Ontario government plans to move auto insurance dispute resolution system out of FSCO

The Ontario government is introducing legislation that would move administration of the current dispute resolution system for auto insurance claims from the Financial Services Commission of Ontario to the Ministry of the Attorney General’s Licence Appeal Tribunal.

In an announcement Tuesday, the Liberal government said the proposed move “would help cut down on consumer frustration as well as curb financial and administrative stress on the system, which can increase costs and cause rates to go up.”

On Feb. 18, a final review, written by J. Douglas Cunningham, a former associate chief justice at the Ontario Superior Court, was released with 28 recommendations for improving the flawed dispute resolution system.

Among the recommendations, Cunningham suggested a “public sector administrative tribunal” for dealing with disputes arising from the Statutory Accident Benefits Schedule in the Insurance Act.

The government also announced Tuesday other proposed changes to the auto insurance system as part of ongoing efforts to reduce rates by an average of 15% by August 2015, with plans to reach an 8% reduction by this August.

As part of its “Fighting Fraud and Reducing Insurance Rates Act” it would establish a “transition strategy” for licensing health service providers who hill auto insurers, so that only licensed providers could be paid directly by insurers.

The legislation would also reduce the amount of time a vehicle could be stored and accruing charges following an accident without notice to the driver from 60 days to a “shorter timeframe.”

The government said it would also be “exploring the establishment of a special investigation and prosecution unit on serious fraud, including auto insurance fraud.”

Although its legislation hasn’t addressed it yet, the government added that it will continue looking into a province-wide approach to oversight of the towing industry. It is currently consulting with the industry and will be producing recommendations later this month, according to its statement Tuesday.

“We’re pleased that the government is fulfilling its promise to introduce changes to reduce costs and uncertainty in the auto insurance system,” Ralph Palumbo, vice president for the Ontario region at the Insurance Bureau of Canada said in a press release Tuesday.

“The insurance industry is committed to doing whatever it takes to build an auto insurance system that will work for decades to come. Access to affordable insurance is fundamental to the health and success of Ontarians.”