In July, the Ontario Liberal government introduced Bill 15 entitled the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014. The aim of the bill is to reduce automobile insurance rates by reducing the overall costs for insurance companies with the intention that insurance companies will pass their savings along to their customers. Whether this will work in practice remains to be seen.
Some features of the bill include:
- A reduction of the prejudgment interest rate on awards of pecuniary damages from 5% to 1.3%, which is more reflective of today’s market interest rates. The 5% interest rate was set back in the 1980’s when interest rates were much higher.
- A claimant for Statutory Accident Benefits will no longer have the option of going to court over a dispute regarding their benefits. All disputes will be dealt with by the Licence Appeal Tribunal, which also hears appeals regarding matters regulated by the Ministry of Transportation, liquor and gaming-related matters, and a variety of other matters.
- More stringent regulation of the activities of tow truck drivers and their fees. Currently, tow truck drivers can store a towed vehicle for up to 60 days without notifying the owner, racking up significant storage fees.
Prior to Bill 15, as part of their ongoing attempts to reduce fraud against the automobile insurance industry, the government passed a bill in 2013 requiring healthcare providers who bill directly to insurance companies to apply for a licence to do so. This licence will be required as of December 2014 in order for healthcare providers to be paid directly by insurance companies.
While Bill 15 may have the desired effect of lowering automobile insurance rates for Ontarians, it is unclear at this point how the new law will affect individuals involved in automobile accidents once the bill becomes law. Many of the details regarding the transition to the new law will be left to regulations, which have yet to be drafted.
Both the reduction in interest rates and the dispute resolution provisions of the bill will directly affect injured claimants involved in a dispute with their insurance company. The law will not be applied retroactively, so if you have already been injured in an accident and are currently involved in a dispute with an automobile insurance company, these changes will not apply to you.
Bill 15 has not yet been made into law. However, the bill is expected to pass since the Liberals now occupy a majority of the seats in the provincial legislature.
