Anti-fraud bill a mirage Ontario government’s latest auto insurance legislation doesn’t do what it’s supposed to do



Ontario’s Bill 15 has a strange title.

The title, Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, is strange because this proposed legislation doesn’t refer to fraud anywhere in the body of the bill save in references to the title of the proposed legislation.

Then again why pass up the opportunity to propagandize?

Upon introduction of the bill earlier this month the Ministry of Finance announced, “Ontario is moving forward with its plan to help reduce auto insurance rates, by introducing legislation that would, if passed, protect the province’s nine million drivers and fight fraud in the auto insurance system.”

But there’s nothing in the bill that fights fraud in the insurance system.

Worse, there’s little in the bill that would protect drivers.

Indeed, there’s much in the bill that would harm drivers, especially those injured in auto accidents.

Let’s start with the manner in which no-fault accident benefits disputes are handled.

Currently such disputes may be dealt with via arbitration or through court action.

Bill 171 will remove the option of court action.

It’s hard to see how removing the right to pursue claims before a judge will help drivers.

Paradoxically, this move will cause legal costs to increase as claimants are forced to pursue two separate claims.

Ontario drivers are subject to a hybrid or dual auto insurance system.

Those injured in auto accidents may pursue a tort or negligence claim (although that right has been curtailed as a result of previous legislation), as well as a claim for no-fault accident benefits.

Currently, lawyers often combine both in one lawsuit.

But following passage of Bill 15 lawyers will be forced to pursue two different proceedings, a court proceeding for the negligence claim and an arbitration proceeding for the accident benefits claim, thereby resulting in higher costs.

At the same time accident benefits claim disputes will no longer be handled by the expert arbitration staff at the Financial Services Commission Ontario.

Bill 15 would see the elimination of all mediators and arbitrators employed by FSCO.

Disputes will be handled by Ontario’s Licence Appeal Tribunal, a body that currently decides cases with no relation to the complex accident benefits issues seen daily by FSCO arbitrators.

FSCO arbitrators have many years of experience handling accident benefit disputes.

They are full-time, unionized public sector employees who are seen to be independent and are highly respected.

LAT members are part-time (other than the Associate Chair), appointed for temporary terms, receive per diem rates (other than the Associate Chair), and are government appointees.

Reappointment is at the pleasure of the Ontario cabinet, so they cannot be seen as independent.

While there’s nothing to stop cabinet from appointing some former FSCO arbitrators to the LAT roster, there’s also nothing to stop cabinet from cherry-picking from among the FSCO arbitrators to eliminate arbitrators whose decisions have displeased the insurance lobby.


Bill 15 contains two other provisions that will prejudice those injured in auto accidents.

Currently arbitrators have the power to penalize insurers who act unreasonably in withholding or delaying benefits.

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.

Bill 15 eliminates that power.

In addition, Bill 15 would reduce the amount of interest insurers are required to pay on money owed to accident victims.

That surely won’t serve to speed up settlements, with insurers given an incentive to delay payments.

Let’s not kid anybody.

Bill 15 is mainly about saving money for insurance companies to help them reduce premiums, so as to assist them in achieving the government’s promised 15% rate reduction.

But even if we achieve this 15% savings in auto insurance rates there’s nothing to stop insurers from increasing premiums on their other products, including property insurance, which is not subject to government regulation.

If you don’t believe me, just take a look at your next property insurance bill

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