Road to Reform

Truth can be stranger than fiction, especially when one looks at the Ontario auto insurance system.

On April 11, the provincial government released David Marshall’s review of the system. Marshall is a former chief executive officer of the Workplace Safety and Insurance Board.

With disputes over accident benefits (AB) claims taking up court time, a case can be made to have the AB system reviewed by someone with experience presiding over an organization mandated to provide compensation for injured workers.

Regardless of who reviews the system, though, what is needed is a 30,000-foot view – one that takes account of the big picture.

Marshall makes some interesting recommendations, one of which has proven to be quite controversial. He recommends that the province establish a regulator which, in turn, should establish a “roster of hospital-based independent examination centres” (IECs), which should “provide diagnoses and future treatment plans” that would be binding on both insurers and claimants.

In his report, Fair Benefits Fairly Delivered, Marshall makes some astute observations, described by Insurance Bureau of Canada chief executive officer Don Forgeron as “probably the best description we have to date of what is wrong” with Ontario auto.

“The need to have lawyers involved to negotiate settlements in what should be a straightforward, no-fault, accident benefits system signals a failure in the system,” Marshall writes in his report. That statement will probably generate some debate, given that Marshall also says private corporations should continue writing accident benefits.

Marshall has a point. Although auto insurance is a private contract, the terms of the contract are standard and are drafted by the government.

With the amount of disagreement over what an AB contract is intended to cover, one would think that the province could add clarity for both insurers and insureds.

The problems with Ontario auto raise even broader questions, not just about how contract disputes are handled, but also on the province’s current approach to healthcare and transportation safety.

For example, why is risk management not the top public policy objective of the auto insurance system?

Marshall says that his proposed IEC system would have significant differences from the designated assessment centres (DACs) of days of yore.

But in reality, this IEC “is a new kind of DAC,” argues Philippa Samworth, a partner with Dutton Brock LLP, who delivered a presentation in late April as part of BDO Canada LLP’s Accident Benefits Conference.

What Samworth said is a perfect example of how truth is stranger than fiction.

“Hospitals did not want to do auto insurance stuff,” she said. “Family doctors don’t want to do auto insurance stuff.”

That statement would probably come as no surprise to auto insurance professionals, but to the lay person, such a statement should be truly astounding. With the role that traffic injuries play in fatalities and disabilities, one would think that “auto insurance stuff” would be core to the business of a single-payer healthcare system.

Imagine if hospitals or family doctors did not want to do “cancer stuff” or “heart disease stuff” or “arthritis stuff.” In this sort of scenario, the market for shamans would flourish.

If the public policy objective is to offload the medical costs of traffic injuries from the public healthcare system, then why not require that auto insurance cover all healthcare costs associated with a traffic injury?

Could this be done without making auto premiums unaffordable for all but the wealthy? Not without changing the rate-filing system in such a way as to let insurance companies use auto insurance as a tool for risk management.

However, if that was the case, many drivers would be uninsurable.