Why Ontario drivers pay the highest insurance premiums in Canada

ROBERT COLLISON

Special to The Globe and Mail

Published Wednesday, Apr. 16 2014

The Fraser Institute’s landmark 2011 study on public-versus-private delivery of auto insurance in Canada concluded that Ontario’s private-sector insurance regimen enjoyed the questionable distinction of being the most expensive in the country – a conclusion even more damning because the report’s major takeaway was the overall superiority of the private system in other parts of Canada.

Ontario’s private auto insurance industry is a train wreck. “When we concluded our study, Ontario had the most expensive system in the country due to regulatory severity and massive fraud,” says Emrul Hasan, an economics instructor at Vancouver’s Simon Fraser University and one of the author’s of the Fraser study.

Another out-of-province expert is even more frank. “Insurance company margins have increased incredibly over the last decade,” says British Columbia-based Bruce Cran, president of the Consumers’ Association of Canada. “The companies are making a lot of money and people are getting less benefits … to be perfectly honest, I don’t know how you’re going to fix Ontario.”

The battle lines are clearly drawn between The Industry and The Stakeholders, but who is manning the barricades? Leading the charge for the insurance industry is the Insurance Bureau of Canada (IBC), one of the savviest and best-financed lobby groups in the country. On the other side are the Ontario Trial Lawyers Association (OTLA), representing lawyers who negotiate and litigate for accident victims, and the Fair Associations for Victims of Accident Insurance Reform (FAIR), the victims’ lobby group.

This standoff was borne out of the 2010 reforms that generated billions of savings for the industry – and the targeted 15-per-cent reduction in premiums that the NDP secured from a minority Liberal government in the 2013 budget as part of the price for its ongoing legislative support. The industry loved the former and is less enthusiastic about the latter; vice versa for accident victims and trial lawyers. The 2013 reductions were meant to address issues pinpointed by reports such as Fraser’s, notably excessively expensive premiums. To date, rates have gone down just 4.66 per cent.

But the story doesn’t end there. Insurers demanded, and received, a pound of flesh for their lost revenue. Benefits for minor injuries were slashed from $30,000 to $3,500, deductibles were ratcheted up to $30,000 to deter litigating contested claims. And here’s the nut of the problem: 80 per cent of accident claims are deemed to fall within the minor injury guidelines, with its small cap. Unsurprisingly, accident victims pushed back.

There was a backlog of more than 30,000 accident claims in mediation until eight months ago, when the government hired an outside consultant to abet the process, but 16,000 cases remain in non-compulsory arbitration with 1,000 new cases entering dispute resolution monthly. Even the IBC admits the status quo is a mess.

“What is clear is that the system we have today, and what the government is trying to fix, is a system that is broken,” says Ralph Palumbo, the insurance lobby’s Ontario vice-president. How to fix it is tricky because the industry and some of its key stakeholders are at loggerheads.

Victims believe the insurance industry is making out like proverbial bandits. “They made over $2-billion after the 2010 cuts,” says OTLA president Charles Gluckstein. But Palumbo says it’s impossible to ask for a massive reduction in rates (insurance company revenue) without looking at the cost side of the equation. “Otherwise it’s not sustainable,” he says.

To critics who argue the industry made billions in the wake of the 2010 reforms, Palumbo says poppycock. “If you say it long enough, people start to believe it,” he says. He cites two commissioned actuarial studies that claim auto insurers’ return on equity hovers between 3.9 and 4.9 per cent. “Compared to the banks in the high-teens – say, around 17 per cent – that’s pretty modest, though some observers claim it’s as high as 25 per cent, which is ridiculous. All our critics ever talk about is the benefit side, never the cost side. And it’s a little tiring, and tiresome, coming from guys who are enriching themselves from the system.”

Palumbo is referring to the trial lawyers, and it should come as no surprise that they don’t buy the argument about the industry’s relative penury.

“The government is at the mercy of the industry and their view of their profits,” says Gluckstein. “That’s why the transparency aspect of the 2010 reforms is so vital because independent auditors will investigate the profits of the insurance industry.”

As part of its reform package, Ontario agreed to commission an annual Automobile Insurance Transparency and Accountability Expert Report. The first, from KPMG, is pending.

From the OTLA’s perspective, the industry camouflages its robust financial health with accounting chicanery. “All sorts of tax manoeuvring, underwriting adjustments, carried forward losses et cetera,” says Gluckstein. “The industry’s view is that if you want reduced premiums, you have to cut costs. So what happened to all the saving they earned on the backs of victims who had to give up all their coverage?”

Gluckstein says that comedian Rick Mercer brilliantly captured the present stalemate in one of his epic CBC rants: “We are your insurance company, we will take your premiums but if you have a claim, we will give you nothing – that’s how it works.”

