Bill 11 - Insurance Amendment Act
October 14, 2008 - Second Reading
Ms Blakeman: Thank you very much, Mr. Speaker. I’m pleased to be able to rise and respond to the opening statements made by the President of the Treasury Board on behalf of the minister of finance. In fact, this bill was introduced May 27, 2008, and we have not had an opportunity, with the summer recess, to be able to come back to it, so this is my first opportunity to speak to the bill. Of course, in second reading we’re speaking essentially in favour or against the principle of what is being presented in the act. This is Bill 11, the Insurance Amendment Act, 2008.
I’ve always found the prospect of insurance really interesting because essentially you’re betting, or rather you’re hedging your bets. I’m betting that things will go wrong, and therefore I’m going to purchase insurance to try to help me when those things go wrong. The insurance company is betting that things are going to go right, and they won’t have to pay out to me, and they will be able to pocket the profit. Thus we move forward in insurance. In certain circumstances we have very specific requirements of the public. For example, in this province it is required that you carry PL/PD insurance. Therefore, the government is also under an equal obligation to make sure that insurance is affordable and is accessible to those people. In other cases it’s more of an option, or at least it’s an option in the eyes of government, although it may not be an option in the eyes of, let’s say, your apartment owner, who requires you to have renter’s insurance to cover any damage to your belongings if there was a fire or a flood or any kind of theft or damage to the contents of your apartment.
Insurance usually engenders some pretty strong feelings from just about everybody because, really, we’d all prefer not to have it. But I think many of us are grateful that it is, in fact, available to us, the idea being that if things go wrong, you have purchased on some sort of an instalment basis some protection and would expect to be getting back some sort of coverage if you are injured or if you have lost or have damaged property.
One of the interesting and not often highlighted aspects of insurance is that insurance companies – remember, I was talking about that I bet things will go wrong, and therefore I’ll get coverage, and insurance companies bet that things will go right, and they won’t have to pay out. But they also deserve credit for working very hard to make sure that things do go right. Insurance companies are at the forefront of trying to improve how automobiles are made, for example, and are largely responsible for campaigning for things like airbags and other safety features to reduce the severity of injury that people may have in traffic collisions. As I’m sure my colleagues on the government side can attest, they also get lobbied by the insurance industry in trying to have better roads, lower speed limits, better markings, and that sort of thing to again reduce the severity and frequency of traffic collisions. That’s true in a number of other sectors that are covered by insurance.
What we have in front of us is a major updating of insurance legislation. This comes to us from more or less two different places. In 2001 Alberta Finance did start to review the Insurance Act in order to modernize it. I would say that in looking through this, they’ve been fairly successful in doing that, and I’ll come back later to some of the things that they’ve put in place here.
This was essentially a two parter. One was the changes that were made in 2003. Now, that has resulted in the cap on the soft tissue injury payout, which is quite controversial and, in fact, is still somewhere in the middle of the courts because it was deemed to be unconstitutional in that it separated out a particular class of individuals who had suffered an injury, those that had suffered a soft tissue injury as compared to those that had broken bones, for example, and deemed that their injuries would only be eligible for a $4,000 cap, a maximum of $4,000 on their injury. That, if I’m still following this, I think is now being appealed by our very own government, so that one is still in the works. That was the 2003 version of this.
Now we come to the 2008 version, and they’re essentially looking at everything else that’s covered under the Insurance Act there. There’s very little of what’s being changed here or adjusted here that refers back to automobiles, but there’s still some stuff in it. The second piece of what happened is that in 2003 the Supreme Court had a ruling that has rippled out into Canadian society and has required a response. Essentially this was a court case around KP Pacific Holdings versus Guardian Insurance Company. It came into being because there was a disagreement on the interpretation of the time frame for when a claim could be filed. There was a dispute about whether it had to be filed within a year or whether an update had to be within a year from the date of filing the proof of the loss.
That ended up going to court. One thing led to another. In the Supreme Court we ended up with a ruling saying that the Insurance Act had been fundamentally unchanged since being created. It needed a serious review, and the Supreme Court did ask that there be a serious review and that clauses be brought in line with current insurance practices and generally accepted principles, which is perfectly reasonable. Specifically, the main case was that “the outmoded category-based Act contains rules based on the old classes of insurance,” and they felt further that this would result in “continued uncertainty about what rules apply.”
