Auto Insurance Reform: Ontario Proposals Focus on Cost, Choice

Proposed changes to Ontario’s auto insurance system would manage rising auto premiums by allowing drivers to pick and choose the kind of accident benefits they want.

At the centre of the proposed reforms–unveiled by Finance Minister Dwight Duncan November 2: a basic benefits package that lowers the mandatory level of medical and rehabilitation coverage to $50,000. The new basic policy would also include $200,000 in third-party liability coverage. Overall, the McGuinty government’s reform package includes 41 proposals that highlight cost containment and consumer protection, and stress the need for better integration of insurance, healthcare and WSIB processes.

The changes—which include a ban on credit scores in quoting, new minor injury guidelines and a revised definition of “catastrophic impairment”– “would streamline a number of processes for insurers and healthcare providers, create a less complex auto insurance system, and protect consumers while giving them more choice,” according to a Ministry of Finance statement.

A New Baseline
 
The proposed basic insurance package would serve as a baseline, giving drivers basic accident benefits coverage. Drivers could top up their coverage with either a $100,000 or $1 million optional benefit package. They would also have the choice to purchase $36,000 or $72,000 in attendant care benefits coverage. Housekeeping and caregiver benefits would also be optional.

The basic insurance package would also include $200,000 in third-party liability.

The set of reforms “lays the foundation for an auto insurance system with greater price stability,” Duncan said in presenting the proposals. “Drivers can choose coverage that provides them with the protection they need based on their own preferences and circumstances.”

Consumer Protection: Credit Scores and Prompt Care

While the basic package is the centerpiece, the majority of the reforms address consumer protection and more efficient care for accident victims. The proposals single out credit scoring as an “objectionable quoting practice,” banning it along with delayed quotes, and written applications for quotes.

Drivers and accident victims should also get faster, more efficient care under the reforms: they would make it harder for insurers to deflect claims, and make sure that claimants received some benefits right away—while the claim is still being resolved.

Duncan’s proposals highlight serious injuries: under the reforms, the definition of “catastrophic impairment” expands to include single-limb amputation, and would be further amended to address catastrophic brain injuries; while the Financial Services Commission of Ontario (FSCO) would monitor fees and health service availability for seriously injured claimants.

The proposals address minor injuries—such as whiplash, strains and sprains—by calling for new, updated medical guidelines to treat minor injuries and measure outcomes
They also call for the insurance industry and healthcare providers to develop new standards for third-party medical examiners and assessors; and in the meantime, limit who can provide assessments for certain benefits.

To move the treatment-related proposals forward, the government plans to set up a multi-sector committee to advise on longer-term reforms, including outcome-based treatment protocols, and measure to control medical and rehab costs.

Capping Costs

Several measures address overall rising costs– proposed caps would apply to assessments ($2,000), form completion fees ($200) and insurer examinations ($2,000 per assessment)– and the tangled bureaucracy associated with claims and healthcare, setting time limits on assessments and paving the way for a harmonized approach from FSCO, the Workplace Safety and Insurance Board and auto insurers.

The full list of the Finance Ministry’s proposals are available at http://news.ontario.ca/mof/en/2009/11/ontarios-proposed-auto-insurance-reforms.html

Canadian Insurance magazine and cdins.com will offer continued coverage of the proposed reforms.

This story was originally published by Canadian Insurance Top Broker.