New Provincial Committee to review auto changes.

April 19, 2012, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

You may recall that we previously distributed an alert that the Provincial government had included reference to further review and move forward on changes to the definition of Catastrophic Impairment as currently provided in the Statutory Accident Benefits Schedule.   We recently learned that a Select Committee to examine issues related to auto insurance, including the definition of catastrophic impairment, was brought forward by the opposition and successfully passed in the provincial legislature.  It is hoped that the creation of this committee will allow for a more fulsome and comprehensive review of the current state of auto insurance in Ontario, post the September 2010 changes, before any further changes are made, particularly to the definition of Catastrophic Impairment.


The following is a message from OTLA president, Paul Harte:


I am pleased to report that on Monday the provincial legislature, over the objections of the minority government, voted to strike a Select Committee to examine a range of issues in auto insurance, including the definition of catastrophic impairment (CAT). This is a welcome development following directly on the heels of the government’s recent decision to proceed with changes to CAT; an announcement which was buried in the provincial budget document. In the circumstances, any action now taken by the government on auto insurance would have the appearance of being in contempt of the expressed will of the legislature. As a result, we are optimistic that the formation of this committee will at least forestall any changes to CAT and will certainly provide an opportunity for our organization to engage in a meaningful dialogue relating to what we see as fundamental flaws in the current auto insurance system.

We intend to continue our advocacy opposing changes to CAT and will work with the Select Committee to demonstrate the need to focus on the two most pressing and public concerns: (a) eliminating the FSCO mediation backlog;  and (b) reducing fraudulent SABS claims. In addition, there should be no further changes to the SABS including efforts to re-write the CAT definition, until the effect of the September 1, 2010 changes can be measured empirically. In addition, we will argue for greater transparency at FSCO through the release of more raw data to stakeholders. An important first step would the release of all statistical data concerning CAT claims, including the number of successful CAT claims, currently and historically; the average cost of CAT claims in the system;  and the cost of CAT claims as an overall percentage of SABS claims.

Over the last year, OTLA has maintained close contact with both opposition parties on auto insurance. We specifically recommended that the issue of catastrophic impairment be included in any committee review. We are pleased to see it specifically set out in the committee’s mandate. The motion approved by the legislature read as follows:

Pursuant to Standing Order 126(c), the Standing Committee initiate a fair and balanced study into a range of auto insurance industry practices and trends including but not limited to:
• The  current  overall profitability  of the  P & C industry with an analysis of current and future trends in both investment and underwriting income;
• The profitability of auto insurance  underwriting in Ontario and costs related to  Ontario underwriting, with particular emphasis  on  profits in the post-September 2010 era where the Statutory Accident Benefits were amended;
• Assessing the adequacy of med-rehab treatment as per the capped Minor Injury Guideline
• The relationship between insurance  underwriters  and their sales representatives and/or the role independent brokers of insurance play in the industry . This would include an in-depth look at the extent to which brokers that portray themselves as independent of insurers really are independent. 
• The impact of fraud in the insurance industry and how that impacts insurance rates;
• Assessment of the adequacy of the current definition of Catastrophic Injury
• Ongoing and future trends in claims fraud as well as the impact of recent anti-fraud initiatives in combating such activity;
• The  appropriateness of the 12% ROE  rate and the approvals mechanisms  related to the ROE rate;
• Reviewing the auto insurance dispute resolution system; and
• Reviewing risk assessment factors of drivers and the corresponding rates assigned to particular drivers as well as the eligibility and classification factors that currently determine individual, corporate and fleet coverage.

The mandate of the committee is very broad. It appears that committee intends to conduct a rare, far-reaching inquiry into insurance industry practices. This takes the business of insurance from the policy backrooms of FSCO and the Ministry of Finance to center stage at the legislature.

We will of course have to see if this current provincial parliament survives the next week or two. The government has called a confidence vote on the budget for next Tuesday and there has been some speculation that the combined opposition may vote against the budget. However, in our view, the chances are still very good that the NDP will reach a deal to vote with the minority Liberal government on the budget motion.

In the meantime, we will continue to hold our advertising campaign in abeyance and work with stakeholders including the Alliance of Community Medical and Rehabilitation Providers. We will proceed with our advertising and public relations campaign if there is any sign that the government intends to force through amendments on the review of catastrophic impairment.

Paul Harte, President

Posted under Accident Benefit News, Automobile Accident Benefits, Car Accidents, Catastrophic Injury, Minor Injury Guidelines, Treatment

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