Ontario can’t reduce auto premiums 15% without Bill 171: Brokers’ group

The Insurance Brokers Association of Ontario (IBAO) is urging provincial politicians to vote in favour of a bill that proposes to make several changes to the auto insurance dispute resolution system.

If Bill 171, the Fighting Fraud and Reducing Automobile Insurance Rates Act, does not get passed into law, “there will be no way for Ontario to deliver the promised 15% average rate reduction by August 2015,” IBAO warned in a press release Monday. 

IBAO was referring to the industry-wide target reduction, by 15% over two years, of the “average of the authorized rates that may be charged by insurers” for private passenger auto. As of last August, Ontario auto carriers were essentially required, when filing rates, to propose premiums that “contribute adequately” to that target.

Bill 171, which passed second reading April 14 and is now before the Standing Committee on General Government, proposes to amend the Insurance Act, the Repair and Storage Liens Act, the Licence Appeal Tribunal Act, the Motor Vehicle Accident Claims Act and the Financial Services Commission of Ontario Act.

Ontario currently has a minority Liberal government, and members of provincial parliament from both the Progressive Conservative and New Democratic Party have expressed misgivings with the bill in its current form.

If passed into law with no amendments, Bill 171 would repeal sections 279 through 288 of the Insurance Act, which stipulate the dispute resolution procedure. In essence, policyholders are currently allowed to bring disputes to court under certain conditions, such as seeking mediation beforehand. But Bill 171 proposes to stipulate that “no person may bring a proceeding in any court with respect to” a dispute over statutory accident benefits, “other than an appeal from a decision of the Licence Appeal Tribunal or an application for judicial review.”

Peter Tabuns, NDP MPP for Toronto-Danforth, contended in the legislature that under Bill 171, “the right to sue will be taken away entirely and require claimants to advance claims to the Licence Appeal Tribunal in the Ministry of the Attorney General.” This, he charged, “is denial to access to justice for Ontarians when they are most vulnerable due to injury.”

Vic Fedeli, the PC party’s finance critic, contended in March that Bill 171 “eliminates the option of the courts.”

Bill 171 also proposes to allow only licenced health care providers to get paid on auto claims directly by insurance carriers, and to give the government the authority to “reduce the number of days, currently at 60, within which a storer has to give notice, where required, to owners of vehicles and still claim a lien,” Finance Minister Charles Sousa said when he tabled the bill in March.

It would also change the “prejudgment interest rate on general damages for pain and suffering” in auto claims, from the current 5%, to “linking it to market conditions,” Sousa noted.

With Bill 171, the ruling Liberals are proposing to implement a recommendation of the Automobile Dispute Resolution System (DRS) Review, written by former judge J. Douglas Cunningham, to appoint a “public sector administrative tribunal” for dealing with auto insurance disputes. Cunningham recommended that such a tribunal fall under a Cabinet minister instead of the superintendent of financial services.  If Bill 171 is passed into law, the responsibility for administering the dispute resolution system and its adjudicative process would move from FSCO to the Ministry of the Attorney General.

“Bill 171 lowers prejudgment interest (PJI) to a reasonable rate, fixes the dispute resolution system as recommended in the Cunningham report, protects consumers from untrustworthy repair and storage shops, and helps implement health clinic licensing,” IBAO stated April 28.

“We’re happy to see the government continue to implement these much needed reforms to fight fraud and lower rates for drivers,” IBAO CEO Randy Carroll stated in the release. “However, it’s important to understand that the reforms underlying the promised reductions will take time.  Not passing (Bill 171) will make it nearly impossible.”

When the amendments to the Automobile Insurance Rate Stabilization Act (AIRSA) took effect in August, 2013, IBAO warned at the time of an “inherent risk that the result of” the change “could result in future availability and affordability concerns for consumers in this province.”

Opposition MPPs have praised some provisions of Bill 171. PC consumer services critic Toby Barrett has suggested the changes to the Repair and Storage Liens Act is designed to reduce claims costs.

“The issue here is that vehicles that are involved in collisions may be taken to storage facilities where the charges kick in immediately,” he said at Queen’s Park. “The problem is that the owner may not be aware of this. The present legislation allows the facility to hold a vehicle for 60 days before notifying the owner. Again, the 60-day period is expired and then you’re notified.”