Although every Canadian auto insurance system has its problems, a special advisor to Ontario’s finance minister did an “excellent job” in describing the problems specific to that province, says the head of RSA Canada.
“I don’t think there is an auto system in Canada that right now is working for insurers,” Martin Thompson, president and CEO of RSA Canada said Thursday. “And I would argue in many cases is not working for consumers as well.”
During a conference call discussing RSA’s financial results, Thompson alluded to Fair Benefits Fairly Delivered, a report released nearly a year ago by the Ontario government and written by David Marshall, former CEO of the Workplace Safety Insurance Board. In his report, Marshall made 35 recommendations to repair Ontario’s auto insurance accident benefits system. Some are already in the works, such as a network of independent examination centres, standard treatment plans for minor injuries and a new insurance regulator.
“We would wholly endorse all of the recommendations in the Marshall report,” Thompson said during the call, adding Marshall “did an excellent job in outlining the challenges with Ontario’s auto system.”
Marshall, a special advisor to Finance Minister Charles Sousa, said auto insurance claims costs continue to rise while accident rates fall. Marshall said the problems are attributable to the way the system is structured and not to the behaviour of personal injury lawyers or “excess profits” for insurers. Marshall noted that about $1.4 billion a year “is being paid for competing expert opinions, lawyers’ fees and insurer costs to defend claims – instead of going to treatment of injured parties.”
Marshall recommended that insurance regulation be “overhauled to encourage insurers to innovate and introduce new products” and to review how rates are set, “with a view to providing more competition in the marketplace.”
Insurance regulations should be “only broad principles and entitlements for benefits,” Marshall wrote. He envisioned the new Financial Services Regulatory Authority (FSRA) would be “responsible for interpreting the legislation and, following appropriate consultation with stakeholders, creating policies, guidelines and rules that are enforceable and not subject to challenge in the courts as long as they are in keeping with the letter and spirit of the legislation.”
The FSRA has yet to appoint a CEO and is not yet operational. Its board of directors includes chairman Bryan Davies, CEO of the Financial Services Commission of Ontario from 2002 to 2005. The new FSRA (which will regulate property and casualty insurance as well as other financial services providers) was one recommendation made in 2016 by a panel appointed to review the mandates of FSCO, the Financial Services Tribunal and the Deposit Insurance Corporation of Ontario. The members of the panel were George Cooke, former president and CEO of the Dominion of Canada General Insurance Company, former Toronto Star columnist James Daw and lawyer Larry Ritchie.
Thompson said Thursday he does not think changes recommended in the Marshall report will be implemented until FSRA is up and running.
RSA Canada officials “are perhaps slightly frustrated at the pace” of implementing Marshall’s recommendations, he added.