Canadian Underwriter

Ontario auto “white paper” brings positive industry reaction

July 11, 2003   by Canadian Underwriter

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Insurers are generally pleased with proposals set out in a new Ontario government “white paper” to further reform the auto insurance system.
Many of the provisions are aimed at reducing health care costs and court awards on auto accident claims, something the industry has been pushing for.
“We strongly support the government’s intention to more closely align health care fees and utilization protocols with those of the workers’ compensation system in the province,” says Mark Yakabuski, Ontario region vice president for the Insurance Bureau of Canada. “Other provinces have found that developing closer links between auto insurance and other key health care partners promotes faster recovery and better management of health care dollars.”
He also applauded the idea of reducing tort access to only those suffering serious injuries in a car crash, rather than minor injuries such as whiplash. “If we want to keep auto insurance affordable, we need to return the system to the original principle where only those with very serious injuries have the right to sue. Those who suffer minor injuries already have access to very generous health care benefits.”
He seemed unconcerned with the government’s threat that if rates did not drop as a result of reforms, premium caps or freezes could be in the offing. “IBC is confident that such measures will not be necessary if the government follows through and implements all the reforms as announced.”
The government did acknowledge that health care and rehabilitation costs are rising by 15% per year, despite an decrease in the number of accidents. It went on to say that insurers are paying rates far above those paid by the workers’ compensation or even by insurers in other provinces.
Actions the government says will be taken immediately include:
– increasing “pain and suffering” deductibles to $30,000 for Insurance Act awards and $15,000 for Family Law Act awards;
– having the Financial Services Commission of Ontario (FSCO) review the Designated Assessment Centre (DAC) system for neutrality, timeliness, effectiveness and cost;
– increasing the number of DACs immediately;
– reviewing or creating fee schedules for health care providers to move fees more closely to those in the Workplace Safety and Insurance Board (WSIB) system;
– reviewing insurer underwriting rules to ensure drivers are not penalized for NSF cheques, not-at-fault accidents, or changes in insurer rating territories;
– reviewing underwriting rules for snowmobile drivers;
– establishing an Auto Insurance Anti-theft Task Force; and
– requiring insurers to immediately file new rates in response to reforms.
The government expects the reviews being conducted by FSCO of health care fee schedules, DACs and underwriting rules to be completed by October 2003.
At the same time, the government is asking for input on ways to reduce the burden of lawsuits, which is says are putting pressure on rates. Using FSCO data, the white paper notes that tort costs for Ontario auto have risen from under $400 million in 1995 to about $1.2 billion last year.
The government has asked for feedback on proposals, including:
– tort reform actions which could include changing the threshold for access to tort to only those physically injured, setting out the threshold more clearly in regulation, and eliminating the deductible for pain and suffering awards over $100,000;
– offering additional tort coverage on an optional basis;
– offering protection to people facing a lawsuit but not actually present at the accident (e.g. employers); and
– changing the disability insurance coverage system so that people who already have private coverage (e.g. through their employer) are not required to buy auto insurance coverage.
Feedback on these proposals is being accepted until September 15, 2003.

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