On November 20, 2014, Bill 15, titled the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, received Royal Assent in the Ontario Provincial Parliament.
This new act will introduce major changes to the dispute resolution system employed regarding accident benefits claims, as well as other changes made to the regulation of tow trucks and vehicle storage services, the Highway Traffic Act, as well as licensing insurance agents and adjusters. The main focus of this article will be the major changes introduced in Schedule 3 of the new bill.
Schedule 3 of Bill 15 has ushered in complete overhaul of the dispute resolution system for accident benefits claims. Previously, the primary method of resolving dispute between insurers and insureds was by way of mediation and arbitration through the Financial Services Commission of Ontario (FSCO). The courts were also accessible to claimants in case mediations failed or if the arbitration decision was to be appealed. Section 1 through 13 of Schedule 3 remove references to “mediation” and “arbitration” as these avenues will no longer be available to insured persons in dispute with their insurers. Instead, Bill 15 now grants the License Appeal Tribunal with the power to assume that role for accident benefits claims. Although FSCO’s dispute resolution role will be completely replaced by the License Appeal Tribunal, there remain other areas of regulation that FSCO will undertake, particularly the regulation of the fees and payment system between the insurance industry and healthcare providers for accident benefits.
Section 14 of Schedule 3 replaces sections 279 and 283 of the Insurance Act, which deal with the powers of the License Appeals Tribunal. The entire system of dispute resolution as it exists today is being replaced with a tribunal system that will be governed by the License Appeal Tribunal. These sections also allow the Lieutenant Governor in Council to make regulations for the transition period as we transition into the new dispute resolution system. Some new sections maintain features from the previous system, such as the provision regarding protection of benefits under section 287 which continues under the new section 281.
Similarly, the existing power of the Lieutenant Governor in Council to assess insurers for the costs, under the Financial Services Commission of Ontario Act, 1997, is now introduced into the Insurance Act by way of section 283 as related to License Appeal Tribunal. More crucially, however, is the complete removal of courts as an avenue for accident benefits claims. Insured individuals will no longer be able to litigate their matters in Ontario courts as was previously the case. All cases for accident benefits will need to go through the License Appeal Tribunal.
Section 15 of Schedule 3 reforms the licensing requirements of insurance brokers and agents. New sections introduced into the Insurance Act now state the classes of licenses for insurance agent and the scope of each license type. The existing process of appointing advisory board for hearings and make recommendations to the Superintendent relating to applicants is now replaced. The impetus behind the inclusion of this new regulation is to fight fraudulent activity in the area of insurance sales. There have been numerous cases of individuals selling fraudulent insurance policies over the past few years. In response to this situation, Bill 15 introduced new provisions regarding the issuance, amendment and renewal of licenses for brokers and agents, including the applications for such licenses.
Another interesting aspect of the new Bill 15 is the creation of inspectors under the new section 5 of Schedule 1. Section 5 grants the Director the power to appoint inspectors in relation to the enforcement of the new rules for towing and storage services, which allow broad powers for inspectors to inspect premises, examine records and question persons for enforcement purposes.
