The Ontario government is studying a cap on auto-insurance rates but new rules announced Wednesday aimed at saving the industry up to $500 million a year offer motorists no immediate relief from sky-high premiums.

Canadian Press

TORONTO — The Ontario government is studying a cap on auto-insurance rates but new rules announced Wednesday aimed at saving the industry up to $500 million a year offer motorists no immediate relief from sky-high premiums.

Premier Ernie Eves offered few details on any rate cap but said he wants a discussion paper ready to take to the annual premiers conference next week. "I'm not going to comment on the sort of cap we're looking at but I think it's fair to say this isn't just an issue that's peculiar to the province of Ontario," Eves said.

Auto insurance rates in Ontario have risen more than 30 per cent over the past two years, partly due to higher claims and a slumping stock market that has eaten into insurers' investment returns.

Finance Minister Janet Ecker refused to speculate on whether a cap might become a reality, talking instead about the possibility of freezing rates.

"We are looking at whether a rate freeze would help," said Ecker.

Stiff premiums almost cost the Conservatives of New Brunswick Premier Bernard Lord re-election recently and Eves wants to be seen tackling the issue ahead of an Ontario vote, expected this fall.

Among the measures he announced Wednesday are limits on treatment claims for soft-tissue injuries such as whiplash and a ban on extraordinary rate hikes for drivers who aren't at fault in a crash.

"People are concerned about the size of their premium going up," said Eves.

"We want to do everything we can to reduce that as much as possible."

Opposition critics blasted the announcement, while the insurance industry called it a "good first step."

"The government does not have the appetite to deal with the problems. These are half-baked ideas," said Liberal member George Smitherman.

"If Bernard Lord had announced this in the province of New Brunswick, he'd be an opposition leader at best."

Perhaps the most important change centres on assessment and treatment of whiplash. Treatment payouts would be limited to $1,450 over six weeks for severe cases. There would be no need for prior approval from insurance companies provided a standardized protocol was followed.

Among other measures announced Wednesday:

- A ban on special premium hikes for drivers whose cheques bounce inadvertently;

- Expanded definition of "catastrophic injuries;"

- A code of conduct for paralegals.

George Cooke, president of the Dominion of Canada insurance company, said he doubted the rule changes would actually save the industry $500 million as Eves said.

Eves said the discussion paper would also look at making changes to a victim's right to sue and controlling what health-care providers can charge.

He also said he wanted the province's insurance regulator to be "more aggressive" in reviewing applications for rate hikes.