What the Ontario Party Platforms Say About Auto Insurance

The policy platforms for the major parties in the Ontario provincial elections are out.  Here is what you can expect from each of the parties with respect to auto insurance if they should win the election.

Liberals

The Liberal platform for auto insurance was essentially set out in the 2014 Spring Budget which was failed to pass before the election was called. 

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.   In addition, the Liberals point to the recently released “Automobile Insurance Transparency and Accountability Report” which highlighted that, without these reforms, insurance rates would have needed to increase significantly.

In March 2014, the Liberals introduced Bill 171, the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014.  The Bill proposed a number of initiatives to address barriers to rate reductions. The Bill includes 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 is building on the steps it has taken by 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 Task Force’s principle that fraudsters should be vigorously pursued and prosecuted where evidence warrants.  The Bill was never passed but would be introduced by the Liberals if they formed the next government.

The Liberals introduced legislation to regulate the towing industry but that Bill also did not pass before the election was called . The Liberals also tried to address storage-fee issues by introducing legislative amendments as part of Bill 171 that would provide regulation-making authority for the determination of vehicle storage periods and fair value regarding daily fees.

The Liberals had retained an independent third party to provide annual Automobile Insurance Transparency and Accountability Expert Reports to assess its efforts to reduce auto insurance costs and rates. An interim report was delivered in April 2014, and annual reports will be delivered in August of each year of the Strategy. The reports will also assess the industry’s efforts to lower costs and pass on savings to drivers. The interim report highlights that further action is needed to support the government’s Cost and Rate Reduction Strategy. The report also concludes it is important that insurers continue working to achieve efficiencies and reduce costs in the auto insurance system through initiatives such as better claim management, more sophisticated pricing methods (such as usage-based insurance) and improved fraud-prevention practices. 

The Liberals would encouraging insurance companies to offer consumers usage-based insurance, which uses technology to identify and offer discounts for safe driving habits.

New Democratic Party

The NDP were slow to get their platform out to the public.  The NDP pressured the Liberal government in 2013 to reduce auto insurance premiums by 15%.  Their position since then is that the government is taking too long to lower rates and that most consumers haven't seen any rate decreases.  They have promised to lower rates by 15% within a year of forming a government.

That promise sounds like a big win for consumers but is not really a big change from the status quo. The Liberals two-year commitment to lower rates ends on August 15, 2015.  If the NDP win the election next month, their commitment would end on June 12, 2015. That only shortens the process by 2 months.  Rate reductions would be effective on renewal which is also the status quo.

The other commitments are to make transparent rate-setting permanent and provide consumers with a voice in the rate-setting process. It's not at all clear how these promises would be implemented.  On transparency, the reference could be to the announced 15% average rate reduction.  Perhaps the NDP would set annual average rate change targets that the regulator would have to meet.  As for consumer input on rate-setting, that might involve rate hearings where consumers could express views on proposed rate changes. Or perhaps the NDP have another mechanism in mind to bring consumers into the process.

Progressive Conservatives

The Conservatives have had an auto insurance action plan for some time now.  They too believe that auto insurance premiums are too high.  The PC plan proposes reforms in four key areas: eliminate red tape, fight insurance fraud, make the dispute resolution system more effective and ensure auto insurers are accountable to customers.

There is a reference to the use of private mediators in the dispute resolution system to expedite the process and reduce costs.  Users could opt for a private mediator instead of a government one in order to reduce wait times.  Although the consensus is that the dispute resolution system needs more reforms than what is in the PC plan. In addition, they would establish an independent peer-reviewed medical assessment system by standardizing assessment procedures and requiring multiple assessments be performed by medical professionals of the same specialization.  This does seem to resemble the former DAC system to a certain extent.

The PC plan calls for moving away from the current rate approval process which requires prior approval and moving to a file-and-use system. The PCs claim that prices in the marketplace would be more competitive if red tape were to be eliminated.  Following large rate increases approximately 10 years ago, several Canadian jurisdictions abandoned file-and-use systems.  The PCs would also like to see more discounts available to consumers.

Another PC auto insurance commitment would be to use the Health Claims for Auto Insurance (HCAI) electronic billing system to identify fraud. As well, they would establish a special office of Crown Attorney to prosecute fraudsters.

Finally, they would increase accountability by making senior insurance executives personally and financially liable for the conduct of their company.