Little benefit for victims

What is most objectionable about Liberals’ Bill 177 is the haste with which it’s been introduced




Earlier this month, Ontario’s Minister of Finance introduced Bill 171, the “Fighting Fraud and Reducing Automobile Insurance Rates Act”. 

According to a finance ministry press release the bill contains “new initiatives to protect the nine million drivers in the province”.

The Insurance Bureau of Canada, representing the car insurance industry, has issued a press release supporting the bill.

So let’s examine a few of the ways that Ontario drivers will be “protected”.

A real way would be by encouraging insurance companies to settle cases quickly.

But one provision of the bill provides an incentive for insurance companies to delay settlements and payments to those injured in motor vehicle accidents.

Bill 171 would reduce the amount of interest insurers are required to pay on money owed to accident victims.

The current rate is 5% but under Bill 171 the rate would fall to 1.3% and be modified quarterly.

Ontario’s finance minister says this will “help reduce claims costs.” I’m sure it will. For the insurers.

The Ontario Trial Lawyers Association, representing lawyers acting for plaintiffs, objects to the change.

According to the OTLA, “insurers will be set to profit particularly in serious cases as they can earn greater returns by delaying settlement and investing the funds.” Fair Association of Victims for Accident Insurance Reform also objects to the change stating, “there is no incentive to settle cases when insurers can make a fortune sitting on the dollars that are owed to the injured accident victim.”

Another real way to protect drivers is to provide arbitrators with the power to penalize insurers that act unreasonably in withholding or delaying penalties.

Actually, arbitrators hearing accident benefits cases currently have that power under the Insurance Act.

They can award a lump sum of up to 50% of the amount withheld or delayed, along with interest, at the rate of 2% compounded monthly.

Curiously, Bill 171 eliminates that power.

So far, it doesn’t seem to be providing much protection to Ontario drivers.

But the centrepiece of Bill 171 is the removal of the arbitration function from the Financial Services Commission Ontario and giving it to Ontario’s Licence Appeal Tribunal. Surely, that’s a good thing for Ontario’s drivers?

Let’s see: FSCO arbitrators have many years of experience handling accident benefit disputes. They are full-time, unionized public sector employees, are seen to be independent and are respected.

What about the Licence Appeal Tribunal? Currently its members are part-time (other than the Associate Chair), appointed for temporary terms, receive per diem rates ranging from $398 to $664 (other than the Associate Chair), and are government appointees. Reappointment is at the pleasure of the Ontario cabinet.

What about experience? Most LAT decisions relate to impoundment of vehicles and liquor licence cases, although the LAT also hears other cases under a long list of legislation, none of which covers the sort of issues seen daily by FSCO arbitrators.

So, we will be moving from experience to no experience, full-time work to part-time, job security to precarious or no job security.

That doesn’t seem to be conducive to more protection for Ontario’s drivers.

But what is most objectionable about Bill 177 is the haste with which it has been introduced — just two weeks following release of the Ontario Automobile Insurance Dispute Resolution System Review by J. Douglas Cunningham, a former associate chief justice of the Ontario, Superior Court of Justice.

That must be some sort of speed record.

But with this haste there has been no opportunity for input by stakeholders.

It’s just as the Ontario government did in December when it modified accident benefits, effective Feb. 1, in part to overturn a recent Ontario Court of Appeal decision.

I can see where reduction of interest rates, removal of special awards and shunting cases away from experienced, independent arbitrators would benefit insurance companies.

But where is the benefit to drivers and accident victims?

Oh yes, there’s that promised 15% insurance rate reduction. We’ll see. 

Leave Reply

You must be logged in to post a comment.