Posted by Best Insurance,Car Insurance,Life Insurance,Health Insurance on Tuesday, 16 October 2012
As we look around at the fallout after Ontario Premier Dalton McGuinty resigned after nine years in office, informing caucus on Monday evening that it is time for renewal.
Earlier in the day Mr. McGuinty asked the Lieutenant-Governor to prorogue the legislature amid continuing fallout from a scandal over the politically motivated cancellation of two power plants and an ongoing battle with organized labour over plans to impose new collective agreements that contain wage freezes via legislation.
Proroguing the legislature makes a lot of sense when the government is essentially leaderless although a caretaker leader could have been appointed. Proroguing the legislature is a gift to the next premier because the contempt charges directed at the government end along with all the bills before the legislature. As well during the Liberal leadership the Opposition will not be able to embarrass the government if the legislature is not sitting. There is a possibility despite that the new Premier will immediately call an election despite the Election Statute Law Amendment Act, 2005 which calls for fixed election dates. The outcome of an election are impossible to predict at this time but it is possible that another party will form the next government.
So how will this all impact on the auto insurance sector? After all there are a number of significant policy initiatives that are in the pipeline.
Definition of Catastrophic Impairment
The Superintendent at FSCO submitted his recommendations for changes to the SABS definition of catastrophic impairment to Minister Dwight Duncan in December 2011. His report was released in the spring of 2012 and was consulted on by the Ministry of Finance over the summer. There has been wide-spread opposition to the Superintendent's report. Some of the recommendations reflect scientific evidence but others do not. Even those recommendations that are based on science have an element of arbitrariness in the selection of the catastrophic threshold.
If Minister Duncan decides to run for leadership he will likely be asked to resign from Cabinet. It is unlikely that his replacement will want to wade into this contentious policy initiatives that provides no political benefits. The prospects for a regulation change are poor.
Fraud
The Auto Insurance Anti-Fraud Task Force is at the conclusion of their mandate and very close to providing the minister with their final report. However, it is unclear who that minister will be and how long he or she will be the minister. So what he or she will do with that report is unclear. It is highly probable that the next minister will be relatively unfamiliar with auto insurance policy and will need to spend time being brief on the portfolio in addition to other finance issues.
It is likely that the more significant changes to be recommended by the Task Force will require amendments to the Insurance Act. However, with the legislature prorogued, there won't be any bills introduced for at least 6 months if not more. Even those changes that only require regulatory changes may also be put on hold. Regulation changes can be made by Cabinet which will continue to meet during the Liberals' leadership campaign. However, it will not likely be business as usual until a new premier is selected. Cabinet will continue to make decisions but new policy initiatives will not likely be acted upon except where there is an urgent need.
There are ant-fraud initiatives that will not require legislation or regulation, for example most of the consumer education and engagement proposals. These recommendations may not be delayed.
It is also not likely that the Task Force will be ignored if there is a new government. All the parties have stated that they support initiatives that address auto insurance fraud. What is unclear is how much of the Task Force's report that will be acted on.
Dispute Resolution Review
The government has made a commitment in the 2012 Budget to review the dispute resolution system operated by FSCO. The review arose from the mediation backlog that has crippled the auto insurance system. No announcement has been made by the Ministry of Finance regarding the vehicle for conducting the review or the time line. There is no reason to delay the review until after a new premier is selected as the review is likely to be overseen by bureaucrats and not politicians. By the time the review is completed the legislature will have returned and if the government decides to act on the recommendations, a bill could be introduced.