Cost of Ontario car insurance stabilizing, but benefits have been chopped

Ellen Roseman Mon Feb 13 2012

When you look at auto insurance rates in Ontario, you find both good news and bad news.

The good news: The cost of insuring private passenger vehicles is going up less quickly than in the past.

The average increase among Ontario insurers that filed for approval in the last three months of 2011 was 1.84 per cent. That compares to an increase of 3.57 per cent in the year-earlier period.

Even better news: A few insurance companies are lowering their rates.

Intact Financial, Ontario’s largest auto insurer, is cutting rates 2.32 per cent. Trafalgar Insurance is cutting rates by 1.79 per cent.

I’m talking about average rates approved by the Financial Services Commission of Ontario (FSCO). You may pay more or less than the average, depending on where you live, your vehicle and your risk.

The bad news: The cost of car insurance is still going up.

Related: Buying car insurance: 10 things to know

The Ontario government hoped to see rates flatten or fall when it slashed accident benefits on Sept. 1, 2010.

Even worse news: Some insurers, including Lombard, Coachman, CUMIS, Primmum and TD General Insurance, were given increases of 6 to 9 per cent in the last quarter.

“The reforms were necessary to address abuses and fraud in the system,” says Kristen Rose, a FSCO spokesperson. “Premiums are expected to be lower than they would have been without reforms.”

So, what are Ontario’s new auto insurance rules? And how are you affected if you’re injured in a car accident?

There’s a $1 million limit on medical and rehabilitation claims for those with catastrophic injuries — such as the three people who survived the crash near Stratford in which 11 people were killed.

Catastrophic injuries make up only one per cent of the 65,000 Ontarians injured in car accidents every year.

Almost 20 per cent of accident victims have severe, but noncatastrophic injuries. Their benefits are capped at $50,000, down from $100,000 before the reforms came in.

I’m talking about services that the public health system doesn’t pay for, such as physiotherapy, chiropractic, massage and psychological counselling.

Only a few policyholders have chosen to pay higher premiums to get more than $50,000 in medical benefits, according to a FSCO survey.

The remaining 80 per cent of accident victims have soft tissue damage — such as whiplash, strains and sprains — and have their medical benefits capped at $3,500.

So-called minor injuries used to be covered under the $100,000 limit. Now you can’t boost your benefits beyond $3,500, even if you want to pay more.

Why was it necessary to cut back coverage so severely?

Accident benefits claims costs per vehicle more than doubled from 2006 to 2010, the Ontario government said. And most of these increases came from the Greater Toronto Area.

“Of the $2.4 billion increase in accident benefits costs in Ontario through this period, $2 billion occurred in the GTA, amounting to $800 per vehicle insured in the GTA in 2010,” said an anti-fraud task force last December.

The government suspected that costs were inflated by fraud, especially when private health expenditures grew at a much slower rate in the same period (up 22 per cent).

The task force is still hard at work. But its interim report says the figure of $1.3 billion used by Ontario’s insurance industry “cannot be considered a verifiable measure of the scope of fraud at this time.”

Will the reforms curb accident benefit costs?

That depends on how many minor injury cases stay under the $3,500 cap. People with pre-existing health conditions that don’t allow them to recover from an accident can be bumped up to the $50,000 level.

“We think pre-existing conditions ought to be documented if you say that you can’t be treated appropriately under the cap,” says Ralph Palumbo, Ontario vice-president of the Insurance Bureau of Canada.

The group also wants to see health clinics licensed or regulated and a dedicated fraud investigation unit set up.

“The average injury claim in Ontario is $56,000. It’s about five times the average in any other province and it’s a staggering, staggering number,” Palumbo says.

While premiums aren’t coming down yet, it’s clear the reforms are having a damaging impact on accident victims.

Last week, the Ontario Trial Lawyers Association (OTLA) released a survey showing that 75 per cent of members had clients needing treatment who had exhausted the $3,500 minor injury limit.

The minor injury guidelines have had the greatest effect on accident victims of all the September 2010 changes, the trial lawyers said.

Insurers can insist the $3,500 cap applies, even when proof of a pre-existing condition is provided. That decision may not be reviewed for a year or more because of FSCO’s backlog of thousands of mediation cases.

“Injured accident victims have no immediate recourse and are often forced to go without appropriate care,” said Laura Hillyer, an OTLA director.

Ontarians now have “the worst automobile insurance protection in Canada” and are entitled to greater coverage, she added.

The Alliance of Community Medical and Rehabilitation Providers polled its members and found 42 per cent of treatment requests were being rejected — up from only 11 per cent before the reforms came in.

“We can’t lose sight of why insurance was created in the first place — to protect victims from vehicle damage and bodily harm,” says Alliance president Nick Gurevich.

The World Health Organization recently published a report about disability, emphasizing “the overarching importance of early access to care,” he says.

But according to Alliance members, more than half of their patients who have been slotted into the minor injury category will run out of benefits before they recover.

Consumer tips on buying auto insurance:

  • Drive carefully. Traffic violations, such as speeding or not wearing a seatbelt, can cost you more than a fine. After two offences in a three-year period, your insurance rates can go up 10 to 15 per cent. (Parking tickets don’t count.);
  • Choose an insurer that offers first claim forgiveness for accidents in which you’re at fault;
  • Get a discount if you bundle your car and home insurance policies with the same provider. More than half of consumers don’t take advantage of multiline discounts, ranging from 5 to 10 per cent;
  • Ask about discounts for belonging to a roadside assistance program. That can save you up to 15 per cent. Driving with winter tires can save up to 5 per cent;
  • Pay your premiums in full once a year. Many insurers charge a fee if you opt for a monthly payment plan;
  • Shop around for low premiums, using an online comparison tool such as Insurance Hotline or Kanetix.

Torstar News

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