All Ontario drivers pay for unnecessary legal costs through higher insurance rates – even if they never make a claim
January 25, 2017 (Toronto, ON) – – Aviva Canada endorses a new provincial study which concludes that lawyers – not their insurance clients – are the primary beneficiaries cashing in on contingency fee arrangements.
The study, conducted by Osgoode Hall Law School Professor Allan Hutchinson, further indicates the need for complete disclosure and transparency on legal issues such as contingency fees (a sum of money awarded to a lawyer if they win a case), referral fees (paid when one lawyer refers a case to another lawyer) and widespread legal advertising.
All of these costs are examples of why Ontario drivers are paying the highest insurance premiums in Canada, Aviva Canada’s head of claims said.
“Ontario drivers pay too much for auto insurance,” states Irene Bianchi, Executive Vice President of Claims, Aviva Canada. “Contingency fees are one of the key drivers of claims costs and, as a result, increase insurance premiums that all Ontario drivers pay.”
The average Ontario driver pays 24% more than an Alberta driver and 72% more than a driver in Atlantic Canada.* These rates are driven by how much is paid out in claims costs.
“The cost difference between the provinces isn’t more accidents or a higher population density. Instead, it can be directly attributable to the large amount of costs taken from the system that do not contribute to helping accident victims. The system is broken. A broader review of where total claim payments are going is desperately needed,” Bianchi continued.
As Hutchinson’s report highlights, contingency fees can amount to over 40% of a settlement, resulting in just slightly more than half of the money paid in any given insurance claim going to the actual consumer who was injured.
Add to this the recent revelations on referral fees and advertising costs in the personal injury legal community and it is clear that all Ontario drivers, not just those injured and needing legal support, are paying for these added unnecessary costs and getting little or no benefit in return.
“The next time you see a personal injury legal ad on the back of a transit bus, or on TV, just remember that those advertising costs, and in many cases the referral fees, are all being paid by Ontario drivers through sky-high auto insurance rates,” Bianchi added.
The Hutchinson report highlighted the lack of public transparency around contingency and referral fees that are charged by the personal injury legal community. His recommendations also include caps on contingency fees and steps to ensure that such fees charged to consumers are in line with the actual billable hours spent on the case.
On the heels of Hutchinson’s report, Julia Munro, MPP for York-Simcoe, signaled her intention to introduce a Private Members Bill that would protect accident victims and other consumers from certain legal practices.
While the Law Society of Upper Canada is conducting a review of its personal conduct rules, including advertising, contingency fees and referral fees, this issue requires immediate action.
Aviva Canada supports both Hutchinson’s and Munro’s call for greater transparency and accountability around contingency fees charged by lawyers that result in a much higher percentage of payments going to the actual injured claimants. We urge the government to consider this bill and the recommendations in the report.
*Insurance Bureau of Canada – GISA 2015 data
About Aviva Canada
Aviva Canada is one of the leading property and casualty insurance groups in the country, providing home, automobile, leisure/lifestyle and business insurance to more than three million customers. A wholly-owned subsidiary of UK-based Aviva plc, the company has more than 4,000 employees focused on creating a bright and sustainable future for our customers and our communities.
Aviva Canada invests in positive change through the Aviva Community Fund, Canada’s longest running online community funding competition. Since its inception in 2009, the Aviva Community Fund has awarded $7.5 million to over 250 charities and community groups nationwide. Aviva Canada, bringing over 300 years of good thinking and insurance solutions to Canadians from coast to coast.
Senior Manager of Public Relations, Aviva Canada