Seven Reasons We Need A Complete Overhaul of Auto Insurance In Ontario
Ontario’s auto insurance system needs a complete overhaul and now is the time. Many successive governments in Ontario have tried to fix the system, at times applying band-aid reforms, some of which only made matters worse. The current Ontario government has heeded the call to action. They just concluded an online public consultation survey on February 15, 2019 and are now working to come up with solutions to the auto insurance problem. Doug Downey, the Conservative MPP, who has been tasked with looking at legislative reforms to auto insurance in Ontario, appears open to all possible reforms.
1) Drivers Pay The Highest Premiums Despite Having The Lowest Accident Rates
Ontario drivers pay the highest premiums for auto insurance in the country despite having among the lowest accident rates in North America and this is an issue ratepayers’ want their elected officials to address. Many people are also being disproportionately affected by higher premiums based on matters outside of their control such as postal code, gender and age. See what other jurisdictions are already doing to address this problem.
2) Everyone agrees the current system is broken
Since 1990, Ontario’s insurance system has drastically limited the right to sue an at fault driver for compensation in favour of a streamlined “no fault” accident benefits regime. Because the court system in Ontario has it’s own problems such as a lack of judicial resources and funding and strict timelines within which to prosecute criminal matters, it is unlikely that we will see a return to a full “right to sue” model, even though it’s clear our “no fault” accident benefits regime is broken, and fundamentally failing the public.
Panelists on a recent episode of TVO’s The Agenda all seem to agree that the current no fault system is broken, but naturally different stakeholders have different ideas on what needs to be done and where the governments focus should be for reforms.
3) The current system Is too complicated and too adversarial
Anyone who practices law in this area can tell you that enormously complicated rules, forms and laws to access even basic treatment or minimal income benefits under the current no fault regime is absurd and wasteful. Insurers will tout statistics about how much they pay out on claims but won’t tell you that they are including in that figure money they pay to doctors and lawyers the insurer hires to fight claims. A 2017 Globe and Mail investigation revealed that in Ontario and BC alone – insurers spend almost a quarter of a billion dollars per year on “insurance medicals” which they use as leverage to limit or deny claims. This is a conscious decision made by the industry to spend their revenues fighting their own ratepayers claims rather than paying them.
4) Fraud needs to be properly identified and addressed
Ontario needs not only a much simpler system but strong independent government oversight that is consumer protection focused. Oversight that would demand transparency from insurance companies about their profits and about fraud statistics before investing significant government resourced toward fraud prevention based on loose and fast figures provided by the Insurance Bureau of Canada (IBC), a lobby group for insurance companies. Insurance companies make decisions on your claim – but they are not neutral. Insurers are by default adversarial and breed an air of distrust towards claimants.
Indeed Ron Bohm, president of the Ontario Trial Lawyers Association (OTLA) raised a very valid question as a participant in the recent TVO panel discussion on this topic: When insurers under value a claim, and a claimant is able to obtain more from the insurer than was originally offered, we certainly don’t label this as fraud on the part of the insurer. However, when an injury victim is paid less than what is claimed, this incident gets compiled into fraud statistics gathered by the IBC on which government policy is being considered.
5) Reforms need to be consumer- protection focused
Usually governments when announcing new policies, make painstaking efforts to assure the public that when considering such policies they have given equal considerations to all stakeholders in the industry. It seems this government wants to appear similarly “neutral”, but the reality is that the stakeholders here are not equal and nor should their rights be viewed on equal footing. Policies must be made to protect consumers – that is the very intent of the mandatory auto insurance regime – to protect the public, and indeed the job of government. The consumers are of two categories – rate payers, and injury victims. Both are vulnerable to a power imbalance within the industry against large powerful and wealthy corporate auto insurers and their powerful lobby groups.
Rohna DeRoches, chair of the Association of Victims For Accident Insurance Reform (FAIR), who participated on the TVO panel discussion indicated that their consultations with past governments amounted to lip service after policy decision had already been made in consultation with insurance companies via the IBC.
6) Past reforms have consistently taken rights of accident victims away
Any personal injury lawyer can tell you and indeed the Ontario Trial Lawyers Association (OTLA) has consistently voiced concerns about the fact that governments have successively continued to make reforms in favour of, and lobbied by insurance companies, to the detriment of the public and accident victims.
“No-fault” benefits – available to all injured accident victims – were originally envisioned to provide adequate and fair compensation to replace the right to sue, but previous governments, in an effort to curb premiums, have allowed insurers to carve away the coverages, forcing accident victims to rely on taxpayer-funded sources such has OHIP, ODSP, and other government social assistance programs. The government should be asking – Why are Ontario taxpayers subsidizing insurance company profits?
7) Accident victims denied by insurers after an accident end up relying on social welfare programs
If for no other reason, the current government, elected on a reduction of government spending mandate, should be motivated to hold insurers accountable to the public because taxpayers should not be subsidizing auto insurers who turn their backs on ratepayers when they are seriously injured in an accident. These claimants then have no choice but to turn to government assistance programs and rely on OHIP and ODSP when they ought to have been able to rely on the insurance policy they paid for, for their recovery needs after a car accident.
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