The Liberal platform for auto insurance was essentially set out in the 2014 Spring Budget which never proceeded beyond first reading before the election was called. Now that the Liberals have a majority, it is expected that they will proceed with those commitments. It also means the NDP will no longer be able to influence government policy.
In the Spring, the Liberals indicates that the rate reduction strategy is on target and average rates will be 8% lower by August 2014 and 15% lower by August 2015. However, the Budget document does not point to any specific initiative that will specifically work towards achieving those targets. Average rates are down 5.6% as of the end of the first quarter of 2014.
The Liberals will have a challenge bringing down rates further without a few significant systemic changes. More and more it appears costs have been rising over past few quarters so it should be interesting to see the second half data for 2013. Rising costs can be attributed to a number of factors including:
- a severe winter
- higher claims volumes
- the backlog of decisions awaiting arbitration
- deterioration of reforms as parties begin to discover how to work the system
- claims staff “fatigue”
- residual fraud
Governments are more likely to make unpopular decisions early in a mandate than immediately before an election. So there is a possibilities that some tougher decisions make be made on the auto insurance file to stabilize costs and ensure consumers will see lower rates.
The Premier has committed to bringing back the Legislature on July 2 to re-introduce the Budget Bill following a Throne Speech. The Budget Bill itself had no auto insurance provisions.
Instead, legislative amendments to the Insurance Act were part of Bill 171, the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014 which was introduced in March 2014. The Bill included legislative amendments for the transformation of the dispute resolution system, and further action to crack down on fraud and abuse, as well as other cost-saving measures. The government was to take further steps on developing a dedicated investigation and prosecution office on serious fraud, with an initial focus on auto insurance fraud. The development of this fraud office would be based on the Auto Insurance Anti-Fraud Task Force’s principle that fraudsters should be vigorously pursued and prosecuted where evidence warrants.
There is no timetable for re-introducing Bill 171. There were some strong objections expressed over several provisions in the Bill – barring access to the courts for accident benefit disputes and reducing the prejudgment interest rate. It will be interesting to see if there are any changes should the Bill be re-introduced.
The Liberals had also introduced legislation to regulate the towing industry that never passed. Bill 189, the Roadside Assistance Protection Act would require towing and storage providers to publish their rates, provide an itemized invoices, accept payment by credit card if requested and to disclose to the consumer any interest a towing and storage provider may have in a location or facility to which a vehicle may be towed for repair or storage. If passed into law, Bill 189 would also stipulate the consumers be given access to towed vehicles in order to remove personal property.
FSCO has been proceeding with the licensing of treatment and assessment facilities on the auto insurance sector. The licence application process opened up on June 1. Facilities will have to be licensed on December 1 in order to submit invoices through HCAI. Application fees were also recently announced.
Perhaps even some outstanding issues, such as the definition of catastrophic impairment and a new minor injury treatment protocol will finally be addressed.