| LEGISLATIVE
ASSEMBLY OF ONTARIO
Official
Record of Debate
(Hansard)
AUTOMOBILE
INSURANCE RATE
STABILIZATION ACT, 2003
December
2, 2003
Mr
Ted Arnott (Waterloo-Wellington): It is with some degree
of mixed emotions that I offer the House my views on
Bill 5, the Automobile Insurance Rate Stabilization
Act, 2003.
First
of all, I must confess that I am absolutely elated to
be back to serve in this the 38th Parliament of Ontario.
The October 2 election was my fourth one. As a candidate,
I was confident in my team, certain that I'd served
my constituents to the very best of my ability with
my best efforts, and comfortable that my future was
in my constituents' hands. However, this is not to say
that I believed that we could not lose in Waterloo-Wellington.
In fact, I must confess that I believed there was a
chance we might lose. No seat in Ontario is the absolute
preserve of any party, and the riding that I'm privileged
to serve is no exception.
Although
parts of Wellington county have been represented by
Conservative MPPs without interruption since 1951 --
and I think of my predecessors John Root and Jack Johnson,
who served in this place with great distinction over
a period of some 30, almost 40, years -- Waterloo county
and, since the 1970s, Waterloo region, has been represented
by distinguished members from all three of the major
political parties. I think of people like the late John
Sweeney, who represented Kitchener-Wilmot, sitting with
the Liberal side; Mike Cooper, who represented the New
Democrats for a period of years in the early 1990s;
of course, the new mayor of the city of Waterloo, Herb
Epp, who sat with the Liberals; and my predecessor Elizabeth
Witmer, who served as the member for Waterloo North
from 1990 to 1999 before redistribution.
All
of us as MPPs, when first elected -- and it's been interesting
to hear some of the maiden speeches today and in recent
days -- come in here with an enthusiastic belief in
our respective parties and a desire to make a positive
difference in the lives of our constituents and the
people of the province. Without exception, we strive
to do our best and make the most significant contribution
that our talents and our energy will allow. But the
electorate is rightly demanding. High standards are
expected of us, standards of industry, integrity, wisdom
and forthrightness. The degree to which we exceed these
high expectations can make it more likely that we as
candidates can be elected or re-elected, but it is still
no guarantee of success at the polls. I know of, and
could list, numerous examples of good people who served
in this House with distinction, who wanted to continue
their public service but were swept away by the desire
of change that reached a climax on October 2. But if
we believe in our democracy and our constitutional monarchy
and our pluralistic political system, we must accept
the result of that election and conclude that, in the
majority of ridings, the people wanted to give the Liberal
Party a chance, and opted to see what they could do.
I
say to my colleagues across the floor, congratulations
on your success, but be forewarned. Our party in opposition
was formidable from 1990 to 1995, and we are determined
to do our job again in opposition, holding the government
to account, combating your complacency, your self-satisfaction,
your spin and your innate desire to tax and spend. While
we concede that you have the right to govern and attempt
to implement your platform, we will offer, from this
side of the House, an alternative course and we will
debate you to demonstrate our platform's superiority
over your program.
Secondly,
I want to express my sincere appreciation to my campaign
team and my supporters in Waterloo-Wellington who have
sent me here once more. I feel very honoured to have
received their trust and their expressions of encouragement
and support during the month of September and since
that fateful first Thursday of October, election day.
I shall strive to be worthy of the support that I have
received and the trust that has been extended to me
by the people of Waterloo-Wellington.
This
debate on Bill 5, which was introduced last Wednesday
by the Minister of Finance, has highlighted once again
the contentious issue of auto insurance, a perennial
political football in recent years. What about auto
insurance? Why does it keep re-emerging as a political
issue significant enough to almost defeat provincial
governments, as almost happened this year in New Brunswick?
The
first thing people need to know about auto insurance
is that it is a compulsory product. If you drive a car
in Ontario, you need to have a valid insurance policy
with a licensed company underwriting your liability
as you drive. Because it's compulsory, the provincial
government, in particular the Minister of Finance, has
an obligation to regulate the insurance industry to
ensure the protection of the public interest and the
protection of the motorists -- as we used to call them
commonly, or drivers as we tend to refer to them today
-- so that drivers, as consumers of auto insurance,
are protected as well.
