FSCO to make insurer payments to Motor Vehicle Accident Claims Fund a priority

About six months after a pointed judicial observation about the roles played by insurers and the province’s Motor Vehicle Accident Claims Fund (MVACF), the Financial Services Commission of Ontario (FSCO) has made it a priority to clarify the roles of each in the claims process especially in the instance of an insolvent insurer.
The Ontario insurance regulator listed the above item in its draft statement of strategic priorities dated June 2009.
In Lombard v. Kent, in November 2008, Ontario Superior Court Justice Romain W.M. Pitt issued a strong rebuke to the insurance industry for failing to resolve coverage disputes between insurers quickly, thereby causing MVACF, a public fund, to pay statutory benefits to victims during the time it takes for the dispute to be resolved.
“In this case, as an example, over [Cdn]$1 million have been paid out of the public coffers in an attempt by the Fund to provide relief and prevent hardship to a severely injured victim,” Pitt wrote. “Since at least October 2004, K&E and Lombard were either aware or ought to have been aware of the accident and the Fund’s stop-gap intervention.
“The failure of both companies to act on their obvious knowledge that the Fund has no ultimate exposure has serious implications for the administration of the public finances of the province.
“It is a circumstance that obtains all too often, and for which insurers must be held to account.”
FSCO’s draft priorities make no reference to the case and are not linked in any way to any specific court decision. But they do talk of the need to “establish a protocol for the processing and payment of Statutory Accident Benefit Schedule (SABS) claims by [MVACF] and subsequent recovery of MVACF costs from the auto insurance industry in the event of an insolvent insurer.”
FSCO’s priorities also mention the need to enhance auto insurance regulatory data, particularly in the area of accident benefits claims costs.
For example, FSCO proposes to “undertake a study of closed bodily injury claims, in partnership with automobile insurers, to provide a more detailed analysis of the types of injuries, costs and other factors contributing to automobile insurance claims in Ontario.”