insurance reforms introduced in September 2010, including the $3,500 cap on payments for injuries under the minor injury guideline.

Related: IBC says Ontario NDP’s plan to reduce auto insurance rates “arbitrary”

Referring to figures from the General Insurance Statistical Agency (GISA), the NDP spokesperson added the loss ratio in Ontario dropped from 89 in 2010 to 65 in 2011. He was referring to GISA’s “Earned Incurred Loss Ratio,” which is the ratio of claims and adjustment expenses incurred to earned premiums. In that ratio, GISA includes expenses associated with servicing policyholders’ claims but does not include other automobile insurance company operating expenses, such as marketing and general administration.

A spokesperson for IBC said Friday the Ontario auto insurance industry “lost an average of nearly a billion dollars a year between 2008 and 2010 on the auto product,” including a $1.7 billion loss in 2010.

“We really question the NDP’s math and we really need to put what they are saying into context,” the spokesperson wrote in an e-mail to Canadian Underwriter. “Of the $233.2 million earned in profits in 2011, there were more than $10.3 billion in written premiums. Most of the money collected is returned back to claimants.”

But Horwath suggested Thursday she wants the Liberal budget for 2013-14 to include measures to reduce premiums. Earlier this month, she had proposed that the Financial Services Commission of Ontario (FSCO) be mandated to reduce auto premiums by 15% by March, 2014.

“The rubber hits the road in a budget, and in that budget I want to see affordability measures, particularly on auto insurance,” Howath said, noting Tuesday’s Speech from the Throne only had “nice words” and nice promises.”

“The day-to-day interests of people across Ontario must be addressed, and your government will strive to protect their privacy and their pocketbooks,” the government said when opening the latest session of the legislature Feb. 19. “It will help this province’s nine million drivers by continuing to implement the recommendations of the Auto Insurance Anti-Fraud Task Force, protecting individuals against fraud and working to reduce insurance rates across Ontario.”

On Wednesday, NDP consumer services critic Jasmeet Singh asked Premier Kathleen Wynne whether the government plans “to give safe drivers in Ontario a break by actually ensuring that insurance rates in Ontario are cut.” Wynne referred the question to Finance Minister Charles Sousa, who noted auto insurance claims are more expensive in Ontario than in other provinces.

“We have to get at that root cause,” Sousa said during Question Period. “We can’t make this a band-aid solution. We have to get at the issues, and I welcome your input to enable us to get at that resolve.”

Singh, who represents the suburban Toronto riding of Bramalea-Gore-Malton, claimed that auto premiums have gone up, though Sousa said in 2012 they dropped by 0.2%.

“Some of the transformations we’ve put forward have already resulted in the stabilization of some of those rates, but more needs to be done,” Sousa said.

In addition to the cap on minor injury benefits payments, the 2010 reforms also included a requirement for insurance firms to send benefits statement to claimants. It also reduced medical, rehabilitation and attendant care benefits in the standard auto policy (SAP) for non catastrophic injuries.

Before, standard auto policies were required to cover up to $100,000 in medical and rehab and up to $72,000 for attendant care. The SAP now requires up to $50,000 coverage for medical and rehab and $36,000 for attendant care. The income replacement under the SAP was reduced from 80 to 70% of income, though the maximum stayed at $400 a week. Under the current SAP, policyholders have the option to purchase additional income replacement of up to $1,000 week, and can purchase additional medical coverage.

Last November, the anti-fraud task force released recommendations on additional measures to reduce fraud, including:

-Legislative protection prohibiting reprisal or retribution against individuals who, in good faith, provide information about suspected fraud;

-Requiring the licensing of health clinics that treat and assess auto insurance claimants and give the Financial Services Commission of Ontario the power to regulate their business practices;

-Have FSCO create an” Auto Insurance Fraud Information Hotline” to let people report suspicious activity in the auto insurance;

-Allowing carriers to collect a cancellation fee for claimants who fail to attend a medical examination at the agreed time, without reasonable notice or explanation;

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Addressing the current backlog of mediation cases before FSCO;

-Ensuring that government-wide hiring constraints do not delay or prevent the FSCO from acquiring the necessary staff and expertise it requires to carry additional responsibilities recommended by the task force;

-Requiring claimants to confirm attendance at treatment facilities and receipt of goods and services billed to insurers;

-Requiring insurers to itemize the list of invoices they have received when they provide a benefit statement to a claimant every two months;

-Ensuring early assignment and continuity of crown attorneys in large complex auto insurance fraud prosecutions;

-Giving insurance carriers the power to examine a claimant under oath, where this is necessary to determine which insurer should be responsible for coverage, without prejudice to the right for an examination under oath;

-Treatment protocols for minor injuries that are based on scientific evidence;

-Amending the Statutory Accident Benefits Schedule to make it clear that insurers are required to provide claimants with a full explanation when refusing to pay for treatment, assessment or other benefits;

-An Ontario-wide licensing scheme for the towing industry;

-Having insurers collect information about towing expenses to facilitate analysis of relationships between tow operators, collision repair facilities and health care clinics;

-Have the Ontario government ask the federal government to “move quickly to secure passage of amendments to the Personal Information Protection and Electronic Documents Act that are now before the House of Commons in Bill C-12,” with the goal of removing any undue limitations on the ability of insurers to pool claims information to combat fraud;

-Increase FSCO’s powers to investigate and sanction unfair or deceptive acts or practices;

-Requiring the development of protocols for active information sharing about suspicious cases among the investigative divisions of FSCO, the Workplace Safety and Insurance Board and Ontario Health Insurance Plan;

-Develop protocols to permit FSCO investigators to exchange information with investigators from federal organizations such as the Canada Revenue Agency; and

-Clarifying the exemption for lawyers and paralegals in the unfair or deceptive acts or practices regulation so that it applies to lawyers and paralegals only when they are acting in a legal capacity.

Photos: Ontario Premier Kathleen Wynne (left) and Ontario NDP leader Andrea Horwath (right)