Ontario’s proposed towing legislation a good first step: IBC

The Insurance Bureau of Canada (IBC) has lent its support to draft legislation tabled by the Ontario government Tuesday meant to combat auto insurance fraud by aiding disclosure and enhancing transparency for consumers requiring towing services.

Characterizing the Roadside Assistance Protection Act as long overdue, IBC reports in a statement that the proposed changes will bring clarity to consumers with their interaction with tow truck operators.

Ontario’s Ministry of Consumer Services reports that the measures will strengthen consumer protection and further reduce auto insurance rates by regulating the towing and vehicle storage industries. The proposed legislation and supporting regulations, if passed, would require tow truck operators and storage providers to do the following:

• have permission from a consumer or someone acting on behalf of the consumer before charging for towing and storage services;
• publicly post prices and other information, such as the operator’s name and contact information;
• accept credit card payments from consumers; and
• provide an itemized invoice listing the services provided and the total cost.

Ralph Palumbo, vice president of Ontario for IBC, calls the Consumer Bill of Rights a positive step. “In addition to protecting consumers from unscrupulous operators, this bill will help combat insurance fraud, and may ultimately save consumers money and make our roads safer,” Palumbo contends.

IBC’s hope is that measures within the bill “will address concerns about fraud as noted in the Auto Insurance Anti-Fraud Task Force Report,” he says.

In response to a Ministry of Consumer Services consultation, IBC’s Towing Working recently recommended the following to the Ontario government:

• implement a standardized invoice and tow authorization form;
• enact the Fair Value Guidelines principles;
• shorten the notice period in the Repair and Storage Liens Act; and
• establish a provincial tow licence and include tow trucks within the Commercial Vehicle Operator’s Registration (CVOR).

“We look forward to working with the government on these important issues.   Once all of these items are addressed, our roads will be safer, and consumers will be better protected and informed,” Palumbo says.

As part of the draft legislation tabled Tuesday, Ontario is proposing to include tow trucks in the existing CVOR registration system “to improve road safety through government monitoring and enforcement measures. The proposed changes and additional oversight would contribute to lower costs in Ontario’s auto insurance system,” notes the statement from Ontario’s consumer services ministry.

The ministry reports that in 2010, tow truck operators in Ontario had a 19.7% collision rate compared to only 1.1% for drivers of other commercial vehicles.

The proposed legislation is just one part of Ontario’s Auto Insurance Cost and Rate Reduction Strategy, which seeks to fulfill the provincial government’s promise to cut auto insurance rates by an average of 15% by August 2015.

In a statement Tuesday, finance minister Charles Sousa said progress is being made, pointing out that rates approved by the provincial regulator have dropped almost 6% on average since August 2013.

Average rates decreased by 3.98% for the fourth quarter of 2013 and by 0.68% for the third quarter of 2013, the statement notes. In total, approved rates have declined on average by 5.67% across the entire market since August 2013.

“Our government is working hard to ensure a fair and affordable auto insurance system for Ontario’s 9 million drivers,” Sousa says in the statement. “With the most recent rate reduction, we are closer to achieving the 15% reduction by August 2015. We’re also moving forward with measures that would help reward safe drivers with lower rates,” the minister adds.

Ontario is further reducing costs and uncertainty in the auto insurance system, fighting fraud and protecting consumers by doing the following:

• establishing a project team to inform the creation of a dedicated investigation and prosecution office;
• posting third-party Accountability Expert Reports in August of every year; and
• encouraging insurers to offer consumers usage-based insurance, which uses technology to identify and offer discounts for safe driving habits.