Monday, November 24, 2014

MPPs’ comments on auto insurance not flattering

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.



 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.

“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.”

COMMENTS
  • Friendly Reader on 30/10/2014 8:50:01 AM
    The insurance companies are privately owned in ontario, so no matter what, their goal is to turn a profit and maximize that profit regardless of who gets the short end of the stick. It could be the employees, policy holders, or even the government. To them money is the main goal and you cannot fault them for that. But at the same time they are providing a service under contract stating they will be there and help the policyholder within the terms of the contract. I feel that many insurance companies are the same as bad contractors who come in and say they can do a job for $5000 and then run for the hills with little penalty to them for not finishing the job.

    Maybe it is time that ontario revamped the system and looked towards the government ran insurance provinces for a template and start moving in that direction.

    As for AB coverage, they should look to the Quebec system and then build from there. That should be a good starting point.
  • Castrated ByInsurance on 17/11/2014 8:04:18 PM
    Garrett: Your comments are very distorted to the facts. More than "some people are dealt with poorly during the claims process”. You say “the claim was paid no questions asked” Are you still with us on planet earth? You must work for the IBC bullshxt department. You say “insurance companies and brokers are forced to sell policies”. Really your forced. We are the ones that are forced. Forced to buy this crap. You say “This person figures they will make a fraudulent or over inflated claim”. Here we go again talking about fraud. How about we talk about the fraud that happens to a legitimate accident victim when they try to collect on their policies. Fraudulent pay-for-hire doctors, lawyers, and bad decision makers making bad policy to satisfy the IBC profits. Oh, and yes and every claim should be treated amazingly. We pay for that.

  • Common Sense on 29/10/2014 11:07:02 AM
    MPP Delaney is the funniest to read though. "It shouldn't matter where you live," he says. He believes everyone should pay the same no matter what territory you live in. It's even funnier that he is from Mississauga-Streetsville, the fraud capital of the world. Mr. Delaney, next time do some homework before you embarrass yourself with how little you know about insurance. These MPPs know nothing about how insurance works.
  • Carmen Sense on 29/10/2014 11:17:27 AM
    MPP Cindy Forster you are the next comedian elected in. You have the same misunderstanding as many people in this province. Auto insurance reductions of 15 per cent was not meant to be taken that every person would see a 15 per cent reduction. I can tell you some people have seen 30 per cent or even 40 per cent reductions in their premium.
    You should likely talk to a few MPPs around the province and see how their communities are doing. Someone is getting quite a discount on their insurance premium and they certainly aren't raising any red flags to notify you. MPPs are so rusty on their insurance knowledge in this province. Scary!
  • PS Opinion on 29/10/2014 12:53:02 PM
    My Opinion…
    I’ve been in the insurance business for many years and have noticed that insurance companies are not what they used to be with respect to claims. Now, they are always looking to find ways not to pay out.
    If the interest rate is reduced to 1.3 per cent on pre-judgment interest, guaranteed you WILL see insurers deny more AB claims – that’s just the nature of the beast.
    Reducing Auto Insurance Costs was an 'Election' tactic but was not necessarily a good idea. The companies will NOT go without their 'profit.'
    In September 2010 the Accident Benefits coverage were substantially reduced with no savings to the consumer. You have to pay $$ just to get back what you had previously – and still some are not even available for buy-back. With reductions in auto insurance premiums, insurers are looking to 'recoup' their loss by increasing property rates. If we are not careful, the end result will be deficient coverage at a somewhat lower premium but higher premium charged elsewhere – insurers keep their profit level but the consumer has less for their buck.
  • TammyK on 29/10/2014 4:20:46 PM
    Carmen Sense: you seem to be more vocal about how the MPPs mentioned are not seeing things your way. You are less vocal about the neglect and ignorance some insurers and their adjusters have toward legitimate victims of MVA. The consumers are forced to buy insurance in the event an accident happens to THEM! The insurance industry is making the event, more about THEMSELVES by delaying and denying the necessary funds and resources so victims can reach maximum recovery.

    There is fraudulent behaviour happening in a lot of industries. But, trying to stop FRAUD should NOT be at the price of a vulnerable & injured person's well being.

    Consumers sign a contract, we pay our premium, and we need the contract to be fulfilled when it’s needed. So, when insurers fail to stand behind the contract, is the insurer in a breech of contract? What are the penalties for them?
  • Paul on 03/11/2014 9:31:23 AM
    From friendly reader:
    "The insurance companies are privately owned in Ontario, so no matter what, their goal is to turn a profit and maximize that profit regardless of who gets the short end of the stick"

    This is incorrect as their are several mutual insurance companies in Ontario who have no investors and no expectation of profit.
    https://www.members.omia.com/about_us

    Given that Mutual Insurers are not offering any better rates or coverage than private insurers it is time to acknowledge that "profit" is not the problem in Ontario Auto Insurance.

    The problem is insistence on an extremely generous set of govt mandated benefits while insisting that premiums be reduced (govt mandated) even as claims costs rise. The strain of these mutually exclusive demands is causing the problems with claims settlements as insurers (even mutuals) are forced to adjust claims as strictly as possible. It's a math problem.
  • Garrett on 03/11/2014 5:06:42 PM
    TammyK: Yes it is unfortunate that some people are dealt with poorly during the claims process, and this can be aggravated by any bodily injury sustained during the incident as emotions (rightfully so) run high. In the past in Ontario, what we saw was exactly what you seem to want: a quick claims process where, if the coverage was in place, the claim was paid no questions asked. Now due to the evolving legal system and the presence of more and more E&O exposure, insurance companies and brokers are forced to sell policies with extremely comprehensive coverage, thus driving up costs. Should an insured decide that they want lower cost on the policy (and thus less protection) they can still turn around and sue the Insurer, or broker, for not informing them of the coverage they (only now realized) that they need.
    So now you have higher costs in the industry, which in turn creates extreme dissatisfaction in an otherwise good customer who for many years pays thousands of dollars into insurance and sees no gain or benefit. This person figures they will make a fraudulent or over inflated claim hearing about all these big payouts to customers, this causes insurance companies to tighten up the claims process, thus causing even more dissatisfaction in the really deserving customers in need of support from their insurer.
    Much like Paul (previous post) says; the problem is that the basic accident benefit coverage is actually very comprehensive in Ontario. You can not reduce premiums while maintaining this level of coverage, and you can not treat every claim ‘amazingly’ while fraud exists. Give Ontario a basic government provided package (like in B.C.) and let each insured decide the level they want on top of that, with less risk to the providers/brokers.
 
Source: http://www.insurancebusiness.ca/news/mpps-comments-on-auto-insurance-not-flattering-184987.aspx?p=1
 

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