Auto Insurance Industry Reaps Profits As Accident Victims Pay The Price Of Reforms
Starting in 1990, successive Ontario governments under pressure to reduce the rising costs of automobile insurance engaged in a long history of changing and amending the way that victims of car accidents would be compensated for their losses and obtain treatment on a timely basis. The emphasis now was on “no-fault” or “accident benefits where the injured person’s own insurer would cover much of the treatment and economic losses suffered. The right to sue negligent motorists still existed (“tort”), but in a very limited form. (Check out our blog on Five common myths About Making a Claim After a Car Accident)
In a pure tort system, accident victims would normally wait for years before the case was settled or went to trial before recovering their losses. Those no longer able to work after a car accident inevitably end up a burden on the taxpayer, while they wait for their lawsuit to work its way through the system. As well, things like physiotherapy, chiropractic, and rehabilitative care were cut from OHIP funding, and accident victims in need of this treatment had no way of accessing it unless they had private health coverage.
The new emphasis on “no-fault benefits” was in essence a “social contract” between Ontario drivers and auto insurers, a deal struck by the Ontario government on behalf of their constituents with the industry. It was intended to be consumer protection legislation – providing injured people with the help they desperately need after an accident right away.
The agreement was – timely coverage for part of their lost wages and rehabilitative care through first-party coverage, and in return the right to sue for compensation (or third-party coverage) would be used only in the most serious cases. The expectation was that most injured people would recover with these no-fault benefits and get back to their lives without the need of pursuing costly lawsuits. These “trade-offs” were supposed to curb or reduce the cost of insurance to Ontario motorists.
Insurance premiums continued to rise and insurance executives and shareholders continued to reap significant profits. The governments response has been to repeatedly slash and cut the amount and availability of no-fault benefits for accident victims. Meanwhile the government also continued to approve increases to the restrictions on lawsuits against the negligent driver – the only recourse left for accident victims to make up what they were no longer getting in no-fault benefits. The original “trade-off” or “social contract” is broken, and rather than crack down on industry profits, it is injured accident victims and their families who are bearing the brunt of government efforts to control insurance costs.
Lawsuits are still restricted to more serious cases (check out our blog on five things every jury member should must know about a car accident trial). Only victims who’s injuries surpass a legal “threshold test” of “permanent and serious impairment” receive compensation for pain and suffering. In addition to the threshold, insurance companies also get to keep a substantial portion of the pain and suffering compensation called the “deductible” – as of 2017, this deductible is over $37,000, this amount is legislative to continuously increase.
Prior to 1990 for many years, car accident victims had a form of “no-fault” benefit available that provided up to $25,000 in medical and rehabilitation expenses, and $140 per week for income loss. Today with the introduction of the “Minor Injury Guideline”, many injury victims are given only $3500 from their own insurer for treatment before being denied, despite paying the heftiest premiums in the country. Prior to 1990 car accident victims could sue for their full damages. Today, car accident victims give up a substantial portion of their damages to the at-fault driver’s insurer (the “deductible”) and face difficult threshold tests and other restrictions, making court cases very risky.
This often means many lawyers who could otherwise provide help to an accident victim fighting for benefits or their right to sue an at fault driver, are shying way from offering their services for all but the most serious injury claims. The result of these legislative reforms and the insurance industry lobby efforts has meant that access to justice, and access to treatment and care are being denied to accident victims leaving them to seek out whatever care they can get under OHIP, and looking to taxpayer funded social assistance programs just to survive.
Automobile insurers continue to make substantial profits, as the Marshall report indicated – Ontario drivers pay the highest premiums in the country with some of the lowest accident statistics. (Check out our blog on the Marshall Report) Car accident victims – most injured through no fault of their own, have their lives ruined having been left abandoned by their government in the erosion of their rights and through successful lobbying efforts by the industry. Whether through a restoration of strong “no-fault” benefits or a claw back on the restrictions on lawsuits, or a combination, there is an overwhelming need to restore the balance and protection for those unfortunate enough to be injured in a car accident.