AUTO INSURANCE: Bill 171 l Bill 189

Bill 171: Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014
Bill 171, the Fighting Fraud and Reducing Automobile Insurance Rates Act was introduced on
March 4, 2014. Its the latest effort by the Ontario government to implement the Auto Insurance
Anti-Fraud Task Force Report and to help achieve the Ontario Governments promised 15%
average rate reduction by August 2015.
Consumers need this bill passed if theres going to be any chance of getting rates down
responsibly
IBAO strongly supports this legislation and is urging the government and all parties to pass
Bill 171 as soon as possible
Were happy to see the government continue to implement these much needed reforms to
fight fraud and lower rates for drivers; the faster fraud can be combatted, the faster
premiums can be lowered
That said, its important to understand that the reforms underlying the promised reductions
will take time

What Does Bill 171 Do?
1) Fixes prejudgment interest anomaly
Prejudgment interest (PJI) is the interest paid to claimants on non-pecuniary, general
damages (pain and suffering) due to collisions; its calculated from the date a plaintiff
commences an action to the date a judgment is rendered, and is intended to
compensate and ensure a plaintiff is kept whole while he or she waits for a judgment
on his/her case
The current PJI is an anomaly, fixed in legislation at 5%; all other forms of PJI in Ontario
are set based on prevailing interest rates (currently, the rate is 1.3%)
Bill 171 aligns the prejudgment interest rate with the interest rate for special damages
(economic losses) at 1.3%

IBAO Response: The current generous PJI is incenting certain bad actors who are abusing the
system to delay dispute resolution as long as possible in order to take advantage of the
generous interest rate. This measure alone will save millions of dollars and speed up dispute
resolution without affecting a deserving victims benefits in any way.

2) Fixes Dispute Resolution System (DRS)
Implements recently completed (Feb 2014) Cunningham Report which states the
current system is broken. The Cunningham Report, if implemented, would ensure
timeliness, accessibility by claimants, predictability and cost-effectiveness. The
proposals would, if implemented properly, prevent backlogs and reduce the 16,000 case
backlog currently in the arbitration system.
Transfers DRS from FSCO to the Attorney General
Appoints tribunal members subject to a periodic renewal and a fixed maximum tenure
to enhance accountability
Limits a claimants access to the courts while a dispute is at the new tribunal this is
being severely criticized by the Trial Lawyers, but is common practice for DRSs of this
kind; as always, claimants may appeal to the courts if there is an error in law
Most of the details of the reformed DRS are left to regulation

IBAO Response: Its vitally important to get on with the implementation of Justice Cunninghams
report. The current system is delaying timely resolution of disputes for our customers and is
unnecessarily expensive and inefficient. Passing Bill 171 will lower costs in the system which are
ultimately paid by all of us, and will provide timely access to a workable dispute resolution
system.

3) Fixes the Repair and Storage Liens Act to end abuse
Bill 171 amendments to the Repair and Storage Liens Act are designed to reduce
unreasonable storage costs for vehicles damaged in motor vehicle collisions
Currently, vehicles involved in collisions may be taken to storage facilities that will begin
to charge the owner of the vehicle immediately
Unscrupulous shops are also charging exorbitant storage rates
Current legislation allows a facility to hold a vehicle for 60 days before notifying the
owner
Often, and deliberately, the owner may not be aware that these exorbitant costs are
accumulating
Facilities can, and do, increase their revenues by waiting until the 60 day period has
expired before notifying the owner
Bill 171 requires facilities to notify owners right away and sets by regulation the fair
storage rate

IBAO Response: The changes to the Repair and Storage Liens Act are long overdue.

4) Health Clinic Licensing
Bill 171 continues to shore up the requirement for health clinics that provide statutory
accident benefits (SABS) to be licensed
Bill 171 clarifies that a licensed clinic does not have to be owned by a regulated health
professional
It also amends the Act to deal with transition to the new licensing regime

IBAO Response: Health Clinic licensing is vital to fighting fraud.

Bill 189: The Roadside Assistance Protection Act, 2014
On April 15, 2014, the Minister of Consumer Services, Tracy MacCharles, introduced the
Roadside Assistance Protection Act to protect consumers from tow truck operators and owners
who have been reported to be taking advantage of consumers.

This bill does not create a licensing regime for tow truck operators. The government says that
theyre still consulting on that, but to still expect action on that front in the future.

The proposed legislation and supporting regulations would require tow truck operators and
storage providers to:
Have permission from a consumer or someone acting on behalf of the consumer before
charging for towing and storage services
Publicly post prices and other information, like the operator's name and contact information
Accept credit card payments from consumers
Provide an itemized invoice listing the services provided and the total cost

Bill 189 also proposes to include tow trucks in the province's existing Commercial Vehicle
Operator's Registration (CVOR) system to improve road safety through government monitoring
and enforcement measures. Operators that violate the new rules will be subject to an
administrative penalty regime.

The specific consumer protections that the bill authorizes are in respect of:
1. Required disclosure of information to consumers.
2. Requirements that tow and storage services provided to consumers be authorized.
3. Deviating from estimated payment amounts.
4. The provision of itemized invoices.
5. Insurance requirements.
6. Publication of rates.
7. A Tow and Storage Consumers Bill of Rights.
8. Requirements that consumers be allowed to remove personal property from towed or stored
vehicles.
9. The establishment of qualifications for tow and storage providers.

IBAO strongly supports this Bill along with Bill 189. We urge all parties to do what is necessary to
pass this legislation as soon as possible.

Auto Insurance 15% Rate Reduction Strategy
The government recently announced that rates have been reduced by 5.67% on average since
August 2013. Whats the status of the promised 15% average reduction in auto rates?

The government has set a target to reduce rates on average by 15% over two years ending
August 2015:
o 8% by August 2014 (the first 4% was achieved during the 4th quarter of 2013 and
announced on January 15, 2014);
o another 7% by August 2015
The reduction target is 15% on AVERAGE
This means not everyone is guaranteed to see a 15% reduction
The promised rate reductions are not instant and are going to take time
It will depend on a number of factors:
o Your insurer companies that can demonstrate they cant provide the reduction dont
have to
o Where one lives insurers price by territory claim experience and can justify different
rates depending on where one lives
o Ones individual characteristics its an average, so some may get higher reductions
while others could get lower reductions
The rate reductions, particularly in the second year, will depend on how successful the
government is in reducing the cost of fraud, mostly in health claims
The government is working on licensing of health care clinics and regulating the towing
industry, but this will take time
The faster fraud can be combatted, the faster premiums can be lowered, but it cant be
done overnight itll take time