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Towing firms propose changes to Ontario auto insurance fraud bill

Bill 15, the Fighting Fraud and Reducing Automobile Insurance Rates Act, passed second reading in October and was the subject of a recent hearing by the Standing Committee on General Government.

If passed into law without amendments, Bill 15 would change the definition of "commercial motor vehicle," under the Highway Traffic Act, to remove an exemption for tow trucks. This essentially means tow truck operators would require a Commercial Vehicle Operator's Registration (CVOR) certificate.

"While the removal of CVOR's exemption for tow trucks would enable greater enforcement of tow trucks to address safety, a straight removal of the exemption could have the opposite effect on the industry," said Elliott Silverstein, manager of government relations with CAA South Central Ontario, during testimony before the general government committee Nov. 5 at Queen's Park in Toronto.

"We believe that a simple amendment to provide a partial exemption to towing operators within CVOR — the removal of the hours of service requirement — is necessary to ensure the vitality of the towing industry. This amendment would have no financial impact on the intentions of the bill, but would prevent unintentional consequences of what Bill 15 sets out to do."

If the Ontario government were to impose the same hours of service rules on tow truck drivers that are currently in place for other commercial vehicles,  "it would reduce the ability to get to a destination on time," Silverstein said in reply to a question from Liberal MPP Mike Colle. "The cost could potentially increase, and the service to members would be down. It has a trickle-down effect that really doesn't benefit anybody involved in those situations."

Silverstein explained that call volume varies for tow truck operators.

"You could have days where it's high volume, like a snowstorm, or you could have days where you could get a call at 8:30 in the morning and not get another call until 3 in the afternoon," Silverstein said. "But the hours of service could impact that, and you couldn't do that second call, potentially, because of the hours that you're technically on the job."

Aris Marinos, a director of North American Auto Accident Pictures Towing Division, an association of independent tow truck operators, echoed Silverstein's concern.

"Tow operators do a lot of short tows, with a lot of time in between," he said before the committee. "There are no scheduled calls, so it's all emergency towing, which will not leave enough time off consistently or consecutively to satisfy the requirements of the program."

Brian Patterson, president and chief executive officer of the Ontario Safety League, explained why his organization supports the requirement for a CVOR for commercial tow truck operators.

"One of the reasons we have the safest roads in North America is because we have invested significantly in how we administer the CVOR in this province specifically," Patterson said before the committee. "It is the best tool available, in our opinion, to deal with commercial vehicles on public roadways."

Bill 15 also proposes to reduce the number of days that a vehicle can be stored after an accident without giving notice to the owner and other persons.

"Currently, when a vehicle has been damaged in an accident, it may be brought to a storage facility after the collision by someone other than the owner, or without the owner's authority," said Laura Albanese, parliamentary assistant to Finance Minister Charles Sousa, when she introduced Bill 15 for second reading Oct. 21.

"Those who store vehicles after accidents can begin charging for storage services right away, even though the owner of the vehicle may be unaware of where their car is located and that it is accumulating charges every day. Storers can hold a vehicle and accumulate storage charges for up to 60 days without giving any notice and then still claim a lien for the storage costs."

But reducing from 60 the number of days a storage firm can hold a vehicle without giving notice would "not make much difference for the owners of vehicles that have any significant value," Marinos said Nov. 5 in the committee hearing.

"All owners who call looking for their vehicles will notify their insurance companies if they are involved in an accident, which do not leave vehicles around to accumulate storage fees," Marinos said. "If they do accumulate fees, the insurance places the funds in the courts. If they don't report to their insurance company, then they are in default of their policies. Why should this be the responsibility of the storage facilities? Will the government compensate the compounds for the abandoned vehicles?"

Marinos noted tow truck operators responding to collisions are "directed by somebody on the scene" to tow a vehicle.

"So whether it's the officers who are on scene — isn't it their responsibility to tell them where the vehicle is? — or whether it is the owner who was involved in an accident or an impoundment of some sort, they've got to know where their vehicle went," Marinos said in reply to a question from Chris Ballard, the Liberal MPP for Newmarket-Aurora. "We weren't driving the vehicle; we were just ordered to take it, or made arrangements to take the car."

Bill 15, if passed into law, would also let the government set qualifications and standards for tow truck operators, including driver certification and training requirements.

"A provincial licence, potentially administered or managed by municipalities, is a strong option to consider to address issues of fraud, as it provides a seamless process and system across Ontario regardless of the market size for training, safety and compliance," Silverstein said before the committee. "An environment that enables a two-tiered system, or a continuation of the current ad hoc system of municipal licencing, could have a long-term negative effect on the industry."

Craig Hirota, members' services manager for Associated Canadian Car Rental Operators, voiced support for the proposal in Bill 15 to require tow and storage providers to publish their rates, accept credit card payments and provide itemized invoices before receiving payment.

"Disclosure of rates, provision of itemized invoices, minimal deviation from estimated payment amounts, insurance requirements, authorization of service requirements, acceptance of multiple forms of payment and establishment of qualifications and licensing are common expectations placed upon any business," Hirota said. But towing services "are almost always rendered when the consumer is in distress, unable to negotiate or choose an alternative service provider," Hirota added.

The legislature earlier passed a time allocation motion on Bill 15, which requires the committee to report the bill to the legislature by Nov. 18.  That motion also limits debate to two hours on third reading.

If passed into law, Bill 15 would also:

-move the auto insurance claim dispute resolution system — currently handled by the Financial Services Commission of Ontario (FSCO) — to the Ministry of the Attorney General's licence appeal tribunal;

-reduce the prejudgment interest rate for non-pecuniary loss for auto accident victims; and

-make changes to the disciplinary process for insurance agents and adjusters.

Canadian Underwriter