March 19, 2015 by Canadian Underwriter
Sections of an Ontario law aimed at reducing auto insurance claims costs, which would give inspectors power to enter premises without a search warrant and remove records for review, take effect in less than two weeks.
Bill 15, the Fighting Fraud and Reducing Automobile Insurance Rates Act, is an omnibus bill that was passed into law Nov. 20. Not all provisions have taken effect, but a section of Bill 15 – that changes to the Consumer Protection Act to provide for the appointment of inspectors and inspection powers – comes into force April 1, the province announced March 14 in the Ontario Gazette.
Bill 15 will “provide new enforcement tools, such as allowing inspectors to issue orders where violations are found,” said Laura Albanese (pictured below), parliamentary assistant to Ontario Finance Minister Charles Sousa, when Bill 15 was tabled for second reading last October. She was commenting on the parts of Bill 15 that impose additional requirements on towing and storage providers.
Bill 15 will change the Consumer Protection Act to require tow and storage providers to publish their rates, accept credit card payments and provide itemized invoices before receiving payment. It “would require tow and storage providers to get authorization from the consumer, or someone acting on behalf of the consumer, before charging for towing and storage services,” Albanese said during the debates last fall.
It also reduces, from 60, the number of days that a vehicle can be stored after an accident without giving notice to the owner and other persons.
“Currently, when a vehicle has been damaged in an accident, it may be brought to a storage facility after the collision by someone other than the owner, or without the owner’s authority,” said Albanese, Liberal MPP for York South-Weston, of Bill 15 last October. “Those who store vehicles after accidents can begin charging for storage services right away, even though the owner of the vehicle may be unaware of where their car is located and that it is accumulating charges every day. Storers can hold a vehicle and accumulate storage charges for up to 60 days without giving any notice and then still claim a lien for the storage costs.”
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One change to the Consumer Protection Act – that takes effect April 1 as a result of Bill 15 – stipulates that a provincial inspector “may, without a warrant, enter and inspect any place in order to perform an inspection to ensure this Act is being complied with.”
An inspector may also “require the production of a record or other thing that the inspector thinks may be relevant to the inspection” and “remove for review and copying a record or other thing that the inspector thinks may be relevant to the inspection.”
Bill 15 includes a number of measures affecting tow truck operators.
The Highway Traffic Act will be changed such that tow truck operators will require a Commercial Vehicle Operator’s Registration (CVOR) certificate. The CVOR “is the best tool available, in our opinion, to deal with commercial vehicles on public roadways,” said Brian Patterson, president and chief executive officer of the Ontario Safety League, during a hearing last November before the Standing Committee on General Government. But other witnesses during the same hearing suggested there could be “unintentional consequences” if the hours of service requirement under CVOR applies to tow trucks.
“Tow operators do a lot of short tows, with a lot of time in between,” said Aris Marinos, a director of North American Auto Accident Pictures Towing Division, an association of independent tow truck operators, during the committee hearing. “There are no scheduled calls, so it’s all emergency towing, which will not leave enough time off consistently or consecutively to satisfy the requirements of the program.”
Bill 15 includes a number of other measures intended to help reduce auto insurers’ costs. For example, it reduces the prejudgment interest rate for non-pecuniary loss for auto accident victims. As of October, the prejudgment interest rate on damages for non-pecuniary loss in a personal injury action was 5% per year, while the rate “for most other damages is based on Bank of Canada interest rates and calculated quarterly,” Albanese said at the time.
“The 5%-per-year prejudgment interest rate for damages for non-pecuniary loss in a personal injury action increases the cost of bodily injury claims in the auto insurance system, which drives up costs for all consumers,” Albanese reported.
Bill 15 will also move the auto insurance claim dispute resolution system from the Financial Services Commission of Ontario (FSCO to the Ministry of the Attorney General’s licence appeal tribunal. The Liberals said last year that 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.”
So under Bill 15, a new section of the Insurance Act will allow insured persons and insurers to apply to the Licence Appeal Tribunal in order to resolve disputes “in respect of an insured person’s entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which an insured person is entitled.”
The Insurance Act will also prohibit parties from bringing such proceedings into court, “other than an appeal from a decision of the Licence Appeal Tribunal or an application for judicial review.”
Bill 15 will also give FSCO the authority to “revoke or immediately suspend the licences of agents and adjusters who act improperly and put the public at risk,” Albanese said last year. “Bill 15 would also align the process for these disciplinary hearings with modern principles of procedural fairness, including replacing the 90-year-old advisory board system with the existing Financial Services Tribunal.