November 4, 2002 by Canadian Underwriter
Despite criticism this past week by opponents to the recent auto insurance legislation reform measures brought into place in Ontario, the Insurance Bureau of Canada (IBC) holds firm that the actions taken will provide long-term cost benefits for policyholders. “the [Ontario] government’s auto insurance reform legislation will control costs and ensure the long-term affordability of car insurance for Ontario drivers.”
IBC vice president of Ontario, Mark Yakabuski, notes that the legislation primarily addresses potential healthcare abuse, an area which emerged as the single biggest cost-pressure facing auto insurers. “The legislation puts in place a structure to manage healthcare expenses effectively.” The legislation will reduce time and expense required in dealing with multiple assessments of injured accident victims, he adds, whilst reducing the incentive for abuse of the system – including “over-treatment”. Yakabuski points out that the legislation was carefully drafted to ensure that benefits entitled to genuine accident victims were not reduced, which critics of the legislation claim to be the case. In fact, Yakabuski adds, “benefits for children and seriously injured claimants are expanded under the bill”.
The new Ontario legislation is expected to result in the province’s auto insurance market eventually returning to an underwriting profit, predicts Bill Star, president of Kingsway Financial Services Inc. Star says he is pleased with the proposed accountability for costs of frivolous claims. “We are pleased that the Minister if Finance has acted quickly to introduce legislation to address the much needed changes to the auto insurance system in OntarioWe understand that the government intends to introduce the legislation and supporting regulations before the end of the year and anticipate that they could be effective as early as January 1, 2003.” While the auto reform measures will not have a bearing on Kingsway’s financial results for the 2002 financial year, Star expects that the measures will have a significantly positive impact on the company’s financial performance for next year.