Car Insurance System Failing According To Former Head Of WSIB
Recently, the Ontario government quietly released a report called “Fair Benefits Fairly Delivered: A Review of the Auto Insurance System in Ontario“. It’s the latest inquiry into Ontario’s car insurance regime. As lawyers practicing personal injury law for many years, we’ve become intimately familiar with the complicated mess successive governments have created in their pursuit of balancing compensation for those who are injured, with keeping premiums affordable in a mandatory car insurance system.
Some of the statistics in the report, authored by the former CEO of the Workplace Safety and Insurance Board (WSIB), Mr. David Marshall, are staggering. Ontario insurance companies collect $10 billion dollars in premiums each year to cover millions of drivers and passengers, and there are only 60,000 injury claims of various severity made annually. We pay the highest premiums in the country according to the report, despite the lowest fatality rates and the second lowest injury rates in North America.
Somehow, despite the massive cash injection, getting fair compensation to injured people in a user-friendly system seems to be impossible. Why is this? The issue is systemic says Mr. Marshall.
1) The No-Fault Benefit Rules Are Too Complicated
Mr. Marshall identifies the complexity of the Accident Benefits laws and regulations as a major problem with the current system. It is doubtful anyone who’s had experience with the system would disagree. As the Honourable Justice Quinn of the Ontario Superior Court observed in the 2003 court ruling of Mercier v. Royal SunAlliance: “Woe be to the injured person caught up in the world of accident benefits who does not have a lawyer in the family. Anyone able to fully understand the SABS should be entitled to claim bilingual status.” It was true then and it is even truer today.
The forms, the demands for personal medical records, examinations under oath, and a multiplicity of “insurance medical” examinations seem to confront anyone who has the temerity to apply for the benefits that they paid for through their insurance premiums. It is an utterly exhausting and entirely unsympathetic experience for someone who’s trying to recover from a serious car accident.
Mr. Marshall proposes reducing the Insurance Act and regulations to only very broad principles for medical and rehabilitation entitlements, and leaving it to a regulator to issue policies interpreting what should or should not be allowed. This is exactly how the WSIB deals with claims. While this may have the benefit of eliminating the immense number of forms and processes that are required in even the most minor claims, the question is – will it result in a fair system to injured people?
2) The No Fault Regime Is Too Adversarial
The report has found that insurance companies are not there to help people obtain the benefits they need. Insurers take an adversarial approach and they use all of the tools that the regulations provide them to challenge vulnerable injured people. While Mr. Marshall seems to suggest that lawyers contribute to an adversarial environment, the reality is that most injury victims are grateful for the legal help they need. It truly is a David v. Goliath battle for injured people.
Many people only seek out a lawyer because they still need care and insurance companies are more concerned with their bottom line. The report indicates that insurers are spending tens of thousands of dollars disputing paying more than the minor injury guideline amount towards benefits of $3500 of rehabilitative care. Yet the average claim cost for no fault benefits is only $11,556.
The report suggests that the insurance denial driven model, results in injuries becoming prolonged and chronic, and resulting in the need for further medical care, exacerbating the problem. As the report states: “Worst of all the injured person is not well served by extending their disability.”
3) Change The System From A Cash Model To A Care Model
The report tells us that more then half of all accident benefits claimants are subject to an independent insurer’s examination on the request of the insurer, seeking to deny their treatment plan. Significant benefits are being paid to obtain expert opinions. As Mr. Marshall observes “expenditures not going directly to the benefits of claimants is threatening the very foundation of the system.”
Once again, the answer to excessive expenditures on disputing claims comes from Mr. Marshall’s experience as CEO of the WSIB. Mr. Marshall suggests the government establish a roster of neutral hospital based assessments centres. Care assessments by these facilities would be binding on both the injury victim and the insurer for no-fault claims. Which means they could not be challenged. This can work if both sides are confident in the fairness and objectivity of the assessments. However, years ago we had a similar system of Designated Assessment Centres. DAC’s were supposed to be a “neutral” opinion, however the system was later abandoned by the government.
Mr. Marshall also recommends that adjusters be modified to case managers who have expertise in medical and rehabilitative care. It is difficult to imagine the cultural shift that would have to take place for this to become a fair and effective reality. Although many of his recommendations are taken from the current WSIB system, Mr. Marshall does not recommend a public (non-profit) car insurance system, like ones already existing in some other Provinces. This ignores the reality that profit-seeking insurance corporations and their adjusters are in an inherent conflict when charged with the responsibility to eat into their own profits in order to deliver accident victim benefits fairly on an ongoing basis. Personal injury lawyers serve their clients to level the playing field to ensure seriously injured victims get the care they need, despite the almost insurmountable obstacles that stand in an injured person’s way, thanks to the complex and onerous legislative framework.
4) Eliminate Cash Settlements
Mr. Marshall recommends the elimination of any sort of cash settlements for medical and rehabilitation benefits. The report indicates that that insurers have an interest in settling claims so that they can release capital they would otherwise have to keep in reserve to pay for long term care needs of claimants.
Most injured victims who have experienced the denial driven system would be horrified at the prospect of always having to look to an insurance company every time they need treatment. Having some control over one’s own care and treatment and being able to select, and develop relationships with care providers of their own choosing, is a very important right for individuals. The benefit of cash settlements to injured people is it gets insurers out of their lives and allows them to control and manage their own care.
5) Changes To The Right To Sue The At Fault Driver
While the report is focused on “fair benefits fairly delivered” Mr. Marshall’s recommendations about the at fault law suit system are conspicuously silent on the threshold test for car accident victims and more importantly, the fact that the insurance companies get to keep the first $37,000 (the deductible) of the injured person’s award. There is nothing fair about these restrictions, and they inevitably lead to a large percentage of those insurance premiums going to fight claims rather than settle economically at far less cost.
While David Marshall has identified some significant problems with the current system, his solutions appear to be premised on his success at the helm of WSIB, it is no doubt that this was the reason the government perhaps called on Mr. Marshall to conduct the review. However, as WSIB lawyers, we have first hand experience with many seriously injured workers whose benefits have been reduced or cut off under the WSIB regime, while they are still in need of care and cannot go back to work. Mr. Marshall’s solutions appear to be premised on a utopian notion that private insurance companies will put the well being of injured people above their profits.
There was a time in Ontario when the right to sue was considered fundamental to the rule of law. What we see happening for many years now is this right being legislatively eliminated through the establishment of laws and tribunals which make it difficult, if not impossible to access the courts, and obtain reasonable compensation for the very real losses that people have suffered.