Ontario’s new centralized regulation of the tow truck industry has not lowered insurance company’s claims bills, in part because the province hasn’t adopted a cap on tow truck fees, an insurance exec said at the Insurance Institute of Canada’s annual symposium in Toronto Thursday.
“The Ontario government took a step to centralize the regulation of towing, taking it up from the municipal bylaw level and bringing it under MTO [Ministry of Transportation Ontario] provincially. This went live Jan. 1, 2024,” said Evan Stubbings, director of government affairs at Desjardins Group. “Had this been done correctly, I think this could have been a really good thing.
“But what they did is they took the licensing element from the municipal regime, but they did not take the maximum rate cap that used to be in municipal bylaw[s].”
For several years, one of the frustrations of claims professionals had been the multitude of different tow fee caps enshrined in various municipal bylaws.
In a series on total losses published in 2019, Canadian Underwriter interviewed Elliott Silverstein, manager of government relations at CAA South Central Ontario. He explained at the time the reason why insurers wanted the province to establish caps on tow fees.
“Right now, municipalities have varying regulations and bylaws around how much a tow can cost, how the process works in terms of hooking the vehicle up, and where the vehicle goes,” Silverstein told CU at the time. “Because there is no specific set of provincial regulations, the consumer really is at the mercy of what the municipalities have set out in their regulations.
“For municipalities that don’t have regulations, it is effectively the Wild West, where no rules apply, because there is no provincial model or minimum standard to work from.”
Insurers at the time gave CU examples of situations in which a towing company might pick up a damaged car inside the border of a municipality with a lower towing fee cap, and take it to a neighbouring municipality instead with a higher fee cap.
Under Ontario’s 2021 Towing and Storage Safety and Enforcement Act, implemented in 2024, the province included a section that addresses “rate regulation and transparency.”
This section of the bill does not set out maximum towing fees. Instead, it says tow truck “operators must publish their maximum rates for towing and storage with the MTO. They cannot charge more than their published rates,” as summarized by 613 Towing.
Elsewhere, the legislation says consumers have the right to use which towing company to use, and the first 10 km for the tow truck to get to the crash site is not chargeable. “Tow drivers are prohibited from recommending repair shops, lawyers, or medical services unless specifically asked,” 613 Towing states.
But the upshot of the lack of a cap on towing fees is “death by 1,000 cuts,” Stubbings said at the symposium.
He observed car thieves could steal a single car and make $80,000 on the resale of the stolen car. But they can also make up the same $80,000 by getting involved with the towing industry.
“In Toronto, it used to cost you $310.44 plus HST to tow a vehicle, all services included,” Stubbings said. “And now, since January 1st of 2024, it’s very common for our claims teams — this isn’t a Desjardins point, this is an industry point — to see the initial tow bill for just a hook-it-and-go-away fender bender [to be] at least $1,500.
“An actuary in the room can do a percentage increase on that. But you start to understand why there’s a financial incentive for [auto thieves] to still be in the game.”
And that’s why there’s violence in the towing industry, added Karin Ots, senior vice president of regulatory and government relations at Aviva Canada. She referenced three tow trucks being lit on fire over a single day last week in Brampton.
“Violence goes to where the money is,” Ot said. “The fighting is not over the glory of being a tow truck driver, but the money.”
Editor’s Note: This article has been updated to reflect the fact that Evan Stubbings said the cost of a tow was actually $310.44 and not $1,044, as previously reported. CU apologizes for the error.