January 15, 2010 by Canadian Underwriter
The proposal to decrease Ontario’s medical and rehab benefit from $100,000 to $50,000, including an option to purchase higher limits, will place a huge onus on brokers and expose them to an increased risk of litigation, said Philippa Samworth, a specialist in civil litigation at Dutton Brock LLP.
Samworth spoke about the proposed reforms to Ontario’s auto insurance product during an Ontario Risk and Insurance Management Society (ORIMS) professional development seminar in Toronto on Jan. 15.
The new $50,000 limit will include the cost of Section 24 assessments. Under Section 24 of the Statutory Accident Benefits Scheme (SABS), assessments are initiated by insureds. Insurers initiate assessments under Section 42 of the SABS.
Section 42 assessments will not fall under the $50,000 limit, Samworth noted.
Assessments under Section 24 have provided a huge opportunity for fraud, she continued. “The assessment costs in many of these minor injury files were double or triple the amount of the actual benefit being received and it was never intended to be that way.” She points to a file that recently came across her desk in which the amount paid in benefit was $10,000, but the assessment cost for the case was $80,000, with roughly 60% of that cost stemming from assessments under Section 24.
“Now the government is revisiting the issue and saying: ‘We know you need assessments, but we need to stop having so many. How do we do that? Let’s put them back into the medical rehab limit.’
“Surely a plaintiff lawyer will then say, ‘I don’t think I can spend $20,000 on assessment costs out of my client’s available $50,000, no matter how good a tort limit I have.’”
As a compromise, the option to “buy up” to a $100,000 or $1 million (including attendant care) limit will be offered.
Whatever the insured chooses, whether it’s to pay lower premiums for the lower limit or opt for the more expensive higher limits, the consequences of taking that path will then be extended to the insured’s spouse and dependents.
This is why it becomes absolutely necessary for the broker to ensure the consumer is aware of the options available and the possible implications of a lower limit, Samworth warned.
“There are a number of injuries that are clearly not catastrophic, but that $50,000 won’t be sufficient for over 10 years,” she said.
It will therefore fall upon the broker to ensure that “the consumer absolutely understands that they have $50,000 for 10 years, and [to ask the consumer if] that is going to be enough money for what their expectations are or what they would want for themselves should they or a member of their family be injured?”