Fair Benefits Fairly Delivered A Review of the Auto Insurance System in Ontario

November 27, 2017, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

This spring David Marshall released a comprehensive report on the state of the auto insurance industry in Ontario. It was done in response to pressure from consumers, and injured people to address the problems with our mandatory insurance scheme in Ontario.

Ontario has the most expensive rates in the country and the government has taken several steps to lower rates and reduce fraud, however the measures have fallen short of promised rate reductions and have resulted in smaller compensation for injured individuals. Waiting times to receive compensation can often take years, and in particularly complex cases over a decade. This has done little to help those injured in accidents who face financial ruin in order to pay out of pocket for treatments. Fraud within the industry from staged accidents, to tow truck drivers on through to rehabilitation facilities has also been a concern for the province.

Mr. Marshall’s report addressed a wide scope of issues:

• Coverage options – giving consumers more flexibility in their coverage options
• Comparable systems – examining what works
• Common traffic injuries - revamping of the MIG (Minor Injury Guideline)
• Legal cost – protection of consumers from unreasonable fees
• Dispute prevention – including restrictions on lump sum payments and requiring insurance companies to establish internal review processes
• Engagement and education – strategies to engage and educate consumers abut coverages, and to promote evidence based treatment protocols
• Evidence based treatment protocols – adopting new protocols to minimize the development of disputes

Key portions from the Executive Summary include the following findings:

1. While Ontario’s benefits, taking into account both the no-fault and tort portions are, on the whole, fair, they are not being fairly delivered. The main cause is that the system does not promote a timely, conflict-free means of deciding what care is needed and providing it to accident victims. The system allows participants to work at cross purposes to its original goals:
   1. Insurers do not aim to provide care to their customers rather they focus on controlling costs.
   2. Accident victims may seek to maximize their entitlement rather than address their need.
   3. Lawyers working on contingency fees work to boost the value of claims.
   4. Providers are paid on volume of treatments, not results.
2. The system has strayed far from its goals. Justice Cunningham in his review of the Ontario dispute resolution system put it this way: “the whole notion of getting benefits to deserving claimants quickly and inexpensively has been lost.
3. Since it is mandatory for drivers to purchase automobile insurance, there is a corresponding responsibility on government to create a marketplace where fair benefits are fairly delivered, at a reasonable cost. This report examines Ontario’s auto insurance marketplace and provides recommendations for improvement.
4. Overall, Ontario has one of the lowest levels of auto accidents and fatalities in Canada and the most expensive auto insurance premiums. Historically, periods of cost reduction have inevitably been followed by cost increases. What is more disappointing is that while the number of automobile accidents in Ontario – especially very serious ones – have consistently come down, the cost of claims has consistently gone up. Ontario also has one of the least effective insurance systems in Canada. It is filled with disputes and inefficiencies, and a very high percentage of premiums are being used to pay experts and lawyers and not going directly to injured persons.
5. The value gap: No one in the system is actively managing medical care for accident victims. There are clear indications that accident victims are not receiving appropriate care, they are taking longer to recover and many report that they have developed permanent impairments from simple soft tissue injuries – that’s the value gap.
6. The structure is flawed: Current trends do not indicate that the system will self-correct. Claim costs continue to rise while automobile accidents continue to fall. The main cause is not inefficiency or excess profits by insurance companies or the behaviour of claimants, providers or lawyers. It is the way the system is structured.
7. There is little agreement as to what constitutes fair diagnosis and care for injuries. Consequently, many applications for benefits are rejected based on medical opinions obtained by insurance companies while claimants hire lawyers and generate countervailing medical opinions. Simple minor injury sprains and strains (80 per cent of claims) often take over a year to settle and incur high medical costs. Instead of a system that helps accident victims recover from their injuries, a significant portion of the system has been diverted into a cash settlement system in lieu of care. Each year about one third of benefit costs, some $1.4 billion – about $7 billion over five years – is being paid for competing expert opinions, lawyers’ fees and insurer costs to defend claims – instead of going to treatment of injured parties.
8. The solution does not lie in reducing benefits. Fair benefits must be taken as the starting point in any recovery, and they must be delivered fairly. If these two conditions do not exist, the system will always fail to meet expectations. Nor does the solution, purely from a cost point of view, lie in changing from a private sector delivery to a public sector delivery system. Run properly, the premium cost for drivers under either system can be roughly the same.
9. There is no need to make any reductions in benefits; indeed, catastrophically injured accident victims can be better served. There should be new investments in health care particularly for brain and mental injuries, such as chronic pain. Access to early, appropriate, health care should be made readily available. Accident victims will recover faster and fewer will develop permanent impairments from their injuries.

I posted last week about the Province of Ontario's pleadge to implement many of the recommendations in the near future.

About Deutschmann Law

Deutschmann Law serves South-Western Ontario with offices in Kitchener-Waterloo, Cambridge, Woodstock, Brantford, Stratford and Ayr. The law practice of Robert Deutschmann focuses almost exclusively in personal injury and disability insurance matters. For more information, please visit www.deutschmannlaw.com or call us at 1-519-742-7774.

It is important that you review your accident benefit file with one of our experienced personal injury / car accident lawyers to ensure that you obtain access to all your benefits which include, but are limited to, things like physiotherapy, income replacement benefits, vocational retraining and home modifications.