Toronto, ON (July 21, 2014) – “The quick introduction of Bill 15 is a very strong message from the Wynne government that it is serious about reducing fraud and the high costs in Ontario’s current auto insurance system,” said Ralph Palumbo, Vice-President, Ontario, Insurance Bureau of Canada (IBC). “But we shouldn’t lose sight of the other good news: insurers are passing these savings along to consumers in the form of reduced rates.” Here are some highlights of the legislation and how it will help Ontario drivers.
Towing and Storage
When your vehicle is towed to a storage facility after a collision and held there for up to 60 days before you are notified, the costs can mount quickly. Some facilities will actually delay notifying the owner of a vehicle just to increase their revenues.
Bill 15 requires storage facilities to notify vehicle owners much sooner, reducing costs by controlling the cost of vehicle storage after a collision.
Dispute Resolution System
Bill 15 will see the creation of a new, more efficient system to expedite the hearing of disputes, prevent backlogs and reach decisions in a timely manner.
This will mean that fewer resources are needed for hearings.
Bill 15 will align prejudgment interest rates on pecuniary and non-pecuniary damages (pain and suffering) to what are typical rates in today’s market. You might be surprised to learn that currently, prejudgment interest on non-pecuniary damages (“pain and suffering”) is 5% and prejudgment interest on pecuniary damages is 1.3%.
Prejudgment interest is meant to compensate – but not over-compensate – the plaintiff for the lost time value of money. Consequently, it should reflect the cost of money so that the plaintiff receives the full value of the award as if he/she received it on the day he/she served notice of the claim.
Reducing prejudgment interest rate will save millions in costs, ensure that claimants are not overcompensated and that they receive their settlements in a timelier manner. The 5% prejudgment interest rate was established in 1989–90 when interest rates were about 13%.
Palumbo added, “At the end of the day, all of us – the insurance industry, government and consumers – must work together to drive down unnecessary claim costs that do not help claimants recover from injuries. The insurance industry is committed to doing whatever it takes to build an auto insurance system that will work for decades to come. Access to affordable insurance is fundamental to the health and success of Ontarians.”
About Insurance Bureau of Canada
Insurance Bureau of Canada (IBC) is pleased to celebrate 50 years as a valuable resource for insurance information. Since 1964, IBC has been working with governments across Canada to make our communities safer, championing issues that directly affect Canadians and the property and casualty (P&C) insurance industry. IBC is the national industry association representing Canada’s private home, car and business insurers. Its member companies represent 90% of the P&C insurance market in Canada. The P&C insurance industry employs over 118,600 Canadians, pays more than $7 billion in taxes and levies to the federal, provincial and municipal governments, and has a total premium base of $46 billion.
To view media releases and information, visit the media section of IBC’s website at www.ibc.ca.
SOURCE: Insurance Bureau of Canada