Because
it's compulsory, auto insurance needs to be affordable,
not just to the average driver, but also to the low-income
driver. In the small towns that I am privileged to represent,
like Clifford and Drayton and Wellesley and Breslau,
for example, and even in the urban areas of Kitchener,
there are literally thousands of people who drive older,
inexpensive vehicles because these are the only vehicles
they can afford. For many, transit is not an option
because it's not existent, certainly in small-town Ontario.
Yet people still need to get to work, they need to buy
their groceries, they need to run errands with their
children and so on. Many are seniors on fixed incomes.
They need their cars. Their cars are an absolute necessity,
not a luxury.
Our
insurance marketplace is comprised of more than 160
licensed companies that sell auto insurance in Ontario.
All of these companies are private enterprises managed
by, no doubt, good people who do their jobs as well
as can be expected. Consumers, in some cases, buy their
insurance directly from these companies and, in some
cases, through a broker who acts as an intermediary.
The broker is expected to represent the consumer's interest
and tries to find the best possible deal for them amongst
a number of companies that the broker may have a relationship
with.
This
is the system we have. Does it work? I think by and
large most of us would agree that it does. Is it perfect?
Evidently not, judging by the numbers of complaints
that we all as MPPs have received in recent months,
as premiums have shot up in the range of 30% in the
past two years alone and 20% in the past year, according
to recent published reports.
The
former government, led then by my colleague the member
for Dufferin-Peel-Wellington-Grey, took decisive action
earlier this year to determine the factors behind the
increases and, engaging expert opinion, brought forth
a plan to contain the insurance companies' costs and
thus apply downward pressure on premium rates. In July
2003, the Ernie Eves government announced changes to
regulations that complemented legislative changes passed
in the budget bill of earlier this year. The effect
of our changes was to streamline access to treatment
for common injuries such as whiplash by introducing
a pre-approved framework for treatment, improved benefits
for children suffering serious injuries and restricted
use of medical examinations by insurers in order to
end duplication. We intended to prohibit unfair business
practices by health care providers and paralegals and
introduce a code of conduct for paralegals.
We
followed that up with a white paper in July outlining
additional steps that we proposed, including amending
the deductibles that apply to awards for pain and suffering,
directing the superintendent of financial services to
review the designated assessment system, the existing
and proposed fee schedules used by various health care
providers treating auto accident victims, and the rules
used by insurers to ensure they are not unfairly denying
coverage to consumers. We attempted to establish a task
force to work jointly with the Ontario Crime Control
Commission to deal with auto theft and auto insurance
fraud, as well as our plan to invite other provinces
to share best practice information and address common
cost pressures such as theft, fraud and rising health
care costs.
1750
The
effect of these changes, it was estimated, would assist
the insurance companies to reduce their costs in the
range of $1.2 billion to $1.4 billion. We encourage
them strongly to pass along those savings to their customers.
We forecast that auto insurance premiums might decrease
in some cases by as much as 15% as a result of these
changes.
We
were also asking the insurance companies to undertake
these steps voluntarily, but we sent a very strong signal
that if they did not, if insurance companies didn't
find the required savings and pass them on to customers,
we were prepared to legislate rollbacks.
Very
shortly thereafter, the writ was dropped and the provincial
election ensued. The Liberal Party and its campaign
articulated a plan to make changes to the auto insurance
rules. They promised to bring in an immediate rate freeze
and a 10% cut within 90 days of taking office and an
additional 10% premium reduction for what they said
was customized insurance coverage. They promised protection
against unjustified rate increases. They promised no
more designated assessment centres and instead suggested
that family doctors could coordinate the people's care.
They promised to implement pre-approved frameworks for
injuries, reduce excessive court costs, eliminate fraud
and conflict of interest, protect and reward safe drivers,
appoint an auto insurance watchdog, a rate shock protection
plan -- whatever they had in mind there -- and identify
$650 million in industry savings. This was their platform;
this is what they ran on.
