March 10, 2014 by Canadian Underwriter
The Ontario Trial Lawyers Association (OTLA) is urging Ontario MPPs to push for amendments to proposed auto legislation that, among other things, would change the prejudgment interest rate in pain and suffering claims.
The draft legislation would lower the rate to 1.3% from the current 5%, notes a statement issued Friday by OTLA, formed in 1991 by lawyers acting for plaintiffs.
If approved, the OTLA contends, insurers could profit “particularly in serious cases as they can earn greater returns by delaying settlement and investing the funds,” the association contends.
“Why would an insurer pay out a claim when it can make money by delaying that claim indefinitely? When they are getting 4% on their money, and they only have to pay interest to the claimant at 1.3%, they can’t lose in that scenario,” OTLA president Charles Gluckstein charges.
OTLA reports it is also concerned about certain changes to Ontario’s auto insurance dispute resolution system (DRS). A recent review by Justice Douglas Cunningham includes a number of sensible reforms, OTLA notes, but the group strongly cautions the government to reconsider changes that it argues “would deprive injured accident victims of the opportunity to access the courts in cases involving denials of statutory accident benefits.”
Finance minister Charles Sousa announced Mar. 4 that the provincial government was taking further action to reduce auto insurance rates by introducing legislation. “The measures we’re introducing today will help further tackle fraud, reduce costs and continue to lower auto insurance rates. These measures build on our previous work and would help ensure a fair and affordable auto insurance system for Ontario drivers,” Sousa says in a statement.
Among other things, the Fighting Fraud and Reducing Insurance Rates Act proposes the following:
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