Canadian Underwriter

A new regime for tow truck regulations? What auto insurers want to see

July 2, 2020   by David Gambrill

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Auto insurers are applauding Ontario’s creation of a new government task force to improve provincial oversight of the tow truck industry, citing the possibility of reducing insurance fraud and associated premium reductions for consumers.

“IBC applauds the Ontario government for taking action against criminal activity and violence in the towing industry,” said Kim Donaldson, IBC’s vice president for Ontario. “Insurance fraud is a safety issue for consumers. Lives can be put at risk as a result of these criminal actions. Insurance fraud costs Canadians in higher insurance premiums, and strains our already burdened health care services, emergency services and court systems.”

Three years ago, Aviva Canada estimated that insurance fraud was costing the Canadian P&C insurance industry up to $2 billion a year.

Last year, Aviva Canada ran an undercover operation in which auto fraud investigators, posing as motorists, asked for help from tow truck operators and collision repair centres. The investigators’ vehicles were outfitted with hidden cameras; of the 10 vehicles taken in for repair, nine resulted in fraudulent invoices, Aviva said at the time.

Aviva said its results from Project Bumper, if extrapolated across the province, would suggest Ontario auto insurers are paying about $580 million a year of fraud in Ontario alone.

“To all the bad actors out there, my message is very clear,” Ontario Premier Doug Ford said Monday, when announcing the formation of the tow truck task force. “The party’s over.”

Ontario Transportation Minister Caroline Mulroney said the task force has already met twice. Led by the ministries of transportation and the solicitor-general, the task force reportedly includes representation from the ministries of government and consumer services; municipal affairs and housing; labour, training and skills development; finance, and the Ontario Provincial Police.

The task force is reportedly consulting with the tow truck industry, law enforcement and other stakeholders. A set of recommendations is expected in late July.

“As part of the review, the task force may consider opportunities for increased protections for consumers against the first-to-scene unethical business practices that lead to accident chasing, insurance savings through a crackdown on insurance fraud rings, and improved consumer choice for payments and repairs,” IBC said in a press release. “The province is also reviewing ways to clear accidents faster from roadside, which would minimize lane reductions and reduce congestion on Ontario highways.”

Citing an anonymous source, the Globe & Mail reported that the task force would also be looking into “exploring a provincial licensing framework” for tow trucks. If so, that would represent a departure for the Ontario government, which had not previously put that on the table for negotiation, the paper reported.

Last year, auto insurers told Canadian Underwriter in a series on total losses that the province’s towing fees and operations should be regulated at a provincial level. Currently, Ontario municipalities oversee the trucking industry within their own jurisdictions. Their patchwork standards across the province have raised alarms for the province’s auto insurers for some time.

“Right now, municipalities have varying regulations and bylaws around how much a tow can cost, how the process works in terms of hooking the vehicle up, and where the vehicle goes,” Elliott Silverstein, manager of government relations at CAA South Central Ontario, told Canadian Underwriter last year. “Because there is no specific set of provincial regulations, the consumer really is at the mercy of what the municipalities have set out in their regulations. For municipalities that don’t have regulations, it is effectively the Wild West, where no rules apply, because there is no provincial model or minimum standard to work from.”


Feature photo by iStock/RyanJLane

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5 Comments » for A new regime for tow truck regulations? What auto insurers want to see
  1. Lawrence Gill says:

    About time the province took hold of these bandits

  2. W. Lord says:

    Stevie Wonder, Ray Charles and even our won late Jeff Healey could see there was consistently fraud and crime elements in this industry as in many other industries.
    Why did it take this long for any level of our government to see this and initiate some sort of plan to combat this? Are they blind or what?

  3. Diane Reid says:

    This industry has been like this for alot of years. My late husband worked in towing 30 years ago. He got “points” money from certain body shops for “recommendations” to customers. Officers got the same. The difference now is the turf wars are getting in the news. The collusion was an open secret. Proper regulation is needed province wide staring with police adhering to the list provided and not first come first served.

  4. Saul says:

    Now that they starting going trough this why not go over insurance companies too? As they very often rise prices making impossible for many peoples to afforded. (In one case i was told by agent ” if you need it you have to pay it” unfortunately they are correct.

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