With sky high insurance rates and the current squeeze we feel with the economy, any help we can get in terms of tax breaks or subsidies are a welcomed relief. Our elected officials create policies and legislation in the effort to appease all those involved and as with most things, everything is up for debate. One of the more recent proposals that have created a bit of a stir is that of Bill 171.
In an attempt to reduce automobile insurance rates in Ontario, in 2013 the Auto Insurance Cost and Rate Reduction Strategy was formulated. In it, an estimated fifteen percent reduction of insurance rates is slated to happen over two years. Below are a few ways that they will attempt to reach this goal.
- Continuing efforts to reduce fraud
- Requiring that insurers re-file insurance rates
- Help guide and follow procedures to ensure that Ontarians receive the benefits from the cost savings
- Sustaining the requirement for insurers to offer safe driving discounts
- Initiating a province wide system to review towing procedures, storage and collision costs
The government is on board to step in when necessary to ensure that the entire process stays on track. Independent experts will be hired to scrutinize the process to test its effectiveness. Consumers are encouraged to do their part by shopping around for the best deal, thereby ensuring the most savings.
To further aid in the continued reduction of insurance rates, Bill 171 also known as the Fighting Fraud and Reducing Automobile Rates Act has been introduced. This extensive plan has received much scrutiny as to some it seems like a double edged sword.
The Prejudgment Interest Act (PJI) is a provision put in place so that interest can be accrued on a winning claim from the date that it occurred to the date that it was awarded. It attempts to compensate the claimant for monetary loss during the resolution of their case and acts as a deterrent for insurance companies that attempt to deliberately delay payments.
There are a few questionable changes that have worried Ontarians and questioned the true benefits of Bill 171. A few are outlined below.
- The new Bill reduces the PJI rate from five percent to a little over one percent with adjustments made quarterly. The aim is said to help reduce the cost of claims, but the Ontario Trial Lawyers Association (OTLA) who represent plaintiffs in the hearings, see it as another way for insurers to delay claims in order to benefit from retaining and investing their wealth.
- The Bill takes away the authority from arbitrators to penalize intentional delays that insurers may impose on claims.
The Insurance Brokers Association of Ontario (IBAO) is backing the implementation of Bill 171. They see no way to successfully implement the Auto Insurance Cost and Rate Reduction Strategy (the fifteen percent reduction) without the voting and passing of Bill 171.
Time alone will reveal how these procedures will benefit Ontarians. All those involved will be weighing the outcome against their needs and hopefully come to a mutually beneficial compromise.