That brings me to the second part of what’s going on here. We all know we’re supposed to read the fine print. Not very many of us do. The other part of what’s happened here is that in some cases the fine print was not available for us to read. Some of the changes that are being contemplated here really are about consumer protection but also about increased access of consumers to information that they need to know in order to understand their policies. Generally, people don’t read their policy until it’s too late. Something bad has already happened, and now you’re trying to figure out if you’re covered for the bad thing that just happened. We really all need to try to read it in advance, but human nature being what it is.
There are a number of changes that are being brought in with this act specifically under, let’s call it, transparency, which I think is the way the President of the Treasury Board talked about it. I tend to talk about it as consumer protection. It is there to make sure that the fine print is there and that folks get to read it. I talked a little earlier about the time limits, and that is flowing directly out of that court decision. What we get out of that is that there are two years to react rather than one, and that actually is bringing it in line with the Limitations Act that we have here in Alberta, which is pretty standard at two years. So it’s bringing that into line. It is requiring that companies disclose the existence of a limitation period. They hadn’t been required to tell you that before, so if you didn’t know, basically, you had no way of finding that out unless you did read the fine print, which, as we said, is human nature not to.
It also allowed for a 30-day late payment and talked about what was a maximum amount of interest that insurance companies could charge you on that late payment. Those are the situations where they tell you that your insurance is expiring at the end of October. In some cases it’s – what do they call it? – negative billing, where if you don’t do anything, they continue, but in other cases you needed to do something and you forgot. Now you’re in the middle of November, and something goes wrong. But you’ve had an insurance policy forever. It allows you make that payment late and still have your coverage, but it also allows the companies to charge you interest on that money that they were owed and did not get for that period of time, but a reasonable amount of interest.
It talks about costs that may be awarded, court costs. One of the major factors now in people going to court or not going to court is whether or not they can get their legal fees paid. That had not been included before in awards from insurance companies. Now you can petition to have what they call court costs, which is essentially your legal fees, your lawyer fees, included or added on to the amount of the settlement that you would be getting.
As I said, you do now get the ability to read the fine print. I know how excited we all are about that, but you didn’t have that before, so we should be excited we have it now. It also requires that we’re informed of a dispute process where the appraisals are contested, and that was not available to us before.
There was no dispute mechanism process for you to say: “Well, I disagree. You say my couch is worth $200. I say it’s worth a thousand.” There was no process through which to take that, and that’s now available.
The printing is too small.
Dr. Taft: It’s the fine print.
Ms Blakeman: It’s that fine print.
The new owners are responsible for the errors in the policy, so if the company is sold, one insurance company sells to another insurance company, and if in transferring the people’s information over they make a mistake on your policy, it’s the fault of the new owners, not your fault. That was what was happening previously. Again, that’s another consumer protection item that is available there. Now, there’s a whole other series of things that fall under a category I’m calling office of the superintendent. Essentially the industry is going to pay for the expenses of that office of the superintendent of insurance, and that office will have wider influence in appeals and disputes and things like that.
The final piece of the changes that are being made here is modernization. It’s offering a framework for the contracts. It’s allowing the use of electronic messaging. Knowing how many of my colleagues now have surgical implants with their BlackBerrys, I’m sure they’ll be just thrilled to hear that. But it will allow for electronic ways of communicating, which of course is including email and faxes, and that had not been allowed before.
Also, plain language. What a concept: plain language to be used in insurance. I can’t tell you how excited I am about that, Mr. Speaker, because it acknowledges that our citizens for the most part are intelligent, well-thought, curious individuals who, given half a chance, will use their good common sense and look after themselves. As I say, I’ve mentioned a number of places where they did not have access to information previously. Now they do, and even better, it’s written in plain language. Thank you so much. All of those, I think, are a step forward. I don’t have any objection to them, and in principle I’m certainly willing to support this.
