When Ontario made wide-sweeping changes to automobile insurance and personal injury law in 2010, the intent was to reduce insurance premiums for the public. Although insurance companies did save money, much of these savings were not passed on to the consumers.
The amount of claims observed in Ontario did decrease in this period, but still remain the highest in the country. In 2006, accident benefits claims were $331, and rose to $588 per insured vehicle in 2009. This dropped down to $313 per vehicle in 2013 after the reforms.
Following the 2014 Cunningham Report, many anticipated that further changes were coming to Ontario, and with the introduction of the new budget, these changes are being realized. The final report stated,
Many stakeholders were ambivalent about where the [Dispute Resolution System] DRS should reside. The Ontario auto insurance system has undergone several major reforms over the past 23 years. Whether the DRS remained at [Financial Services Commission of Ontario] FSCO, moved to a public sector tribunal or moved entirely to the private sector did not seem as important as ensuring that the new tribunal is staffed with adjudicators with knowledge and expertise on the current and earlier schemes. Adherence to prescribed timelines and accountability were also identified as important irrespective of where the system might reside.
Cunningham’s interim report suggested that the Statutory Accident Benefits Schedule (SABS) be moved from FSCO to a tribunal model similar to the Workplace Safety and Insurance Appeal Tribunal (WSIAT). The final report instead suggested incorporating SABS into an existing adjudicative tribunal administered by the Ministry of the Attorney General (MAG). The expert ministry would retain the responsibility of developing policy, while enhancing efficiency and access to justice by utilizing existing experience and expertise.
The new budget implements this recommendation by moving the automobile insurance dispute resolution system to the Licence Appeal Tribunal, which will start to receive applications from April 1, 2016. Changes to medical and rehabilitation benefits and attendant care services, and reducing the standard deductible for comprehensive care, are all intended to ensure that savings are passed on.
Rather than repeat the situation observed in 2010, the province will now mandate that these savings are passed on to the consumers by reducing the maximum interest rate on monthly premiums from 3% to 1.3%, and prohibit any premium increases for minor at-fault collisions where there are no repeated injuries. The province will also require that all insurance companies provide a discount to consumers who use winter tires.
What is more concerning to the personal injury bar are amendments to the Insurance Act regulations to update the definition of catastrophic impairment. These changes also emerge from the 2010 reforms, with a commitment by the province to consult with the medical community. The Superintendent’s Report in 2011 concluded after thorough consultation,
The Panel recommended not only changes to the definition of catastrophic impairment, but also changes to the existing structure around catastrophic impairment claims (e.g., the introduction of a new “interim” catastrophic impairment status). Implementing these recommendations would require regulation changes not only to the catastrophic impairment definition but also to numerous other provisions governing the process for determination and handling of catastrophic impairment claims.
The 2010 reforms modified the definition of catastrophic impairment to include the amputation of an arm or leg, instead of two limbs as required before. The creation of an interim impairment status, or adopting the American Spinal Injury Association (ASIA) scale, may create more reliable and consistent results, but it may have the inadvertent result of overlooking the subjective experience of the claimant as previously evaluated by the AMA Guides or excluding seriously injured drivers from the catastrophic definition.
These changes to accident benefits will likely impact licensed paralegals far more significantly in Ontario than it will lawyers, as prior to 2010 this was an important area of practice. With these coming changes and the shift to the Licence Appeal Tribunal it’s unlikely that paralegals will continue to service this area extensively. This could lead to higher unrepresented rates before the tribunal where these benefits are not handled by a law firm already processing an at-fault tort claim.
However, personal injury law firms are also expressing concern about the changes proposed in the new budget. The changes to medical and rehabilitation benefits and attendant care services reduce the maximum amount for catastrophic claims from $1 million for each of these to $1 million combined. The exclusion of seriously injured drivers from catastrophic care means there are less benefits these people are entitled to. The changes also reduce the standard duration for medical and rehabilitation benefits for non-catastrophic claims for most claimants down to 5 years.
During a news conference at Queen’s Park this week several stakeholders gathered to oppose the proposed changes,
Peter Athanasopoulos, of Spinal Cord Injury of Ontario, said the changes will “rob those who need the greatest support at the most difficult time of their lives.”
Finance Minister Charles Sousa said Wednesday this province is the only one to have “catastrophic” insurance — a claim the lawyers for the Personal Injury Alliance dismiss, since other provinces don’t have the same complicated insurance system we have.
The reduced benefits are typically used for additional health care required following a motor vehicle injury, including physiotherapy and nursing services. Although these changes may potentially require auto insurers to pay less for this care, and theoretically could be passed down to consumers in the form of lower premiums, there is also another hidden danger that has not been discussed by the media or the various stakeholders.
The automobile insurance reforms were initiated largely out of an interest to combat fraud and abuse in the system by drivers. While this is an admirable goals, the concerns about fraud go both ways and include where insurers wrongfully deny claimants funds that they need, or unnecessarily delay before paying a driver out.
Where drivers do not get the medical attention they need, their recovery can be delayed or even result in their medical situation getting worse. This disability, whether it be long or short-term, has its own burdens on society, including tangible financial costs to employers, family members, and our other social services. Individuals who do not get proper medical care when they need it are likely to seek this care from the publicly-funded system, at a time where Federal health transfer funding is being reduced by $36 billion. Our provincial health system is already strained and does not need to shoulder more of this burden.
By shifting the responsibility of motor vehicle collision injuries from insurers to the public there may in fact be some short-term savings to the public in cost in the form of lower premiums. But the larger costs of absorbing this care in our society at large simply does not justify pursuing this goal single-handedly. All of the studies examining reform of auto insurance have failed to properly explore these impacts. Legal representation ensures that claims that do have merit are properly compensated, instead of abandoned by meritorious claimants who are repeatedly denied by insurers.
Auto insurance premiums in Ontario should come down for consumers, but fraud is not the obstacle in preventing them from doing so. Profits in the past five years have skyrocketed for insurance companies in light of a system which already strongly favours them. These changes will likely entrench their power even further, and that cannot be a good thing for consumers, no how low their premiums may be.