Ontario Auto Reform: Responding to Consumer Needs

Ontario released new and revised auto insurance regulations in March 2010 that resulted from reforms it had announced last November. Although changes to Ontario’s auto insurance system are not new — this represents the fifth product reform in 20 years — some have suggested that the latest round of reforms is the most fundamental yet. Furthermore, it is apparent the reforms respond first and foremost to the needs of consumers.

For its part in the Bill 198 review process, Insurance Bureau of Canada (IBC) continually presented consumer-centred arguments that clearly and credibly illustrated the effects of any given reform on Ontarians. People in this province are already paying 25% more for their auto insurance than other Canadians. No one doubted that Ontario’s auto insurance system was in a critical, unsustainable state. But opinions varied on how to fix it.

From the beginning, IBC argued it wasn’t about what insurers, health care providers or personal injury lawyers wanted. Rather, it was about what consumers needed: affordable, available and stable auto insurance. Fortunately, the government agreed. The province initiated substantive reforms that, as of Sept. 1, 2010, will provide Ontarians with greater choice when it comes to their auto insurance. They will also continue to provide fair and robust benefits for collision injury victims.

ONTARIO’S NEW STANDARD AUTO PACKAGE

Starting in September, consumers will be able to customize their auto insurance policy to meet their individual needs. A new standard insurance package will become available, providing $50,000 for medical and rehabilitation coverage for non-catastrophic claims and $1 million for catastrophic claims. As of Sept. 1, consumers wanting a higher level of coverage will be allowed to purchase it when their policy renews.

The existing standard package of $100,000 in benefits for non-catastrophic claims proved to be overly generous and vulnerable to overuse and abuse. Also, the existing package is overly expensive and doesn’t succeed in getting injury victims any better, or healing injuries any faster, than in other jurisdictions.

The reforms mean Ontarians will soon benefit from a wider range of choices on other benefits such as attendant care, housekeeping expenses, home maintenance expenses, caregiver expenses, death and funeral expenses, court compensation and compensation for property damage.

Although the new limits on the standard package will be lower than they are now, they are on par with those of most other accident benefits packages across the country. They should provide enough coverage to help accident victims recover.

The reforms address the problem of over-assessment, an area of great concern that is responsible for significantly driving up claims costs. As of September, assessment costs will be capped at $2,000, with a maximum of $200 payable for the completion of forms — including any assessment required to complete them. Additional measures, such as the elimination of rebuttal assessments, will work to reduce the frequency and cost of assessments to the system.

Another important reform is a $3,500 cap on minor injury medical-rehabilitation expenses and an improved definition of “minor injury.” In addition, the government has specifically designated physicians as assessors for catastrophic injuries or neuropsychologists for catastrophic brain impairments. The goal is to ensure claimants are getting the right level of medical attention, according to the severity of the injury.

THE AFTERMATH

Insurers understand the importance of every regulatory detail. Although the provincial government did not accept all of IBC’s recommendations, the final regulations do reflect many of the industry’s concerns. This is not so much a victory for industry as it is a victory for consumers. After all, well-intended but poorly-worded regulations would quickly become vulnerable to abuse; this would result in higher (not lower) claims costs and more (not less) system instability.

IBC is pleased the government took the steps necessary to create a more balanced auto insurance system for Ontarians. However, we understand more work remains to be done to address important, outstanding details and to educate consumers and industry professionals about these changes. IBC continues to work closely with government on the reform implementation process and has created five industry working groups to work on the various aspects of implementation, including: accident benefit (AB) claims, forms and endorsements, rate filing, consumer education and the development of the Minor Injury Guideline.

In addition, throughout the coming months, IBC will be leading efforts to raise consumer awareness so that, come September, consumers will be well-prepared to make the best choices about their auto insurance.

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Starting in September, consumers will be able to customize their auto insurance policy to meet their individual needs. A new standard insurance package will become available, providing $50,000 for medical and rehabilitation coverage for non-catastrophic claims and $1 million for catastrophic claims. As of Sept. 1, consumers wanting a higher level of coverage will be allowed to purchase it when their policy renews.

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The reforms mean Ontarians will soon benefit from a wider range of choices on other benefits such as attendant care, housekeeping expenses, home maintenance expenses, caregiver expenses, death and funeral expenses, court compensation and compensation for property damage.