Caught in the middle are accident victims. Part of the problem, says FAIR’s Rhona DesRoches, is the public’s relative disengagement and passivity on the issue. Maybe that’s not surprising: Ontario has nine million drivers but only 60,000 accident victims.

“No one ever thinks they’ll be in an accident, that it will happen to them,” DesRoches said. “Until they are and it does.”

An earlier online version of this story and the original newspaper version incorrectly stated that there is a backlog of more than 30,000 accident claims in mediation in Ontario. This online version has been corrected.

Ontario cracks down on tow-truck operators’ price gouging

ADRIAN MORROW

The Globe and Mail

Published Tuesday, Apr. 15 2014

Ontario is cracking down on renegade tow-truck operators with a set of new rules meant to force them to stop gouging drivers and pay fair prices.

The government is also hoping the proposed law will curb insurance fraud and lead to lower premiums for drivers.

“It will give stronger protection for people who have their vehicle towed or stored,” Consumer Services Minister Tracy MacCharles said at Queen’s Park Tuesday before tabling the bill. “It’s going to help with road safety and it’s going to help us drive down insurance costs by driving down fraud.”

The legislation will compel tow-truck operators to tell drivers exactly how much they will charge them before they tow their vehicle, post their prices and provide itemized invoices. Such measures are designed to allow drivers to comparison shop and discourage towing operations from charging exorbitant rates.

The proposed rules would also require tow-truck operators to make information such as their names and contacts publicly available, and accept credit-card payments.

Tow-truck drivers would also have to register with the government, allowing the province to keep better tabs on them.

The proposals are partly a response to complaints from drivers who have been charged massive, unexplained fees by towing companies, partly to accusations that some tow-truck drivers have been involved in insurance fraud rings and partly a result of a high rate of collisions among towing companies, Ms. MacCharles said.

They are part of a larger push by the government to crack down on fraud in a bid to lower premiums.

The province’s Liberal government, as part of a deal with the New Democrats to pass last year’s budget, is slashing average auto-insurance premiums by 15 per cent by August of 2015. To compensate for lost industry profit, the government is trying to make the system less costly for insurance companies by speeding up arbitration processes for claimants and battling fraud. These measures are contained in a separate bill, introduced earlier this year.

Finance Minister Charles Sousa said Tuesday that average insurance premiums have so far fallen by 6 per cent since last summer, and that the government is on pace to meet its targeted 15 per cent cut.

But he said the NDP isn’t doing enough to help speed through his reforms to arbitration and clamp down on fraud.

“If the NDP really wanted to reduce rates they’d be helping us pass this bill as soon as possible – but that’s not what they’re doing,” he said. “They want to keep these rates high so they can have that political advantage. That’s not necessary and it’s certainly not fair.”

Our information, their files; Why do Ontario residents have to pay exorbitant fees to access their own medical records?

BY ALAN SHANOFF, TORONTO SUN

FIRST POSTED: SATURDAY, APRIL 12, 2014

 Late in 2013, several Ontario MPPs spoke about the need to pass a regulation to protect Ontario residents from having to pay exorbitant fees to access their own medical records.

Yet here we are in April, 2014 and the problem hasn’t been fixed.

Worse, the Ontario Liberal government has known about this problem since at least 2006, when a regulation limiting fees was proposed but never proclaimed as law.

In 2008, Ontario’s Information and Privacy Commissioner Ann Cavoukian publicly asked the government to regulate fees patients were charged to obtain copies of their health records.

In 2010, Liberal MPP David Caplan, a former Ontario health minister, put forward a private member’s bill on this issue.

But apparently our provincial government is too busy to deal with such a small problem.

After all, who really cares what we have to pay to obtain a copy of our own medical files?

Well, just wait until one of your doctors retires and you have to pay $200 to have your file retrieved.

Or wait until you need some records for a personal injury case and have to pay $120 for nine pages of notes, or $350 for six pages.

How about $500 for a five-page printout of notes, or $100 for a three-page page summary of prescriptions from your pharmacist?

These are just a few of the examples provided by Liberal MPP Bob Delaney at Queen’s Park in late 2013 when he demonstrated the need for a regulatory remedy.

The numbers are all over the place because there’s no law governing what custodians of medical information can charge.

Many take advantage of this regulatory gap to gouge patients or customers.

Usually, the medical records are sought by a lawyer for purposes of a lawsuit.

Lawyers don’t care about the amounts charged because it’s their clients who have to pay for these-out-of-pocket disbursements.

Often, these amounts are reimbursed by an insurance company as part of a settlement. But not always.

Medical records may be required to process a disability claim, to apply under the Ontario Disability Support Program, or to apply for social assistance under Ontario Works.

