Opposition politicians criticize Ontario government proposal to reform auto insurance dispute resolution system

Ontario politicians from both the Progressive Conservative and New Democratic Party suggested this week will not stop the ruling minority Liberals’ latest auto insurance bill from going to committee, but the opposition is expressing strong reservations about the proposed changes to the dispute resolution system.

Bill 171, the “Fighting Fraud and Reducing Automobile Insurance Rates Act,” was tabled March 4 by Finance Minister Charles Sousa.

As of March 27, the legislature had yet to vote on whether Bill 171 would be sent to committee, but MPPs from both the PC and NDP parties indicated they would not defeat the bill on second reading.

“Ultimately, Bill 171 is an okay piece of legislation, but I do want to see some key amendments made at the committee level,” said Sylvia Jones, the PC MPP for Dufferin-Caledon, during the debate March 25.

“We are going to make sure that this bill does go to committee, because there’s a lot of work – tons of work – that needs to be done with that word that has been thrown loosely in there about helping consumers with the fraud piece,” Teresa Armstrong, a former insurance broker who is now the NDP MPP for London-Fanshawe, said in the legislature.

If passed into law, Bill 171 would 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. Only licenced health care providers would be able to get paid on auto claims directly by insurance carriers.

Bill 171 also proposes to give the Financial Services Commission of Ontario (FSCO) the authority to “revoke or immediately suspend the licences of agents and adjusters who act improperly and put the public at risk,” Sousa said March 4.

A contentious proposal is to move responsibility for administering the dispute resolution system and its adjudicative process from FSCO to the Ministry of the Attorney General.

J. Douglas Cunningham, former associate chief justice of the Ontario Superior Court, recommended earlier that the government appoint a “public sector administrative tribunal” for dealing with auto insurance disputes.

In his Ontario Automobile Dispute Resolution System (DRS) Review, released in February, Cunningham had recommended that the tribunal fall under a Cabinet minister instead of the superintendent of financial services.

Bill 171 also proposes to restrict Ontarians from bringing disputes over auto accident benefits to court, other than appeals from Licence Appeal Tribunal decisions.

“As it stands now, once a dispute moves through the mediation stage without resolution, the claimant and the insurer will get together with respective legal counsel and decide whether to take the case to an arbitrator or the courts,” said the PC finance critic Vic Fedeli, who represents the riding of Nipissing. “Bill 171 eliminates the option of the courts.”

Bill 171, Fedeli said in the legislature March 25, would remove “the inherent fairness of allowing a local judge to decide an issue in dispute.” It would also remove “the right to sue for extra contractual damages, leaving such issues strictly in the purview of a tribunal not authorized to deal with equities of the situation.”

Carriers and claimants, therefore, would have “to fight battles on two fronts rather than one on every case,” Fedeli added.

Armstrong echoed Fedeli’s concerns.

“One of the major changes that has happened here is now we have two places that accident victims, who have been involved in an unfortunate situation where they were injured, can use,” she said.

“If the accident victim was injured and it was someone else’s fault, the victim now has to pay a lawyer to bring two entirely different cases into two entirely different systems: one in the court against the person who injured you, and this new arbitration against your insurance company who denied your benefits. The accident victim now has huge extra legal costs and two different legal proceedings, one in the court system and one in the arbitration system.”

During the March 25 debate at Queen’s Park, both Liberal and NDP MPPs both took issue with the proposed move of the dispute resolution from FSCO to attorney general.

“The Attorney General’s office does employ individuals who have backgrounds in dispute settlement and, therefore, the skills necessary to conduct mediations adequately,” Fedeli said. “However, Bill 171 is being introduced for the purpose of reducing costs, so the government can deliver premium reductions.”

Fedeli noted FSCO is financed by the insurance industry.

“So moving any administrative function out of FSCO will reduce costs that industry have to pay FSCO,” Fedeli added. “Therefore, it’s conceivable the premiums could come down slightly. However, costs aren’t really reduced at all. Now, rather than paying for the dispute resolution system through auto insurance premiums, Ontarians will pay for it through their taxes.”

Paul Miller, the NDP MPP for Hamilton East-Stoney Creek, suggested that FSCO arbitrators have more expertise in auto insurance than Licence Appeal Tribunal members.

“The current arbitrators at the Financial Services Commission of Ontario are highly skilled, experienced, full-time, permanent, salaried employees who are hired to be independent -I repeat, independent – decision-makers,” Miller said. “The Liberal proposal would see them replaced with per diem arbitrators from the Licence Appeal Tribunal who typically deal with issues such as the Board of Funeral Services Act, the Collection Agencies Act, the Payday Loans Act and liquor licence violations, among other things – not what I would call experts in the field of insurance.”

Miller added the Licence Appeal Tribunal arbitrators “do not have the expertise to deal with the complex issues around liabilities and injured and vulnerable parties who are seeking redress from their insurance companies.”