Canadian Underwriter

Ontario government to mandate disclosure of insurance claims history on used vehicles

February 25, 2016   by Greg Meckbach, Associate Editor

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Ontario’s Licence Appeal Tribunal will being accepting applications to deal with auto insurance claims disputes April 1, and the government will set up an office to focus on auto insurance fraud, the ruling Liberals suggested Thursday in their budget document.

The government will establish a serious fraud office with a special focus on insurance fraud

 “The government will establish a serious fraud office with a special focus on auto insurance fraud,” the government stated Thursday in its budget document for 2016-17. It is not clear when the new office will be up and running. Two years ago, when they released their 2014-15 budget, the Liberals also said they would develop “a dedicated investigation and prosecution office on serious fraud, with an initial focus on auto insurance fraud.”

In 2012, the Auto Insurance Anti-Fraud Task Force recommended an early assignment and continuity of crown attorneys in large complex auto insurance fraud prosecutions.

Then in 2014, the Liberals said that developing an office dedicated to serious fraud “would be based on the Task Force’s principle that fraudsters should be vigorously pursued and prosecuted where evidence warrants.”

In its 2016-17 budget document, the government stated Thursday it is “prepared to amend the Insurance Act to ensure that consumers are provided with complete information about the history of used vehicles.” Those amendments would “allow for regulations to be made to require insurers to provide claims and repair history information to motor vehicle dealers for disclosure to prospective used vehicle purchasers.”

The Liberals also alluded Thursday to one reform resulting from Bill 15, an omnibus bill passed in November, 2014. One result of Bill 15 is that the dispute resolution system, for statutory accident benefits, will move from the Financial Services Commission of Ontario (FSCO) to the Ministry of the Attorney General’s Licence Appeal Tribunal. Insured persons and insurers will also be prohibited from bringing such disputes into court, other than appeals from the Licence Appeal Tribunal or application for judicial review.

“The government has developed a new auto insurance dispute resolution system that will help Ontario drivers get faster access to the benefits they need,” the government stated in its 2016-17 budget document. “It will begin accepting dispute applications on April 1, 2016.”

The opposition Progressive Conservative party is “looking forward to the meetings that are ongoing between us and the regulator to learn exactly what the change is going to bring us,” PC Finance Critic Vic Fedeli said at a press conference Thursday.

Among other things, Bill 15 also reduces the prejudgment interest rate for non-pecuniary loss for personal injury in auto collisions. It also imposes new rules on towing and storage providers.

Insurance rates have decreased by more than 7% on average since August, 2013, the province noted in its 2016-17 budget document.

However, the Ontario Automobile Insurance Rate Stabilization Act (AIRSA), which passed in August, 2013, established an “industry-wide target reduction,” by 15% over two years, of the average private passenger auto premium. When AIRSA was passed into law, Ontario insurers were required to “propose rates and a risk classification system that contribute adequately to the achievement of” that 15% target.

“We have watched the insurance file go from a 15% reduction to 7% because it was a stretch goal,” Fedeli said Thursday. “So we are not really confident that the government has any solid plan for the insurance file in the province of Ontario.”

But on Thursday, the Liberals said that changes announced in last year’s budget “will work through the system to deliver further rate reductions.” Those changes take effect for collisions occurring on or after June 1, 2016.

Currently, Ontario vehicle owners must buy accidents benefits insurance covering $50,000 in medical and rehabilitation benefits, and $36,000 for attendant care, for non-catastrophic injuries. In a change announced in last year’s budget, the mandatory accident benefits coverage will change to $65,000 and that will include attendant care.

For catastrophic impairments, the coverage is are $1 million each for attendant care, and for medical and rehab. For accidents occurring on or after June 1, there will be one $1-million limit, for catastrophic impairments, covering medical, rehab and attendant care.

Also as of June 1, the criteria for catastrophic impairment will change for traumatic brain injuries, amputations, ambulatory mobility, loss of vision and mental and behavioural impairments. Furthermore, there will also be a new process for combining physical with mental and behavioural impairments.