June 13, 2014 by Greg Meckbach, Associate Editor
Now that the Ontario Liberals have a majority government, they reportedly plan to re-table a budget in which they proposed to prohibit credit unions from promoting auto and home insurance online and to develop an office dedicated to investigating and prosecuting “serious fraud,” including fraudulent auto insurance claims.
Meanwhile, the provincial insurance brokers’ association is calling on Premier Kathleen Wynne to re-introduce legislation that would, among other things, allow only licenced health care providers to be paid directly by carriers for auto claims and to require towing firms to disclose any interest they have in auto repair or storage facilities.
Both The Globe and Mail and Global News Friday quoted Wynne as saying she will re-introduce the budget that was originally tabled in the legislature May 1.
In that budget, the government said it is “building on the steps it has taken” to reduce auto insurance claims costs “by developing 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 had recommended the early assignment and continuity of crown attorneys in large, complex auto insurance fraud prosecutions.
In their 2014-15 budget document, the Liberals also proposed May 1 to “prohibit credit unions from online promotion of insurance products such as home and auto insurance, which they are not permitted to promote in their branches.”
That measure would protect consumers “who are vulnerable at the point of lending from an obligation to purchase an important insurance product under duress,” the Insurance Brokers Association of Ontario (IBAO) said in a press release after the budget was tabled.
IBAO noted at the time that insurance products require “different competencies” than wealth management services. So forbidding credit unions from promoting home and auto coverage online would protect consumers “from cross-selling tactics from persons not properly trained to provide insurance advice,” IBAO stated at the time.
When Sousa tabled the budget May 1, the Liberals only held 48 seats in the 107-seat legislature. Progressive Conservative leader Tim Hudak told reporters May 1 his party would not support the budget, while New Democratic Party leader Andrea Horwath confirmed the following day her party would not support it either. So on the advice of Wynne, Lieutenant Governor David Onley dissolved the legislature and called the election for June 12. Published reports indicate Liberal candidates won in 59 ridings.
When the legislature was dissolved last month, several bills had died on the order paper. Government bills that would have to be re-introduced in the next session of the legislature include:
– Bill 171, the Fighting Fraud and Reducing Automobile Insurance Rates Act, which passed second reading April 14 and was referred to the Standing Committee on General Government.
In Bill 171, tabled by Sousa, the government proposed to allow only licenced health care providers to be paid on auto claims directly by insurance carriers. That bill also proposed 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.”
– Bill 189, the Roadside Assistance Protection Act, which Consumer Services Minister Tracy MacCharles tabled April 15.
Bill 189 would require towing and storage providers to publish their rates, provide an itemized invoices, accept payment by credit card if requested and to “disclose to the consumer any interest a towing and storage provider may have in a location or facility to which a vehicle may be towed for repair or storage,” MacCharles said when she tabled the bill. If passed into law, Bill 189 would also stipulate the consumers be given access to towed vehicles in order to remove personal property.
– Bill 78, the Electronic Personal Health Information Protection Act, which was tabled by Health Minister Deb Matthews and last debated April 28 on second reading.
If passed into law, this bill would prohibit “a health information custodian from collecting personal health information from the electronic health record maintained by a prescribed organization except for the purposes of providing or assisting in the provision of health care to an individual, or eliminating or reducing a significant risk of serious bodily harm to a person or group of persons, where the health information custodian believes on reasonable grounds that the collection is necessary for this purpose.”
On Friday, the IBAO stated in a press release it “looks forward to working with the new Liberal government to continue where the past minority parliament left off.”
In particular, IBAO stated, “we would like to see the reintroduction of legislation formerly known as Bills 171 and 189 to continue the responsible reforms needed to combat fraud and lower auto insurance rates for Ontario’s consumers.”
Now that the Liberals no longer rely on the NDP for support, it is unclear how the Liberals will handle private passenger auto rate filings. In Ontario, auto insurers must submit proposed rate changes to the Financial Services Commission of Ontario (FSCO) for approval. FSCO and its actuaries are mandated to review the carriers’ submissions in order to ensure that the proposed rates are not excessive but are also not going to impair a company’s long-term solvency.
In August 2013, the government mandated “an industry-wide target reduction,” by 15%, of the “average of the authorized rates that may be charged by insurers” for private passenger auto, with a two-year target. The law requires carriers, when filing an application, “to propose rates and a risk classification system that contribute adequately to the achievement of” the 15% target. That measure was made at the behest of the NDP, which had supported the 2013-14 budget on the condition that the Liberals reduce private passenger auto premiums by 15%.
As of April 15, 2014 there had a total rate reduction of more than 5.6%, industry-wide, since August, 2013, the Liberals noted May 1 in their 2014-15 budget document.
“While the progress has been achieved to date, further actions will be required to meet the average rate reduction targets,” according to the document. “It is critical that industry play its part and take concrete steps to lower costs, control overhead and manage claims effectively and fairly. The government will continue to review industry’s efforts as the strategy progresses.”
In the 2014-15 fiscal year, the Liberals are planning to spend $130.4 billion while raising $118.9 billion in revenue. So by March 31, 2015, the accumulated debt is budgeted to increase from $177.26 billion to $189.76 billion. The net debt – which factors in the debt of hospitals, colleges and school boards – is projected to rise from $269.15 billion to $289.2 billion by March 31, 2015.
Other measures proposed in the budget tabled May 1 include:
– Raising individual tax rates for those earning $150,000 or more. In Ontario in 2013, individuals paid 5.05% on the first $40,120 of taxable income, 9.15% on the next $40,122, 11.16% on the next $433,848, and 13.16 % on the amount over $514,090. Starting with income earned in 2014, the Liberals plan to lower the taxable income threshold for the 13.16 per cent tax rate from $514,090 to $220,000 and to add a new tax rate of 12.16% on taxable income between $150,000 and $220,000.
– A new Ontario Retirement Pension Plan (ORPP), intended to supplement retirement income from the Canada Pension Plan, e
xcept it would not be mandatory for employees “already participating in a comparable workplace pension plan.” ORPP will require equal contributions, not exceeding 1.9% each, from employers and employees, on earnings up to a maximum annual earnings threshold of $90,000.
– An increase, to $16.50 per hour by 2017, of the base wage for personal support workers “in the publicly funded home and community care sector.” Wage increases would be $1.50 per hour in 2014-15, an additional $1.50 per hour in 2015-16 and another $1 per hour in 2016-17.
Image Credit: Ontario Liberal Party