Often people with disabilities have lengthy medical records, resulting in large fees.

Not all medical professionals overcharge their patients, nor does every pharmacist, but there’s no excuse for this regulatory gap.

Some professionals will reduce their fee if asked by their patients, but why should anybody be put in that position?

Many hospitals charge reasonable fees.

Sunnybrook Health Sciences Centre has an electronic records system and allows patients to access and print many records online, without a fee.

This issue doesn’t apply to situations where professionals are asked to prepare reports or provide a summary of records.

Professionals are entitled to be fairly compensated for these tasks, although too many charge excessive amounts for them, thinking an insurance company will pick up the tab.

Personal injury lawyer Roger Foisy has long advocated for government regulation, pointing out an Ontario Medical Association recommendation that physicians charge $30 for the first 20 pages and 25-cents for additional pages is not normally followed.

He also points out the OMA recommendation doesn’t apply to clinics that employ chiropractors or physiotherapists.

According to Foisy, the excessive fees impact clients’ net settlement values and increase costs for insurance companies thereby contributing to higher premiums.

While the Ontario government is otherwise occupied and apparently unable to proclaim a simple regulation — after all there must be so many stakeholders who have yet to be consulted — there is something you can do if faced with an exorbitant bill for your medical records.

First, ask to have the fee reduced. If you don’t want to do that or it doesn’t work, you can file a complaint with Ontario’s (or your own province’s) Information and Privacy Commission.

If they believe the fee is too high they can intercede and have the fee reduced. 

Discriminating Against Injured?

By Alan Shanoff ,Toronto Sun

First posted: Saturday, March 29, 2014

 “What kind of government creates laws that discriminate against injured and disabled citizens by denying them the same access to justice that every other citizen enjoys in a democratic society?”

That question was recently posed by FAIR (Fair Association of Victims for Accident Insurance Reform) in an open letter to Ontario Premier Kathleen Wynne concerning Bill 171 — the so-called, Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014.

It’s a valid question that deserves an honest answer. Here’s the background.

Under current law people injured in motor vehicle accidents who wish to dispute their insurance company’s denial of no-fault accident benefits have the right to mediate the dispute.

Failing resolution by mediation they may elect to contest the denial in either an arbitration proceeding or a court action.

But the Ontario Liberal government’s Bill 171 would remove the right to pursue court action, forcing all accident benefits disputes to be determined solely by arbitrators.

Why should we care? There are several good reasons.

Courts have the power to award punitive damages.

They rarely exercise that power, but it is there and insurers have been slapped with punitive damage awards on occasion.

Arbitrators don’t have that power.

In some cases, an injured person may have the right to sue the other driver for negligence in a tort lawsuit.

This is in addition to making a claim for no-fault accident benefits.

Currently, injured people can pursue negligence claims and disputed accident benefit claims in the same court action.

However, by forcing all injured people to pursue accident benefit claims only via arbitration, Bill 171 will force some accident victims to pursue two separate, costly legal actions, one in court, the other via arbitration.

That may be good for lawyers but it won’t help accident victims.

As Progressive Conservative MPP Jeff Yurek (Elgin-Middlesex-London) recently told the Legislature, “(T)his bill proposes that instead of dealing with a dispute with both the tort and no-fault components, people now have to pursue a dispute on two separate fronts. That means two separate files, two separate forums of pursuing the dispute and two separate decisions to be made with respect to the dispute. How can this possibly be more cost-effective and efficient than the current system?”

There have been many court decisions that favour accident victims.

These wide-ranging rulings include the assessment of catastrophic impairment — victims assessed as catastrophically impaired are entitled to greatly enhanced accident benefits — so as to promote fairness to accident victims.

It is likely the Ontario government will be introducing amendments to the catastrophic impairment definition in the future.

But under Bill 171, courts will not have any say in the interpretation of the new definition.

That does not bode well for accident victims.

I expect the Ontario Trial Lawyers Association to criticize this removal of the right to seek recourse to the courts.

They certainly do, by correctly pointing out this proposed law has nothing to do with fighting fraud, “but everything to do with making it easier for insurance companies to wrongfully deny benefits, delay settlements and make it harder for you to collect what you are rightfully owed.” Surprisingly, even Canadian Defence Lawyers, a national organization representing the interests of civil defence lawyers, says that taking away the right to sue in respect of accident benefits “will reduce rather than enhance opportunities to access justice” and will “(r)emove the inherent fairness of allowing a local judge to decide issues in dispute”.

Removal of a person’s rights to seek recourse to the courts should not be undertaken without ample justification.

Forcing the injured and disabled to forego all court action and pursue their accident benefits claims via arbitration is just another way our government is running roughshod over the rights of motor vehicle accident victims.