There are two things that I don’t like. This bill is meant to line up with the B.C. bill – the TILMA word comes up – because basically B.C. and Alberta agreed that they would align their two insurance systems. Now, interestingly – and I’m assuming we’re going to hear from somebody on that side about an update about what’s happening – the B.C. Legislature introduced their version of this bill actually before we did, on April 30. As I said, we introduced ours on May 27. But the B.C. Legislature did not pass it in the spring, and they have suspended their fall sitting, so their bill is going to die on the Order Paper because they won’t be back in time to deal with it. So we’re not lining up with them anymore. I also have some questions about whether they’re going to change their bill beyond what we thought they were going to do. This was supposed to get everybody to line up.
Now, I’m on the record repeatedly, as are my colleagues, with deep concerns about that whole process of that agreement, of TILMA, as it’s called. I won’t go into it again except to register that this is one of the pieces that’s now coming forward. But you know what? We get to debate this in the Legislature. That’s why I’m not going on too much about TILMA: because we actually get to talk about this act here, unlike all the other parts of that agreement of TILMA, which we were not allowed to talk about.
The second piece that I never like is moving things out of legislation and into regulations. I have had this reinforced to me so many times by members of the public, people that work in not-for profit groups and in service organizations and in umbrella organizations for companies, associations. They come forward and say: you’re absolutely right, Laurie; it is hard to find those regulations. It’s much easier to find the legislation online, and you can read the debate about what was intended or not intended in the Hansard. But with regulations you’ve got to know what you’re doing. You’ve got to hunt them down, and you’ve got to be persistent in getting them. So I never like to see items moved out of legislation and into regulations. The other thing is that the regulations get no debate in this Assembly, and there’s some question about whether they’re allowed to get debate in the policy field committees. Now, the original policy field committee standing orders, in fact, allowed for that and recognized it in a number of places, but I’ve now been to two or three of those policy field committees in which government members have adamantly said that they were not allowed to be discussed. So that one is up in the air, and I think that’s another reason why we don’t want to see deciding factors put in regulations rather than in the actual legislation.
One really nice thing, that I really like, that doesn’t outweigh TILMA but goes a long way towards it, is what is happening around reciprocating insurance exchanges, which is allowing larger groups like municipalities to offer insurance coverage through their own funding to NGO and volunteer-driven charitable organizations. This has been a huge issue in the NGO and volunteer charitable sector over the last six or seven years. About that far back all of a sudden we started to get calls from community leagues saying: “What’s happening? Our insurance for our little community league building, where, you know, we turn the temperature down every night and hardly use the building at all, has gone from $800 a year to $3,000 a year. What are we going to do? We don’t have that money. We use that money for our programming.”
It was everybody. It was the community league buildings; it was children’s recreation and leisure activities; it was theatres and dance companies that had buildings. The insurance just went crazy, and nobody could help. We did work really hard to try to find some insurance groups that would cover off these small organizations, but for the most part there was no help. I remember having an ongoing and rather bitter exchange with the then Treasurer, who, of course, has always had a great fondness for ag societies, and her best recommendation was to somehow, you know, be like the ag societies and all band together and somehow self-insure that way. But that just was not realistic for most of the groups we deal with.
That NGO sector right now is under such strain. I cannot emphasize enough how difficult it is for them right now. Having a clause in this amending act that would allow what they call reciprocating insurance exchanges to happen is a very small but very, very important piece for a sector that’s very important to us. This government likes to talk like the only important sector is the business sector – and God knows that I love my small and medium sized businesses in downtown Edmonton – but we have a huge sector called the public service and the public sector here, which covers all of your social service groups and helping agencies, children’s agencies, arts and culture, leisure, youth. All of those groups are part of our society. They’re an important part of our economic society but also make it possible for us to have a nice place to live. Those groups have really been struggling, mostly with the cost of their human resources right now because they can’t keep up to what’s being offered in the private sector and in the government sector. I’ll talk about that in another debate. This little piece in here should really help them and should help very basic community-level organizations like your local community leagues.
As the critic for this area I’m very happy to speak in second reading to recommend to my colleagues that they should support this bill in principle. Thank you very much, Mr. Speaker.
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