Although acknowledging the Ontario government’s efforts to crack down on the tow-truck industry, one insurer is struggling to find another 5.3 per cent in premium savings by July 1.
Ontario is cracking down on renegade tow-truck operators with a set of new rules meant to force them to stop gouging drivers and pay fair prices – a move applauded by the province’s insurers and The Co-operators. But that may not be enough, says The Co-operators Leonard Sharman, who shares the company’s disappointment that Queen’s Park didn’t acknowledge the 17 per cent in premium reductions that were achieved over the past two years.
“The Co-operators has reduced rates by more than 17 per cent since 2012. In accordance with the most recent order, we’re being called upon to reduce rates by 5.3 per cent effective July 1,” Sharman told Insurance Business. “We do not believe that this recent reduction is justified based on the overall impact of the existing auto insurance reforms, but we do look forward to seeing the current reform measures passed in the legislature, and will work with the government to find further cost savings for our clients.”
The governing Liberals, as part of a deal with the New Democrats to pass last year’s budget, is slashing average auto-insurance premiums by 15 per cent by August of 2015. To compensate for lost industry profit, the government is trying to make the system less costly for insurance companies by speeding up arbitration processes for claimants and battling fraud. These measures are contained in a separate bill, introduced earlier this year.
The government is hoping the proposed law for tow truck drivers will curb insurance fraud and lead to lower premiums for drivers – as is the insurance industry, which has been waiting on Queen’s Park to implement more recommendations from last year’s Anti-Fraud Task Force. (continued.)
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“It will give stronger protection for people who have their vehicle towed or stored,” said Consumer Services Minister Tracy MacCharles before tabling the bill. “It’s going to help with road safety and it’s going to help us drive down insurance costs by driving down fraud.”
The legislation will compel tow-truck operators to tell drivers exactly how much they will charge them before they tow their vehicle, post their prices and provide itemized invoices. Such measures are designed to allow drivers to comparison shop and discourage towing operations from charging exorbitant rates.
The proposed rules would also require tow-truck operators to make information such as their names and contacts publicly available, and accept credit-card payments.
Tow-truck drivers would also have to register with the government, allowing the province to keep better tabs on them.
The proposals are partly a response to complaints from drivers who have been charged massive, unexplained fees by towing companies, said MacCharles, partly to accusations that some tow-truck drivers have been involved in insurance fraud rings and partly a result of a high rate of collisions among towing companies.