I
recall vividly a discussion about this issue at a number
of all-candidates meetings in Waterloo-Wellington and
the Liberal candidate promoting the policy of her party.
During
the months leading up to the election campaign and since
that time I have received numerous letters from constituents
explaining their circumstances and in many cases offering
good ideas to fix the problems which exist in auto insurance.
I heard from Ian MacEachern of New Hamburg; Reg Small
of Reg Small Hay and Straw, of Mount Forest; Donna Carmichael
of Moorefield; Florence Thiessen of Salem; Mike Linseman
of Kenilworth; Peter Hafemann of Wellesley; Wayne Moser
of Fast Tire and Auto Service, near Waterloo; Robert
Neal of Heidelberg; and Brad Ellis of Moorefield. The
Minister of Finance has received copies of their ideas
and would do well to consider the views of these thoughtful
constituents of mine who took the time to write.
Today
we see the results of the Liberal government's very
first political pronouncement: a temporary freeze on
rates. Bill 5 would provide the legal steps necessary
to follow up on the government's October 23 statement,
their very first decision after being sworn in to government.
Bill
5 "temporarily" -- at least so the government
says -- "freezes automobile insurance rates for
private passenger vehicles at the rates in effect on
October 23, 2003 and suspends the approval of applications
under the Insurance Act for rate changes while the bill
is in force.
"An
insurer may apply to the superintendent of financial
services for a rate increase if the insurer believes
that it is just and reasonable in the circumstances
having regard to the insurer's financial circumstances.
The superintendent shall not approve the insurer's proposed
rate increase or a smaller increase unless the superintendent
finds it is in the public interest and just and reasonable
in the circumstances to do so, given the insurer's exceptional
financial circumstances."
We've
heard some degree of criticism about this provision
of the bill. It's been said that you could drive a Mack
truck or a Boeing 747 through it.
"Every
insurer affected by the freeze must apply to the superintendent
on January 23, 2004 or a day specified by the superintendent
not more than 30 days after January 23, 2004 for approval
of its risk classification system and rates. No rate
or risk classification changes may be implemented without
the superintendent's prior approval. The superintendent
may approve a rate or require a rate to be reduced or
otherwise varied.
"Insurers
that fail to comply with the bill may be prosecuted,
may have their licences suspended or cancelled under
the Insurance Act and may be ordered to refund premiums
charged in excess of authorized rates."
This
is what the government indicates Bill 5 is all about.
However, as has been pointed out by our party's critic,
the member for -- what's Jim's riding?
The
Acting Speaker: Whitby-Ajax.
Mr
Arnott: Whitby-Ajax, one of our party's critics who
is an expert on auto insurance -- this bill appears
to be another page in what is fast becoming a veritable
catalogue of broken election promises by this Liberal
government. In politics, as in life, first impressions
are lasting ones. The first impression of this new government
has not been good. Ontarians have seen their new government
deny, deflect, deflate, denigrate, depress -- everything
but deliver. The government members will find out very
soon how quickly the goodwill of their brief honeymoon
has evaporated. And when consumers realize that Bill
5 will have the effect of freezing rates at their current
high levels, stopping in the middle of the process actual
rate reductions which insurers have filed that would
have provided for a 10% to 15% real reduction, they
will conclude, as I have, that this government is not
doing enough to reduce auto insurance premiums in Ontario.
With
Bill 5, the Liberals are embarking upon another cynical
exercise of responsibility evasion. The people of Ontario
expected much, much more.
The
Acting Speaker: It being very near 6 of the clock, this
House will adjourn until 6:45.
Questions
and Comments December 3, 2003:
The
Acting Speaker (Mr Bruce Crozier): When we last dealt
with this issue, the member for Waterloo-Wellington
had completed his remarks, so I would call for questions
and comments. The member from Timiskaming -- Timmins-James
Bay.
