The recent Bill 171 “Fighting Fraud and Reducing Automobile Insurance Rates Act” introduced by Ontario’s Minister of Finance, proposes reducing the amount of interest insurers must pay on compensation owed to motor vehicle accident (MVA) victims. Currently, the interest rate is 5%, but under Bill 171, the rate would become 1.3% and be modified quarterly.
This latest change was presented without notice or any consultation with any industry stakeholders.
As a recent article by Alan Shanoff of the Toronto Sun describes, this change is far from good for MVA victims.
The apparent reason for this change in prejudgement interest on general damages in MVA claims is to “help reduce claims costs”. However, as a personal injury lawyer, I am greatly concerned that the Ministry of Finance and officials at Financial Services Commission of Ontario (FSCO) have little understanding that the prejudgment interest rate provided incentive to settle cases in a timely manner.
With the interest rate for pain and suffering damages in MVAs reduced from 5 % to 1.3% to link it to the prejudgment rate for other damages, there will be little incentive for insurers to deal expeditiously with claims for pain and suffering. Instead, they will keep their money in the bank for as long as possible, make additional profits from their investments, to the detriment of innocent plaintiffs.
This development follows the December 2013 announcement to amend the attendant care provisions (click here to learn about these changes) of the Statutory Accident Benefits Schedule (SABS), effective February 1, which was also made without any prior consultation or notice to industry stakeholders.
This amendment is a gift to insurance companies at the expense of the innocent, injured MVA accident victim. This change lets insurance companies delay justice to innocent accident victims in order to fuel further profits. If left uncorrected, it will only add to the considerable court case backlog since delayed resolution means more cases on the trial list, more pre-trial conferences, more motions, and so on.
These amendments were made without any consultation with the legal profession, or any awareness of the impact that this will have on accident victims, access to justice, and the significant cost to the Court system.
Once again, the government has further tipped the balance grossly in favour of the insurance industry, which has already reaped in huge profits since the September 2010 policy change.
The government must rework this punitive measure, consult with the legal profession, and restore balance.
>> Roger R. Foisy is a Personal Injury Lawyer with extensive experience in motor vehicle accident cases. If you, or a loved one, have been injured in a motor vehicle accident in Ontario, please do not hesitate to contact us for immediate support and a free consolation.
More on motor vehicle accident injuries from Roger R. Foisy:
Accessing Funding for Medical Rehabilitation after Suffering a Mild Traumatic Brain Injury in a Motor Vehicle Accident [Video]
Changes to Accident Benefits for Vehicle Collision Victims in Effect as of December 17, 2013
The Increasing Relevance of Social Media in FSCO Arbitration