Ontario budget’s effect on car insurance will be minimal4 July 16, 2014 at 9:15 am by William Star
The Ontario Budget presented on July 14, 2014 will have little effect on car insurance. The Liberal Party had stated last year that insurance rates must be reduced by 15% but did not indicate how this would be accomplished. They seem to think that insurance companies can make changes without any actuarial studies or logical reasons.
The few changes that were introduced to control the costs of towing, storage and patient care providers will not justify a reduction of 15% over two or three years. The result of the changes must first be demonstrated before rates can by reduced. The changes are long overdue and were recommended about fifteen years ago when paralegals were subject to the control under the Law Society. There is not an easy way to control these services and fraud related to those services will continue.
When the no-fault plan was introduced in Ontario the main concept was to provide benefits to injured people quickly and to avoid many of the costs associated with litigation. Now legal expenses have soared and there are no controls in place to stop the rising costs. In the past before no-fault, lawyers in Ontario were not allowed to advertise their services the way they do today. No-fault has not reduced legal costs, it has increased them. FSCO is so busy with claim disputes, mediation and arbitration that they cannot keep up with the work and are forced to use outside services to assist with the backlog.
This system is so lucrative for lawyers that they continually advertise through the various types of media. You even find benches on the streets near hospitals and bus shelters to encourage people to contact them to get more money following a car accident. Yellow pages are filled with ads of law firms. You can’t watch television without seeing their ads to encouraging people involved in car accidents to contact them. In many cases they suggest you contact them before you call your insurance company. On station CP24 there is a retired police officer who reports traffic for the station with the message to “know your rights”. This is in conjunction with the advertising he does for a law firm. It appears this government is after the little guys but they avoid the lawyers.
The changes made in this Budget will not reduce the cost of car insurance. They cannot correct a bad system. It will require a complete overhaul.
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Nice article. It is correct that we need to start capping the costs of the legal fees that are associated with the industry. The problem is the entire industry does need a complete overhaul that is for sure, but what direction? Fraud needs to be addressed, legal fees need to be contained, the price of insurance for the consumer also needs to be reviewed.
The industry forgets that the average person does not care about the issues of fraud, towing expenses or legal fees, it is the bottom line. The industry is still creating huge profits despite the fraud, fees, etc, so why should the average consumer care unless it affects their bottom line. Helping the insurance companies combat fraud and save them a few million dollars so the average person saves $25 a year on their premium is not in the consumers best interest.
Easy to point to the high cost of legal representation but ask why there are so many unpaid accident victims in the system in the first place. Why so many claims turned down? Why don’t insurers use in-house lawyers instead of hiring expensive defense firms? Is it an adjuster’s problem – too many legit claims turned down? Or are defense lawyers telling insurers that they should defend against a claim when an adjuster does a bad job? Can that many people, the tens of thousands waiting for hearings to hold their insurer accountable, all be the victims of a nefarious legal advertising scam? Are insurers getting scammed themselves by the biased medical opinions they often commission in order to disqualify claims – what do the costs of fighting legitimate claims add up to?
Agree the system is broken beyond repair but as a consumer I disagree with why/how that happened.
All the while Insurers make record profits. Stay retired Bill
How interesting that you blame the lawyers. If the insurer would pay the claim from the outset, then there would be no need for a lawyer. What about Insurer perpetrated fraud? Obtaining medical assessments from companies that fraudulently change the assessments of doctors to suit the Insurance company? Like all insurance people, the insurance company believes (wrongly) that the premiums belong to them. They DON”T. The premiums are intended to form an insurance pool to pay claims – not to make the insurance company profit. Get rid of insurance companies (nationalize them) and we would not have this problem.