Mr
Gilles Bisson (Timmins-James Bay): Timiskaming is south
of Timmins-James Bay, Mr Speaker, and there's somebody
else in that riding. I wouldn't want to push him out
just yet. We'll wait four years.
I
listened intently to the comments made by the member
in regard to this whole auto insurance fiasco. I just
want to say, I agree with part of what he said, but
I have a little bit of a problem on the other part of
what he said.
Let
me start with the first part. First, this plan is going
to do nothing, quite frankly, in order to really assist
people to get their rates down. The government ran on
a promise that they were going to reduce people's auto
insurance within a 90-day period by 20%. A 20% reduction
from an increase of $800 a month to $4,600, which is
what some people are now paying, doesn't cut it. I've
got people in my constituency who had a bill last year
of about $800. Because of no fault of their own, they're
in a situation where their automobile insurance has
gone up to $4,600. So, even if the government was to
carry through on the promise they made in the election,
the 20% doesn't cut it.
1540
First
of all, this bill does not roll back rates by 20%. What
it purportedly does is freeze auto insurance rates at
elevated rates that insurance companies have already
passed on to consumers. The problem is that section
6 of the bill -- that's called the Mack truck section
-- says that any insurance company that is having financial
difficulties is able to pass on an increase to the consumer.
I just want to point out that that's basically what's
in the current legislation. Section 6 is not verbatim
but it's basically the same type of provision that we
have in the existing legislation.
Even
with the so-called freeze, people will still be gouged
by automobile insurance companies. That's why we, as
New Democrats, argue that the only way to fix this is
to move to a publicly funded, not-for-profit system,
as they have in Manitoba, another province where the
rates are a heck of a lot cheaper than here.
Mr
Ted McMeekin (Ancaster-Dundas-Flamborough-Aldershot):
I'm pleased to rise and respond to the Waterloo-Wellington
member's comments on this important piece of legislation.
When
the member from Waterloo-Wellington speaks, I've long
ago learned that it's really important to have two listening
ears, because he so often offers such fresh insights
and some really cogent suggestions as to where we should
be going. I was delighted to hear some of his helpful,
constructive remarks about standards yesterday, and
his reference to some of the procedural aspects of this
bill. I would point out to the member that this bill,
although it is but a temporary freeze, will buy us the
time we need to do the very consultation that he has
indicated is so incredibly important with an issue that
-- in fact, it's compulsory. People must have auto insurance,
and that's why governments of all stripes have the requirement
to be somewhat interventionist in terms of this issue.
He
also raised an interesting paradigm that I was pleased
to see read. That was the question, and it was more
than just a rhetorical question, about the injury system:
Does it in fact work? That has all kinds of spin-offs
around the designated assessment centres and some of
the other issues that he and I are all too familiar
with, answering the phone in the constituency office.
The
need to streamline the process that we bring to the
table with respect to common injuries: I want to say
to the member opposite that we on this side found that
a particularly helpful suggestion. We do indeed need
to streamline it, thinking of the victims and the people
of Ontario we're all here to serve.
Mr
Garfield Dunlop (Simcoe North): It's a pleasure to rise
this afternoon to make a few comments on the speech
and the comments made by my colleague Mr Arnott, from
Waterloo-Wellington. I can tell you that with his family's
connections in the business world and his connections
from his many years in politics, watching different
governments pursue different styles or different proposals
on automobile insurance, I too take him very seriously.
Mr
Arnott and I were talking the other night about this
auto insurance bill. One of the things he said to me
was -- he's a man of his word and he's a very honest
person -- "You know, I don't think that this will
correct the problem here. I believe it's a worldwide
problem." It's something I have to agree with him
on.
I
look back at the impact on the insurance world as a
result of September 11, when billions and billions of
dollars in lawsuits are actually outstanding right to
this day. Also, there were some poor investments and
that sort of thing. A lot of things, along with the
courts system, drove auto insurance up. I'm not so sure
that this bill will do anything at all. I think it really
is a time delay type of bill, to see that they can think
about it after we get the House adjourned. Maybe there
will be some other opportunities or some other legislation.
