Monday, 12 March 2012

Three new auto insurance private member's bills introduced in Ontario

Let's be perfectly clear, very few private member’s bills become law. However, the fact that three private member's bills were introduced in the Ontario legislature in one week indicates a growing awareness that problems with the Ontario auto insurance system persist.

Mississauga-Brampton South MPP Amrit Mangat reintroduced her auto insurance bill, which she first introduced in June 2011. The purpose of Reducing Automobile Insurance Premiums by Eliminating Fraud Act, 2012 (Bill 41) is to protect people who report insurance fraud. It is also intended to ensure that insurance investigators have the proper tools to investigate fraud.

York West MPP Mario Sergio introduced Insurance Amendment Act (Elements in Classifying Risks for Automobile Insurance), 2012 (Bill 43), which deals with allowable elements of a risk classification system.

Then a similar bill was tabled by Bramalea-Gore-Malton MPP Jagmeet Singh. The Insurance Amendment Act (Risk Classification Systems for Automobile Insurance), 2012 (Bill 45) also deals allowable elements of a rsk classification system.

Bill 41

The Bill provides whistle-blowing protection to an inspector under the Independent Health Facilities program of the Ministry of Health and Long-Term Care, health regulatory College investigators, insurance company employees, IBC staff and the police. It does not protect private citizens. The Bill protects these employees from dismissal and other forms of discipline as well as from harassment and other forms of coercion. It also protects them from civil suits as long as their were acting in good faith.

The Bill allows the health regulatory Colleges to appoint investigators to determine whether College members have been involved in fraudulent activities related to auto insurance claims. I believe the College Registrars already have that authority. The Bill does go further by requiring that the police be notified if an investigation suggests that there has been such fraudulent activity.

The Bill also amends the Independent Health Facilities Act to provide that a licensee under the Act must be a member of a health profession college. This amendment appears to be irrelevant. An Independent Health Facility is a facility where members of the public receive services (lab tests, diagnostic imaging, laser surgery, etc.) paid for by the Ministry of Health and Long-Term Care. They are not involved in auto insurance claims.

The Bill can be found here.

Bill 43

The Bill amends the Insurance Act by requiring automobile insurers to use a person’s driving record, a person’s age, the type of automobile, and any element prescribed by regulation in classifying risks for a coverage or category of automobile insurance. The Bill also prohibits automobile insurers from using a person’s home address or postal code and any element prescribed by regulation in classifying such risks.

Essentially the Bill would eliminate territorial rating. The Ontario Cabinet already has regulation-making authority to prohibit territories as an element of a risk classification system. Section 16 of Ontario Regulation 664 deals with prohibited elements. The impact of this Bill is that it removes discretion from Cabinet regarding the use of territories as an element of a risk classification system.

The Bill can be found here.

Bill 45

The Bill amends the Act to require that elements of a proposed risk classification system use the following mandatory factors in decreasing order of importance:

1. The driving safety record of the insured person, but only in respect of accidents where the person was found to be principally at fault.

2. The number of kilometres driven annually by the insured person.

3. The insured person’s years of driving experience.

4. The population of the statistical area in which the driver primarily resides.

If other factors are used, they cannot, when taken together, be given more weight than the fourth mandatory factor.

Insurers are prohibited from using a geographical region in which an insured person resides as an element in classifying risks. Other elements may continue to be prohibited under the regulations. Insurers must provide written explanations and other prescribed information regarding rate determinations in specified circumstances.

This Bill goes beyond the proposed amendments in Bill 43. Not only does the Bill eliminate territorial rating but it requires insurers to use specific factors in classifying risks and sets out their relative weights.

The Bill can be found here.

Both 43 and 45 have been introduced by politicians in riding where rates are high. The amendments to the Insurance Act do nothing to reduce auto insurance rates by reducing fraud or costs in the system. Instead they reduce rates in regions where costs are higher and increase rates in regions where the risk of being in accident and costs are lower. Pitting consumers against each other in the end benefits no one.

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