Ontario Auto Insurance – Reducing Accident Benefits from 100 to 25 Thousand Dollars.

Update: see Insurance Rates page                                                                   

The Insurance Industry is up to their old tricks again, crying poor and raking in billions of dollars. Remember, if the Insurance Industry earned say, seven (7) billion dollars in profit in 2007 and only made five (5) billion dollars in profit in 2008, they can state that they lost billions of dollars in 2008 (based on the profit margin from the previous fiscal year). The natural question arises; if Insurance Companies providing Ontario driver’s automobile insurance are losing money on this particular product, then why are they still selling this particular product? Anyone that had money invested in the stock market (which includes Insurance Companies) have lost monies on their investments due to the economy in 2008, which continues in 2009. Insurance Companies need to satisfy the appetite of their shareholders and therefore remain profit driven in any economic climate. Auto Insurance in Ontario remains the most expensive Auto Insurance anywhere  in Canada.

Based on the March 31, 2009 recommendation number twenty-two (22) of the Financial Services Commission of Ontario (FSCO)  in their Five Year Review of Automobile Insurance in Ontario, is as follows:

Recommendation #22: Reduce the cap for medical and rehabilitation benefits for non-catastrophic claims to $25,000. Introduce a $100,000 optional medical and rehabilitation benefit along with the existing $1 million optional benefit.
There have been some proposals for expanding the Pre-approved Framework (PAF) Guidelines to include other minor injuries. This idea is worth exploring from a number of perspectives. If feasible, it would expand the amount of treatment without requiring prior approval by the insurer, thereby simplifying the system and reducing transaction costs. As well, if the accident benefit system moves towards designating primary health professionals, expanded PAF Guidelines would reduce the time spent by designated professionals in managing minor claims and allow them to focus on the most seriously injured.
In February 2008, the Neck Pain Task Force (NPTF) of the World Health Organization published a series of articles summarizing its findings. There may be some merit in providing a more extensive continuum of care to ward off chronicity and recurrences based on the NPTF findings

The Ontario Liberal Government supports the FSCO’s recommendation of reducing statutory accident benefits resulting from motor vehicle accidents,  from $100,000.00 to $25,000.00 due to Insurance companies complaining that they are losing money under the current system. Insurance companies are suggesting that the $100,000.00 should only apply to catastrophic injuries (which amount to about 1% of the injuries that are reported on Ontario roads and highways). The change would not apply to motor vehicle accidents where the driver or passenger received catastrophic injuries and they would still be eligible for rehabilitation services that cost up to a million dollars.

Ontario Liberal Finance Minister Dwight Duncan wants to change the rules in the next 45 days by the end of June, 2009. On top of this latest gift from the Liberals to the Insurance Industry, we will all be paying alot more for everything beginning on July 1, 2010 when Dwight Duncan brings in the 13% Harmonized Sales Tax (H.S.T.) in Ontario.

The “Alliance of Community Medical and Rehabilitation Providers”, a coalition of 43 organizations that provide care for accident victims are opposed to this drastic change to the legislation, which would have an overall detrimental affect on accident victim clients. From the Alliance’s website: The Alliance urges consumers to contact their MPP and email Finance Minister Dwight Duncan directly at [email protected] .  As well, consumers can sign an online petition at www.feelinglucky.ca

Definition of Catastrophic Injury (which amounts to 1% of all Ontario accidents):

(1.2)  For the purposes of this Regulation (O.Reg. 281/03 which amends O.Reg. 403/96), a catastrophic impairment caused by an accident that occurs after September 30, 2003 is,

(a) paraplegia or quadriplegia;

(b) the amputation or other impairment causing the total and permanent loss of use of both arms or both legs;

(c) the amputation or other impairment causing the total and permanent loss of use of one or both arms and one or both legs;

(d) the total loss of vision in both eyes;

(e) subject to subsection (1.4), brain impairment that, in respect of an accident, results in,

(i) a score of 9 or less on the Glasgow Coma Scale, as published in Jennett, B. and Teasdale, G., Management of Head Injuries, Contemporary Neurology Series, Volume 20, F.A. Davis Company, Philadelphia, 1981, according to a test administered within a reasonable period of time after the accident by a person trained for that purpose, or

(ii) a score of 2 (vegetative) or 3 (severe disability) on the Glasgow Outcome Scale, as published in Jennett, B. and Bond, M., Assessment of Outcome After Severe Brain Damage, Lancet i:480, 1975, according to a test administered more than six months after the accident by a person trained for that purpose;

(f) subject to subsections (1.4), (2.1) and (3), an impairment or combination of impairments that, in accordance with the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in 55 per cent or more impairment of the whole person; or

(g) subject to subsections (1.4), (2.1) and (3), an impairment that, in accordance with the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in a class 4 impairment (marked impairment) or class 5 impairment (extreme impairment) due to mental or behavioural disorder.

(1.3)  Subsection (1.4) applies if an insured person is under the age of 16 years at the time of the accident and none of the Glasgow Coma Scale, the Glasgow Outcome Scale or the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, referred to in clause (1.2) (e), (f) or (g) can be applied by reason of the age of the insured person.

(1.4)  For the purposes of clauses (1.2) (e), (f) and (g), an impairment sustained in an accident by an insured person described in subsection (1.3) that can reasonably be believed to be a catastrophic impairment shall be deemed to be the impairment that is most analogous to the impairment referred to in clause (1.2) (e), (f) or (g), after taking into consideration the developmental implications of the impairment.

The FSCO now seeks to change the definition of “Catastrophic Impairment” as reflected in recommendation number ten (10) of their March 31, 2009 report, is as follows:

Recommendation #10: Further consultation with experts in the field is needed to amend the definition of “catastrophic impairment.” The goal for this review should be to ensure that the most seriously injured accident victims are treated fairly.
One area where stakeholders appear to be in agreement is that there is a problem with overutilization of assessments in the auto insurance system. The Insurance Bureau of Canada (IBC) submitted that in 2007, based on incurred losses (paid claims plus reserves), for each dollar spent on treatment, another 60 to 80 cents were spent on assessments. Multiple requests for assessments may be sent to insurers involving treatment plans, completion of certificates and forms, and benefit applications. It has been suggested that adjusters frequently refer requests for an insurer examination in order to buy themselves more time which only adds more transaction costs, paper and delays.

This latest Liberal “rush to change the laws quick” move, is not beneficial for Ontario driver’s and passengers. If you want to sign the petition against this move to enrich Insurance Companies, you can sign the online petition at petition online.

The Financial Services Commission of Ontario has produced their “Report on the Five Year Review of Automobile Insurance March 31, 2009” see report. Other political parties in Queen’s Park, adamantly disagree with the Liberal party’s intention to rapidly impose this  “insurance friendly” legislation on Ontario driver’s and passengers. There may be more to come on the insurance front, that hasn’t yet been realized in Ontario.

How cyclists in accidents are treated by Insurance Companies.

How much have our beloved insurance companies lost? See story.

See Twelve (12) Tips to save on automobile insurance.

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