As MPPs discuss the ongoing changes to Ontario’s auto insurance landscape in the legislature, there is a picture that is being painted of the industry – and it isn’t that flattering.
“The Liberal government promised to reduce auto insurance rates by 15 per cent. Their target was 8 per cent for August of this year. They haven’t got there,” said Welland MPP Cindy Forster. “I can tell you, in my community and many communities across this province, people have not seen a reduction in their auto insurance.”
Legislators at Queen’s Park have been debating Bill 15 – an Act that detractors argue would remove the court option as an avenue of appeal on the statutory accident benefit (no fault) side.
Nick Gurevich of the Ontario Rehab Alliance says that a proposed regulatory amendment will create an incentive for insurers to deny benefit claims for everyone.
“By reducing the penalty that insurers pay for inappropriately denied claims this proposed regulatory amendment will create a financial incentive for insurers to deny every claim for benefits,” said Gurevich. “It will further impoverish legitimate claimants trying to get the benefits they paid for when they purchased their insurance.”
MPP Bob Delaney of Mississauga-Streetsville, said during the legislature debate that these bills on auto insurance reform were important to ensure that insurance companies not only lower premiums, but not try to recover the money from drivers in some other form.
“We’ve got to keep these bills moving through committee. We’ve got to get them passed, we’ve got to get them enacted, and we’ve got to put some teeth into them,” said Delaney. “We’ve got to make sure, when that legislation is enacted, that the insurance companies actually obey the law and bring our premiums down, and that they don’t recapture them in the form of higher executive compensation and other assorted little games that they play.” (continued.)
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He continued to say that penalizing drivers for living in areas of high auto insurance fraud was unacceptable.
“It does depend on where you live, and this is something that I disagree with,” said Delaney. “I don’t think it should depend on where you personally live. If there’s a statistically higher incidence of fraud in the area where you live or the postal code where you live, that shouldn’t penalize a good driver. I have never, ever accepted that argument, and I never will.”
Delaney’s constituents live in an area that historically and statistically have had high incidents of auto insurance fraud.
Rhona Desroches, board chair for the Association of Victims for Accident Insurance Reform (FAIR), feels that the new legislation will unfairly punish victims.
“The discussion at Queen's Park last week reveals that Ontario's legislators have no idea what insurers are doing with their profits or what those profits actually are and yet they are willing to rush these changes through,” said Desroches. “Our legislators are willing to penalize consumers by propping up the insurance industry already substantial profits with legislation that will further impoverish accident victims and restrict their access to our courts.”
One MPP, Arthur Potts of Beaches-East York, acknowledges that insurers are under the gun when it comes to meeting premium point, and the skyrocketing expense of court costs.
“The cost of litigation is so high that insurance companies are recognizing that sometimes it’s better just to settle. It’s unfortunate that now people realize that just by putting in an application, they’ll get a settlement. That is increasing the cost of writing insurance,” said Potts.
He told his fellow MPPs that the proposed legislation is not about consumer protection measures, but really about rooting out the fraud so that we keep the settlements down and keep our premiums down.
“The notion of prejudgment interest is not meant to be a stick to force insurance companies to settle,” he said. “It’s meant to compensate people for the reasonable cost associated with the length of time so that if legitimate claims come forward, they will be legitimately compensated for the cost of living during that period.”
Sarah Campbell, MPP for Kenora-Rainy River, also recognized that there is a need to strike a balance in auto insurance in Ontario. (continued.)
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“I don’t believe that cutting costs for the industry is the way to achieve balance in the system. I believe very much that we’ve been there, and we’ve done that,” said Campbell. “We’ve seen those efforts on the part of this government in 2010, and we’ve seen how those haven’t translated into savings.”
However, she was quick to take the industry to task when it came to accident victim claims.
“Insurance companies have very, very deep pockets. They have all sorts of lawyers on staff. That’s what they do,” she said. “I think there needs to be some kind of an incentive to wrap this stuff up quickly. Having seen first-hand some of these accident victims who have struggled with going long periods of time without being paid, I would just say that we have to do that.
“The bottom line is that there are other ways to bring down auto insurance premiums by 15 per cent across this province, and there are other places to squeeze,” Campbell continued. “But paying for the reductions out of the pockets of accident victims is disgusting and it’s wrong.”
For FAIR’s Desroches, the reduced interest rate on pre-judgment interest shouldn’t be linked to fighting fraud.
“Ontario's insurers and the IBC are lobbying for a reduced interest rate of 1.3 per cent on pre-judgment interest under the guise of fighting fraud,” she told Insurance Business. “Punishing victims by eradicating their ability to recover legitimate costs has absolutely nothing to do with combating the fraud in the system.”
