Optional benefits in auto reforms may bring to light weakness in broker-client communications

***CLARIFICATION***

In the following story, panelist Jim Cameron is quoted as saying: “The problem being that people buy it as an optional benefit, that doesn’t mean you are entitled to it. You have to have a [more serious] injury than a minor injury in order to qualify, even though you purchased the product. It could be a tough sell. We haven’t really seen that come out yet.”
In a subsequent email exchange, Cameron clarified his remarks above.
First, the Minor Injury Guideline does not apply to caregiver or housekeeping benefits, which are specified benefits and not med-rehab and attendant care benefits under Part III.
Second, Cameron intended to emphasize that, with the tightening of the incurred expense definition and more demanding proof of entitlement criteria, these benefits will not be automatic even if purchased.
For example, “even after purchasing the optional benefits, the insured still must prove entitlement to the benefit under the SABS by proving they were the primary caregiver, prove that they have a ‘substantial inability to engage in the caregiving activities in which he or she engaged at the time of the accident’ and that they incurred expenses under the new definition of incurred to be reimbursed,” Cameron observed in a subsequent email.
“Similarly, they must prove a ‘substantial inability to perform housekeeping and home maintenance services that he or she normally performed before the accident’ and prove ‘reasonable and necessary expenses incurred’ to qualify for that benefit.”
Canadian Underwriter apologizes for any confusion.

If an auto insurance consumer in Ontario purchases optional benefits under the province’s new auto insurance regime, that doesn’t mean the policyholder is entitled to such benefits if they suffer a minor injury arising out of a motor vehicle accident.
A misunderstanding around this point may lead to prickly communications in the future between brokers and consumers, a panel of speakers told the 2011 CIP Society Symposium in Toronto on Apr. 6.
Panelist Jim Cameron, president of Cameron & Associates Insurance Consultants Ltd., noted in his presentation that caregiving and housekeeping benefits are no longer mandatory auto insurance benefits, but optional benefits. This is one of the changes made in the auto insurance reforms Ontario introduced on Sept. 1, 2010.
“The problem being that people buy it as an optional benefit, that doesn’t mean you are entitled to it,” said Cameron. “You have to have a [more serious] injury than a minor injury in order to qualify, even though you purchased the product. It could be a tough sell. We haven’t really seen that come out yet.”
Kadey Schultz, partner at Hughes Amys LLP, flagged this as an issue for broker-client communications.
“This is going to be an issue for conflict resolution between brokers and clients down the road,” Schultz predicted. “Because someone is going to speak with their broker, find out what optional benefits they want or need, purchase those optional benefits.
“And [then], one year or two years down the road, they [might] get in an accident, they will think they are automatically entitled to these coverages, but they will have to meet the medical test for entitlement. So then there’s going to be a big fight with the broker about the level of communication –
“You never told me,” chimed in panelist Hugh Fardy, senior vice president of the CG&B Group Inc., mimicking what a consumer might say to the broker in that situation.
“It is going to create a conflict and probably within a year we’ll start to see that emerge,” Schultz continued.
The issue prompted subsequent discussion between the panelists and the audience about the public’s take-up of optional benefits.
Joel Baker, president of MSA Research, made an observation as an audience member. He said he had spoken recently with two insurers, one operating in the direct channel and the other operating in the broker channel.
According to Baker, the insurer representatives told him the take-up on the optional benefits at their companies was only 3-5%.
Fardy said the take-up depends on the area and upon how aggressively the options are sold. He said in some areas, the take-up percentage on optional benefits is more in the territory of between 9% and 10%.