Auto Insurance Update - Dale Orlando
The recent five-year Auto Insurance review by the Ontario Liberal Government was a major disappointment to all OTLA members. When the final package of reforms was introduced by way of Regulations in March of this year, anyone who had been involved in the review process could only be left with the impression that the Ontario Liberal Government had bowed to the political pressure exerted by the Insurance Bureau of Canada (IBC) who mounted a scare tactic campaign centered around rising premium costs.
As local Toronto reporter, Alan Shanoff recently said:
“Who are the winners and losers? Insurance companies win big. They provide less coverage for the same premium. They get extra premiums for the same coverage.
Accident victims lose. Car owners lose.
We get the privilege of paying more for the same coverage we now have."
I do not believe that this insurance industry ‘hand-out’ provided by the Ontario Liberal Government was necessary or warranted and I believe this will be borne out over the coming years.
It has been admitted by various insurance industry executives that the cycles in profitability of the insurance industry are in large part due to the conduct of companies in the way they price their product during the “good times” and the level of risk assumed by various insurers in their investment decisions. When those decisions work in their favour, the insurance industry enjoys hundreds of millions of dollars in profits as they did during the period from 2003 to 2007, with record profits being achieved in 2004 and 2005. When the insurance market softens and the stock market slips, the industry expects Ontario drivers to smooth out the rough spots. The recent demand by the industry for insurance reform and premium increases is a rehash of the pleas heard by the same parties in 2002. Unfortunately, the Ontario Liberal Government has bowed to insurance industry demands yet again with a slate of amendments that further erode the rights of accident victims.
As of September 1, 2010, the new Statutory Accident Benefits Schedule (SABS) will include a host of changes including the following:
- Replacing the existing Pre-Approved Framework Guideline for Grade I and II Whiplash Associated Disorders with a new Minor Injury Guideline for accidents occurring on or after September 1, 2010 and capping medical/rehabilitation and assessment/examination expenses for minor injuries to $3,500.00.
- Reducing medical and rehabilitation coverage for non-catastrophic claims to $50,000.00, inclusive of all assessment and examination costs incurred by the injured claimant.
- Reducing attendant care coverage for non-catastrophic claims to $36,000.00.
- Eliminating caregiver, housekeeping and home maintenance benefits for non-catastrophic claimants.
- Capping each assessment to $2,000.00 – this applies for all assessments, whether they are requested by the claimant or insurer.
- Providing payment for in-home assessments only to claimants who have sustained more than a minor injury.
- Eliminating rebuttal examinations.
- Offering $2,500.00 for accounting reports to support income replacement claims.
- Merging treatment plans and applications for approval of assessments or examinations into one process.
This erosion of first party rights has been counter balanced by a minimal restoration of tort rights with the elimination in fatality claims of the statutory deductible of $15,000.00 from Family Law Act awards of $50,000.00 or less.
As these changes move ahead, OTLA’s Board of Directors remains highly involved in working to influence the process of implementation of the various changes. Through the participation of OTLA Board, we are active on a number of FSCO committees including:
- The Forms Committee
- The Minor Injury Guideline Committee
- Policy Forms and Endorsement Advisory Committee
- Consumer Information Working Group
- Reform Implementation Committee
- Dispute Resolution Service (DRS) Committee
This package of amendments came about despite the literally hundreds of hours invested by OTLA’s Five Year Review Committee in the process of consultation, government relations and public relations. The efforts of the OTLA committee undertaken on behalf of all OTLA members included:
- Conducting Ipsos Reid polling that supported the need for eliminating the threshold and deductibles
- Hosting an insurance summit that was attended by nearly all stakeholders and that received favourable coverage from the press
- Launching a press conference that attracted television and print coverage, highlighting the plight of accident victims and illustrating the unfairness of the deductible on fatality claims
- Authoring numerous opinion pieces that received media coverage and responding to reporters’ questions to provide a competing view to that of the IBC
- Building strong alliances with the United Seniors Coalition and student interest groups who share our opposition to the threshold deductibles
- Retaining and using a lobbyist to open doors to Government
- Participating in weekly meetings with the lobbyist to be kept abreast of any developments with Minister Dwight Duncan
- Meeting directly with Minister Dwight Duncan and his staff
- Delivering a presentation to the Liberal Caucus
- Meeting with and informing key representatives of the opposition parties of OTLA’s position for the need to restore tort rights
- Prepared extensive submissions for the FSCO review and prepared extensive responding submissions to the IBC position paper
- Attended meetings at the FSCO along with members of the IBC in advance of delivery of the FSCO report
- Retain an actuary to review and analyze the insurance industry's financial data and provide statistical evidence to educate M.P.P.s
These efforts may not have delivered the resounding success that all involved had hoped for, but we are able to claim victory on a number of fronts. As mentioned previously, the new legislation includes the elimination of the statutory deductible in fatality claims. Further, under the new legislation, members of the motoring public will have the option of purchasing an endorsement that will reduce their statutory deductible on non-pecuniary general damages claims from $30,000.00 to $15,000.00. Additionally, the package of amendments included an expansion of the definition of catastrophic impairment to include single limb amputees.
Furthermore, the IBC was unsuccessful in securing many of the major amendments that they sought. Some of the failing positions include:
- Reduce medical and rehabilitation benefits to $25,000.00 in non-catastrophic injury claims
- Reduce attendant care benefits to $20,000.00
- Eliminating the principle of joint and several liability as between defendants in auto claims
- A demand that the government be provided with regulatory authority to negate the precedent-setting effect of Court/Arbitration decisions that would undermine the purported purpose of benefits provisions
- Require mandatory commutation of collateral benefits and allow the valuation of collateral benefit to be deducted from tort awards without a mandatory requirement that the commuted value be paid to innocent accident victims
- An overall tightening of the definition of catastrophic impairment including an elimination of combining of psychological/psychiatric impairments with a person’s percentage ratings for physical impairments in determining if a person has suffered a 55% whole person impairment.
It is without doubt that the IBC will continue to lobby for the six amendments listed above in addition to the many other amendments unsuccessfully sought in the last review. You may rest assured that the representatives of the OTLA Board will be ready to meet this challenge head on. We will continue with our fundraising efforts to allow us, when needed, to retain the expertise of actuaries, political lobbyists and public relations personnel. We will develop new media contacts and encourage existing media contacts to enhance our public relations presence as a means to educate the public at large about the unfairness of the Ontario Liberal Government cuts to auto insurance and the importance of purchasing optional first party coverage and adequate third party liability limits. As frustrating as the process can be, we will continue to monitor activities at Queen’s Park. We will foster relationships with M.P.P.s from all three parties as a means of educating them about the countervailing perspective to that presented by the IBC on auto insurance and on all other issues that impact the clients we serve.
Together we will work to preserve civil justice and seek fair and equitable Access to Justice for all in Ontario!