Fighting Fraud and Reducing Automobile Insurance Rates Act
Ontario is introducing new initiatives to better protect the over nine million drivers in the province and reduce costs and uncertainty in the auto insurance system. Reducing costs is expected to help lower insurance rates for Ontario drivers.
Transforming Ontario's Auto Insurance Dispute Resolution System
The province is proposing changes to the current Dispute Resolution System (DRS) that, if passed, would help those injured in motor vehicle collisions settle disputed auto insurance claims faster.
The Auto Insurance Anti-Fraud Task Force recommended the creation of a more robust DRS in its final report in November 2012. The government appointed J. Douglas Cunningham, a former Associate Chief Justice of the Ontario Superior Court, to lead a review of the current process in August 2013. Mr. Cunningham received input from 35 stakeholders, including written submissions and in-person meetings. He delivered an interim report in November 2013 and subsequently consulted on a possible framework for legislation.
The final report was released on Feb. 18, 2014, and contained 28 recommendations to transform the process.
The proposed changes would create a new framework for the DRS by moving responsibility from the Financial Services Commission of Ontario (FSCO) to an existing tribunal administered by the Ministry of the Attorney General (the Licence Appeal Tribunal). This proposed move would help resolve disputes faster by making the process more effective and efficient, while ensuring it remains accessible for accident victims. Having Ontario's auto insurance dispute resolution operate as an administrative tribunal was a key recommendation of the review.
The current DRS has created considerable uncertainty in the auto insurance system. If passed, the proposed changes would expedite the resolution of disputes as well as reduce financial and administrative pressures, which can increase costs and cause rates to go up. Transforming dispute resolution would help reduce uncertainty, create long-term stability in claims costs and provide claimants with faster access to the benefits they require.
Regulating Ontario's Vehicle Towing and Storage Industries
Ontario is strengthening consumer protection by proposing to regulate the towing and vehicle storage industries. The changes would, if passed, help Ontario drivers make informed decisions when getting their vehicle towed or having it held in a storage facility.
The proposed legislation and supporting regulations would require tow truck operators and storage providers to:
- Have permission from the 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
- Provide an itemized invoice listing the services provided and the total cost before demanding and receiving payment.
Providing Regulation-Making Authority to Address Vehicle Storage Issues
The Ontario government is proposing changes to the Repair and Storage Liens Act that would allow the government to develop regulations to change the number of days a vehicle can be stored after an accident without giving notice to the owner where required. Regulations would also set out the determination of fair value of storage that can be charged where an amount has not been agreed upon.
Currently, a storer is required to give written notice of a lien for storage charges to the owner within 60 days after the day it receives the vehicle, if the vehicle is brought for storage without the owner's permission. The Auto Insurance Anti-Fraud Task Force noted that storers can maximize their lien by delaying notice until the 60-day period has almost expired, and the vehicle's owner or insurer may be liable for inflated costs.
If passed, the proposed amendments would help the province address the task force's recommendation, reduce abusive storage practices and remove associated costs from the auto insurance system.
Updating the Prejudgment Interest Rate
Ontario is proposing changes that would align the prejudgment interest rate on pain and suffering damages due to motor vehicle collisions with market conditions. If passed, the proposed changes would update the current rate of five per cent by linking it to the prejudgment interest rate for other damages (currently 1.3 per cent and updated quarterly).
Aligning the rate with market conditions would help reduce claims costs while still ensuring fairness for consumers.
Modernizing the Insurance Agent and Adjuster Discipline Process
The province proposes to modernize the system for insurance agent and adjuster disciplinary hearings to ensure the process is streamlined, efficient and fair.
This proposed change would help protect consumers by allowing for immediate suspension of an insurance agent or adjuster's licence if the public is at risk. It would help combat fraud and build on previous changes the Ontario government has made to improve consumer protection, and expand and modernize FSCO's investigation and enforcement authority.
Addressing Serious Fraud Issues
As part of its broader Auto Insurance Cost and Rate Reduction Strategy, Ontario will establish a dedicated investigation and prosecution office on serious fraud, including automobile insurance fraud.