Ontario Auto Losses Remain Under Spotlight

As insurers await Bill-198 regulations, substantial problems remain within Ontario’s auto insurance system, says Mark Yakabuski the Ontario regional vice president of the Insurance Bureau of Canada (IBC). He recently spoke at the annual meeting of the Canadian Insurance Accountants Association (CIAA).

While the legislation helps abate some of the costs associated with the healthcare portion of auto claims, which he expects will top $2 billion in 2002, “there will remain substantially unresolved issues to deal with in the months to come”. Issues such as a more efficient rate filing system cannot wait years, but must be addressed in months, he adds. Furthermore, looking at the serious injury threshold, and instilling the role of insurers as secondary payers, rather than the first source of healthcare spending, is another factor that has to be taken up with the province, Yakabuski observes.

In a separate presentation to the CIP Society, Kingsway Financial Services CEO Bill Star called the Ontario auto system “the most generous auto insurance system in the world”. “It’s a terrible product,” he says, which can but only ultimately lead to fraud. He notes that his own company does not see the same kind of system abuse within its trucking and motorcycle products.

As such, Star says that, regardless of Bill-198, the only effective manner to address abuse within the province’s auto product is for companies to start “saying no” to suspect claims. This, he notes, is something that Kingsway began doing eight months ago, which the effort has already seen a marked improvement in the company’s underwriting result. And, companies cannot rely on rate increases alone to bring them to profitability, he adds. Putting the brakes on fraudulent paralegals and clinics is just the start, he says, “when I finish with these people, I’m going after [fraudulent] lawyers”.

Brokers support many of the new Ontario auto provisions, Insurance Brokers Association of Ontario (IBAO) CEO Bob Carter told a meeting of the Insurance Brokers of Toronto Region (IBTR). But issues remain, specifically with the “take all comers” rule, which Carter says has “outlived its use”. The IBAO supports a “file and use” rating system which many insurers have lobbied for, he adds.

As regulations are being debated between the government, insurers and the rehabilitation field, Carter observes that the provincial government does not seem willing to impose a decision, but is looking for consensus. “Bill-198 may clear up 75% of our problems. At least insurers will feel they have an opportunity to make some money.”