October 23, 2015 by Greg Meckbach, Associate Editor
Ontario’s auto policy should be changed to allow more choice for consumers, some insurance carrier chief executive officers suggested Thursday, though Intact Insurance’s president expressed concerns about the change in catastrophic impairment coverage that takes effect next June.
“There is a number of people who share the view that a new product which has more choice for consumers is the way we should be going,” said Greg Somerville, president and chief executive officer of Aviva Canada Inc. “It will create many more opportunities to tailor a solution than we are talking about today.”
He made his comment during the CEO Panel at the Insurance Brokers Association of Ontario (IBAO) annual convention, held Oct. 21 through 23 at the Sheraton Centre in Toronto.
“We have to change the product for the benefit of the customer,” said Sylvie Paquette, president and CEO of Desjardins General Insurance Company.
“The concept of a regulated product, where all the coverages, the wording is prescribed, and there is no differentiation between whether you buy it from any of us on the stage – that’s a very hard situation for our broker partners, because what’s your value-add?” asked Karen Gavan, president and CEO of Economical Insurance. “I truly think the Googles of the world will be much better at shopping for the best price compared to our independent broker. Our independent broker’s sweet spot is around advice to consumers. And the more options and decision-making required by the consumer, the bigger your role is, and so I think we have to think long and hard about how we advocate with our government on what we see for the future.”
The panelists were responding to a question from moderator George Cooke about changes – that take effect for accidents occurring on or after June 1, 2016 – to the mandatory level of coverage for catastrophic impairment.
Cooke asked whether errors and omissions exposure would be an issue for brokers.
“There are always exposures for brokers with these things, but I think the Ontario brokers have proven to be experts at this, in adapting and evolving to the various reforms that have happened previously,” said Rowan Saunders, president and CEO of RSA Canada.
With the new policy, “there will be more opportunity” for brokers to educate consumers “and more questions around ‘what does that mean to me?’” Travelers Canada CEO Duane Sanders said.
Ontario’s standard auto policy provides $50,000 in medical and rehabilitation benefits, and $36,000 for attendant care. Those limits are for non-catastrophic injuries. For injuries meeting the definition of catastrophic impairment, the limits are $1 million each for attendant care, and for medical and rehab.
As of next June, the limits for catastrophic impairment will be effectively halved and the criteria for catastrophic impairment will change.
Ontario is “the only province that provides catastrophic coverage, which is expensive,” Finance Minister Charles Sousa told reporters last April when he tabled the budget for 2015-16. “We are going to continue doing that. We are modifying it somewhat.”
Instead of having two limits of $1-million each – for attendant care and medical and rehab benefits – those coverages will be combined into a $1-million limit. The coverages for non-catastrophic injuries will also be combined into one $65,000 limit, under the basic mandatory coverage. Policyholders will have the option of buying additional coverage.
“On the catastrophe issue, I am concerned for the consumer, that if you don’t cover people well for catastrophic losses, as an industry we won’t serve our purpose very well,” said Jean-Francois Blais, president of Intact Insurance, on Thursday during the CEO Panel. “The last thing I would like to see is someone that suffers a catastrophic loss and that person has very limited coverage. That would be bad for our industry and I hope everybody will consider that.”
Blais did describe the Ontario auto reforms as “a good step in the right direction.”
Effective next June, the criteria for catastrophic impairment, under the Standard Accident Benefits Schedule (SABS), will change for traumatic brain injuries, amputations, ambulatory mobility and loss of vision.
It will also be more difficult, for claimants with mental or behavioural impairments, to meet the definition of catastrophically impaired. Currently, an auto accident victim could be considered catastrophically impaired by having a Class 4 (marked) impairment in only one functional area. But effective next June, a claimant would require a Class 4 (marked) impairment in three or more areas of functioning, or a Class 5 (extreme) impairment in at least one functional area – in order to meet the criteria for catastrophic impairment.
The areas of functioning are daily living, social functioning, concentration and adaptation.
Under the current system, a person injured in an auto accident resulting in paraplegia or quadriplegia could be considered catastrophically impaired. Under the new system, the patient with paraplegia or quadriplegia would also be required to meet certain criteria, on the American Spinal Injury Association (ASIA) classification for spinal cord injury, in order to be considered catastrophically impaired.
In implementing the new definition, the government took into account recommendations made in 2011 by the Catastrophic Impairment Expert Panel.
That panel recommended there be no combination of psychiatric and physical impairments. However, the new definition stipulates that an accident victim with a mental or behavioural impairment (excluding traumatic brain injury), that when combined with a physical impairment results in a “55% of more impairment of the whole person,” can qualify as catastrophically impaired.
More coverage of the IBAO Convention 2015