I doubt if it will be corrected in one piece of legislation.
I
look forward to hearing about the committee that will
travel around and visit different communities to seek
input. I think it is important to do that, as we try
to keep auto insurance rates down in this province.
Whether the government can guarantee, as they did in
their election platform, a 20% decrease in rates will
be seen in the future with the results of the proposal
and the committee's work.
Mr
Michael Prue (Beaches-East York): I too listened with
some interest to the member when he spoke on the last
occasion. I have to tell you that although much of what
he had to say could in fact be correct, I think far
too much blame is being put by people on the events
of September 11 in New York for what is happening to
the insurance industry. Whereas that may have had some
small effect in terms of the amounts of money that are
being paid out on automobiles in Ontario, it is not
the real reason that the rates are going up. The real
reason the rates are going up is quite clearly that
the insurance industry invests the money that drivers
and other people give to them -- that's one of the ways
they make their money. And their investments in the
stock market over the last number of years, in the declining
stock market, is the number one cause of the reason
that insurance rates are skyrocketing in Ontario.
I
invite the members here to look no further than what
has happened where those monies are not invested, the
not-for-profit situation in three separate provinces
of this country. I ask them to look at British Columbia,
Manitoba and Saskatchewan, and they will see that in
those three provinces, which do not have the same problem
of investing the money in the stock market the way private
companies do, the insurance rates are going up in single
digits only. The reason, perhaps, they are going up
in single digits is something that affects all of us,
and that is the increasing costs of the claims. But
in Ontario we are looking at, and have looked at, a
30% increase, and it is not because of September 11,
or at least not in large part; it is mostly because
of bad investments in the stock market.
We
need to understand how private insurance works. It works
on investing money, and the investing has not been good.
We need to look to a term of public insurance so that
we do not have to look at the vagaries of the stock
market in the future.
The
Acting Speaker: The member for Waterloo-Wellington has
two minutes for summary.
Mr
Ted Arnott (Waterloo-Wellington): I was pleased to have
the opportunity to give my thoughts to the House on
this bill yesterday afternoon, after question period
and routine proceedings. People had an opportunity to
respond the very next day, and they still remembered
what I said. I'm glad that some people were actually
listening to my speech yesterday afternoon, because
I have difficulty remembering what I said myself. And
to see other members who actually seem to be able to
restate some of my thoughts -- I appreciate that very
much.
Two
New Democrats responded to my speech: the member for
Timmins-James Bay and the member for Beaches-East York.
Where we have a fundamental disagreement with the New
Democrats is of course on the issue of whether or not
public auto insurance would be in the public interest.
New Democrats continue to espouse this particular policy
at the present time, but of course, as we know, when
they had the opportunity to govern, between 1990 and
1995, they seriously considered it, they were committed
to doing it, I believe in the 1990 campaign, in the
Agenda for People. I don't know what the discussions
were during those years -- I wasn't privy to those discussions,
not being a part of the government caucus -- but I sat
in opposition and watched it unfold, and certainly I
think the Premier of the day, Bob Rae, struggled with
the decision. I know the member for Niagara Centre was
prepared to go to the wall to fight for the principle,
but in the end, the Premier decided that it was not
in the public interest to move forward in that respect.
I think he was concerned about the potential job loss
that would have resulted. There would have been probably
thousands of people put out of work at that time. Particularly
during a recession, I think he considered that those
working people's interests needed to be considered.
I
believe that to change the system of auto insurance
the way the New Democrats would have us do would probably
cost in the billions of dollars, from what I have been
told and advised by the Insurance Bureau of Canada.
It's not a practical policy, and it's not one that I
support. But I do appreciate their interventions in
response to my speech.
I
also appreciate the response from the member for Ancaster-Dundas-Flamborough-Aldershot,
who spoke quite eloquently about the need for an important
role for the provincial government to regulate auto
insurance. I certainly agree with that.
I
thank my colleague the member for Simcoe North for his
kind comments. But he also questioned the effectiveness
of this bill, and certainly we'll see how effective
it will be over time.
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