Ontario regulator says new Minor Injury Guideline must apply to at least 55% of minor injuries for auto insurers to turn a profit

Ontario’s insurance regulator has told industry defence counsel that 55% to 65% of all non-catastrophic, minor injury claims would need to fall within the province’s new Minor Injury Guideline (MIG) in order for auto insurers to turn a profit.
Due to be implemented on Sept. 1, 2010, Ontario’s auto reforms have introduced a hard cap of $3,500 on all minor injury claims.
The reforms include a new Minor Injury Guideline (MIG), which establishes a three-stage treatment framework for minor injuries. The MIG replaces the old Pre-Approved Framework (PAF) for Grade I and II Whiplash Associated Disorders, which never really applied to as many minor injuries as initially intended.
Insurers have told Canadian Underwriter in the past that the PAF was originally intended to capture roughly 80% of minor whiplash injuries. But at least one insurer has said it ultimately applied to less than 2% of their claims; others have cited numbers less than 5%.
Given the PAF experiences above, most people attending an Ontario Insurance Adjusters Association (OIAA) seminar on the reforms in Toronto on July 29 expressed disbelief that the MIG injuries would meet the Financial Services Commission of Ontario (FSCO)’s projected targets.
“We’ve been told by FSCO that 55% to 65% of all claims need to fall within the MIG in order for the new premium structure to make it so that Ontario insurers are not working at a loss,” said Kadey Schultz of Hughes Amys, who provided a broad overview of the province’s auto accident benefit reforms. “That’s just impossible. We are never going to see 55% to 65% of cases fall in the MIG.”
Schultz’s presentation cited a number of reasons for claimants’ injuries to fall outside of the MIG, including the potential for psychological complaints and pre-existing conditions, to name a few.
“So the idea that the new SABS is more economically viable for an insurer than the old SABS, my respectful opinion is that we have missed the ball on that completely,” said Schultz.