Ontario auto insurance reform debuts to mixed reaction

Much anticipated Ontario auto insurance reforms have been put before the legislature with the view of having legislation enacted by the beginning of next year.

Auto insurers, represented by the Insurance Bureau of Canada (IBC), say they “applaud” the actions taken by Ontario Finance Minister, Janet Ecker, in tabling the legislation that will allow future changes to the auto insurance system to be introduced more quickly. “We support this legislation and are delighted that the government is moving to reform the auto insurance system at this time,” says Stan Griffin president of the IBC.

The legislation is in line with discussions between insurers and the government to address rising healthcare costs associated with auto insurance. Griffin also feels the legislation addresses the concerns of healthcare providers and other stakeholders. “The legislation will assist in controlling the rising cost of healthcare for injured accident victims and, as a result, will help keep auto insurance affordable for Ontario drivers.”

The changes will result in a more “outcome-based” approach to healthcare, with the hope of reducing the amount of time and treatments needed to complete claims. Griffin also notes that a new system will allow the Ministry of Transportation to create a database for verifying insurance coverage for vehicles and make insurance a requirement for vehicle registration. “We are encouraged that the government has introduced these initiatives in an effort to work toward keeping uninsured vehicles off Ontario roads.”

However, the reforms also drew criticism from the provincial government’s opposition, who accused insurance companies of milking policyholders to pay for their weak investment returns, and in the process cutting back on insured benefits. Ultimately, the critics say, the auto reform legislation put forward will end up costing consumers more. Despite this criticism, the IBC holds firm that the actions taken will provide long-term cost benefits for policyholders. “The government’s auto insurance reform legislation will control costs and ensure the long-term affordability of car insurance for Ontario drivers,” notes bureau vice president of Ontario, Mark Yakabuski. He adds that the legislation primarily addresses potential healthcare abuse, an area which emerged as the single biggest cost-pressure facing auto insurers. The legislation will reduce time and expense required in dealing with multiple assessments of injured accident victims, he points out, whilst reducing the incentive for abuse of the system – including “over-treatment”.

Yakabuski points out that the legislation was carefully drafted to ensure that benefits entitled to genuine accident victims were not reduced, which critics of the legislation claim to be the case. In fact, he adds, “benefits for children and seriously injured claimants are expanded under the bill”.

The new Ontario legislation is expected to result in the province’s auto insurance market eventually returning to an underwriting profit, predicts Bill Star, president of Kingsway Financial Services Inc. Star says he is pleased with the proposed accountability for costs of frivolous claims. “We understand that the government intends to introduce the legislation and supporting regulations before the end of the year and anticipate that they could be effective as early as January 1, 2003.”