September 21, 2010 by Canadian Underwriter
Ontario is entering into yet another optimistic phase of its seemingly perpetual auto insurance reform cycle, but many within the insurance industry appear to want to break out of this cycle and build an altogether new model for auto insurance in the province.
“You get initial optimism,” said defence lawyer Lee Samis, principal of Samis & Company, speaking as part of a panel discussion about the Ontario auto reforms at the National Insurance Conference of Canada in Montreal on Sept. 21.
“Then you start to get a little bit antsy about how the thing rolls out,” he said, describing the reform cycle. “And then you start to see the other stakeholders play their cards. There are nerves about that because they came up with things we hadn’t thought about.
“And then we get hit hard with some court decisions and arbitration decisions that are the pathway to abuses. Then we get cost pressure. Then we go back to government and say, ‘Let’s do this again.’ Then we start all over again.
“Expect to see the same thing again,” Samis warned, referring to Ontario’s new reforms implemented on Sept. 1, 2010.
Samis further observed it would appear the industry is now starting to feel the need to get off the merry-go-round.
Samis said he personally conducted an informal online survey of people within the insurance industry about the current Statutory Accident Benefits System (SABS). He said more than 100 people in the claims industry responded to his poll.
In his survey, no one thought the SABS system in Ontario “right” as of this moment. More strikingly, 30% of the poll respondents said they thought the whole system should be “scrapped” and future reforms should start from scratch.
Forty-five per cent of respondents thought the SABS system required “significant change” in order to work.
There was a great deal of discussion at the NICC as to whether Ontario would benefit from a full-tort system, a full no-fault system, or even a Quebec-style model in which auto insurers pay only for physical damages, while the government is responsible for payment of health care provision.
Still others asked whether Ontario would benefit from models in Alberta, Nova Scotia, New Brunswick or Newfoundland. Neither of the panelists, including trial lawyer John McLeish, senior partner of McLeish Orlando LLP, expressed optimism that the models could be easily imported into Ontario, which offers the richest accident benefits system in the country.
Samis said he thought the current round of reforms would help contain some insurers’ costs. But he remained “pessimistic” about the outcome of the latest round of reforms. His pessimism was based in part on the uncertainty surrounding whether psychological injuries would be covered under the definitions of minor and/or catastrophic injuries.
Samis noted that while 58% of his poll respondents in the claims industry thought psychological injuries would be included in the reform’s Minor Injury Regulation – which caps payments for minor injuries at $3,500 – psychologists recently issued guidelines saying they did not believe psychological injuries would be covered.
This is a big “disconnect,” Samis said.
He noted the issue of psychological injuries is important for insurers because the updated DSM-V, a medical guide used to determine these types of injuries, is going to be available in 2013.
The new DSM-V is expected to include new psychological conditions such as “Complex Post-traumatic Stress Disorder,” “Sluggish Cognitive Tempo Disorder,” “Personal Relational Disorder” [i.e. problems in relationships with other people as a result of struggling with pain] and ‘Post-traumatic Embitterment Disorder.”