Bill 15 was passed in the legislature this morning at Queen’s Park, ironically without the support of the party that had put it forward as a condition for the passage of the 2013 then-minority Liberal budget.
The legislation is primarily aimed at reducing car insurance premiums an average of 15 per cent by next August, and has been welcomed by the Insurance Bureau of Canada as the first step to reducing the cost of auto insurance in Ontario.
“It’s a great step and strikes a blow at those in the car accident business who have wrongly profited from the current auto insurance product,” said Ralph Palumbo, Vice-President, Ontario, IBC. “Everyone – including the insurance industry – is in agreement on one thing: auto insurance in Ontario is far too expensive. We realize the financial hardship it can create for vehicle owners, particularly young people and those in northern and remote communities.”
The Liberals say the bill will help tackle fraud to lower costs for insurance companies, which “is expected to help lower insurance rates for Ontario drivers.”
Premier Kathleen Wynne’s government says the Fighting Fraud and Reducing Automobile Insurance Rates Act is designed to help those injured in collisions settle disputed claims faster.
However, groups like FAIR (fair association of victims for accident insurance reform) have been arguing that the opposite will happen, pointing to the provision for reducing the Prejudgment Interest to 1.3 per cent, which FAIR feels will only encourage insurers to dispute more claims.
“There needs to be more accountability, not less,” says FAIR’s board chair Rhona DesRoches. “Without anything to discourage them, insurers will be incentivized to systematically deny claims through the use of partisan medical reports prepared by their preferred medico-legal ‘expert’ assessors to deflate a claim.
“All because, for some unknown reason, it’s generally believed that honest and unbiased medical assessments of accident victims is a bad thing.”
Bill 15 had its birth back in 2013, when the NDP forced the then-minority Liberal government to agree to legislate a 15 per cent cut in car insurance rates in exchange for allowing the 2013 budget to pass.
And that 15 per cent mandated cut has been a tough pill to swallow for insurers.
George Kalopsis, president and chief operating officer at Echelon Insurance, has said that the holy grail of 15 per cent won’t come from a single silver bullet – especially fraud.
“Fighting fraud is important, but I don’t think it gets us to the 15 per cent,” Kalopsis told Insurance Business. “You can reduce costs for insurers by streamlining the filing process, and develop a clear and sustainable definition of catastrophic impairment. There is no one silver bullet. They are all important, but unfortunately, we’re missing some of those bullets in our gun right now.”
Bill 15 provides the basis for:
- Establishing a more efficient and effective dispute-resolution system;
- Continuing the right of claimants and insurers to appeal decisions to the courts;
- Continuing the right of claimants to pursue tort claims in court;
- Reducing the prejudgment interest that can be awarded for non-economic losses to reflect current interest rates; and
- Reducing fraud and abuse in the towing and vehicle storage industries.
“Now we have an opportunity to begin fixing the system once and for all,” said Palumbo.
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