Ontario auto reforms produced a switch from accident benefits to tort

The Greater Toronto Area (GTA) remains Ontario’s trouble spot for auto despite the fact that the September 2010 reforms are working well on the accident benefits side, Brigid Murphy, president and CEO of The Dominion, said during a speech on Tuesday. 

Ontario has, in essence, plugged the dike on the accident benefits side, Murphy told attendees of the Insurance Brokers of Toronto Region luncheon. “The changes in the regulations have worked incredibly well on the accident benefits side, better than expected. That’s the good news. The bad news is people who were living off accident benefits coverage have moved over to the tort side.”

Still, Murphy emphasized that this is not an Ontario-wide problem. “Outside of the GTA, Ontario auto is doing just fine,” she suggested.

“There is certainly a degree, and possibly a large degree, of frivolous-type claims,” Murphy commented. “A lot of companies are paying these nuisance claims to get rid of them,” but this serves to fund their ongoing continuation.

“We’ve gone from a system where who you insure was the key factor, because the biggest payout was on the accident benefits side. We’re now in a system where who you hit is the big factor,” Murphy said.

She praised the approach taken by the Ontario Auto Insurance Anti-Fraud Task Force, which released its recommendations last November. “The really good thing about this fraud task force is that it looked at the system as a whole,” Murphy noted, “which is really what you have to do.”

Just this week, the Ontario government announced it was moving forward with several proposed regulatory amendments to combat auto fraud in the province. The draft changes – which, if given the green light, will take effect June 1 – include requiring insurers to provide claimants all reasons for denying a claim; giving claimants the right to receive a bi-monthly, detailed statement of benefits paid out on their behalf; increasing the role of claimants in fraud prevention (e.g., require them to confirm attendance at health clinics); and making providers subject to sanctions for overcharging insurers for goods and services and banning them from asking consumers to sign blank claim forms.

“There are imbalances in the system that the drivers of Ontario should be really annoyed about because it’s taking money out of their pockets,” Murphy said. “It’s not money well-spent.”