We need insurance reform The sorry state of Ontario’s auto insurance should be a major election issue



There’s no shortage of issues for Ontario’s June 12 election: Out of control hydro prices, the sad state of the economy, pension reform, transit funding and, of course, all the Liberal scandals.

Once again, the issue of auto insurance reform is likely to be left at the curb with no party championing those injured in auto accidents.

It’s a pity as the state of Ontario’s auto insurance cries out for reforms to protect accident victims.

1. Since the reforms of 2010, approximately 80% of all accident victims have been slotted into a new minor injury category in which they are limited to a maximum of $3,500 (and in many cases, $2,200) in medical/rehabilitation benefits.

According to the Ontario Rehab Alliance, an association representing over 4,000 health care professionals, the minor injury category was designed to cover those with simple, uncomplicated whiplash-type injuries, but insurance company adjusters are placing many with joint dislocations and tears to tendons and ligaments into this category, resulting in denials of treatment.

2. Medical/rehabilitation benefits for serious, non-catastrophic injuries were reduced by over 50% in 2010, from $100,000 plus assessment costs to $50,000, including assessment costs.

3. No-fault income replacement benefits were set at $400 per week in 1996. There’s been no adjustment for inflation since. While policyholders can purchase optional coverage, few do. Even if optional coverage (up to $1,000 per week) is purchased, income replacement is capped at 70% of gross income.

4. Attendant care benefits for serious, non-catastrophic injuries were cut in half ($72,000 to $36,000) in 2010. Worse, as of Feb.1, 2014, attendant care payments to family members who provide care have been capped by the amount of income lost by the family member, regardless of the hours incurred.

5. Even with reduced benefits, denial rates and delays in treatment are at unacceptably high levels, meaning accident victims are not receiving the benefits for which they have paid.

6. According to data analyzed by the Ontario Trial Lawyers Association, insurance companies now spend about 50 cents on experts’ fees to assess accident victims for every dollar they spend on treatment. When we look at the approximately 50% of victims who are assessed, we find that insurers pay more for experts to assess than they do for treatment for these victims.

7. Redundant laws are in place to insulate or reduce exposure for insurance companies from negligence lawsuits arising out of auto insurance accidents.

8. In 2012, the latest year for which figures are available, Ontario’s car insurers collected $3.78 billion in accident benefits premiums but paid out only $1.67 billion in claims and adjustment expenses.

These numbers come from the General Insurance Statistical Agency, the non-profit agency that tracks information on behalf of provincial insurance regulators. That means insurers have a gross profit margin of 56% on accident benefits coverage, not including the investment income earned on prepaid premiums. That’s not surprising since they are paying out a maximum of $3,500 in accident benefits for most injured in auto accidents.

We know what the Liberal party has in mind for auto insurance. They passed the 2010 cuts and introduced regulations to cut attendant care benefits to family members earlier this year. They introduced Bill 171, which would eliminate the right to pursue accident benefits claims in the courts, eliminate the right to pursue punitive damages in an accident benefits claim, provide an incentive for insurance companies to delay settlements and payments to those injured in motor vehicle accidents, and remove the right of arbitrators to penalize insurers who act unreasonably in withholding or delaying benefits.

We don’t know what Conservative leader Tim Hudak or NDP leader Andrea Horwath might do on auto insurance reform if elected.

One thing is certain. The current system can’t get much worse for accident victims.

Victims need timely, adequate accident benefits even more than they need premium cuts. 

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