Ontario Auto Insurance Reform
Grant Dow for The Lawyers Weekly
January 15, 2010
The proposed reforms to Ontario auto insurance are unlikely to achieve the government's goal of less complexity and stable premiums. At issue is whether they satisfy any of the stakeholders, including lawyers.
Medical and rehabilitation expenses
For non-catastrophic injuries, basic coverage for medical and rehabilitation benefits will have a limit of $50,000. The current limit of $100,000 would become an optional coverage available for an additional premium.
The reforms propose that the cost of medical assessments addressing a person's need for treatment, which currently is a separate category of benefit, apply against the limit of coverage. This change may dramatically reduce the funds available for treatment, since the superintendent notes in his review report that for every dollar spent on treatment, another sixty to eighty cents was spent on assessments.
Currently, an individual with minor injuries has an automatic right to treatment when the cost of such treatment is less than $2,000. The reforms propose increasing this amount to $3,500.
Catastrophic impairment benefits
Catastrophic impairment, which provides a higher level of benefits, will now include single-limb amputees.
Currently, a Glasgow Coma Scale reading of nine or less allows the individual who is seen and assessed by an ambulance attendant or emergency department personnel within minutes of the incident to receive catastrophic level benefits, while the individual who is not seen promptly and regains consciousness is excluded.
Efforts will be made to redefine catastrophic brain injuries, but no specific methodology is identified other than to consult with the medical community. Regardless, the issue of catastrophic injuries will continue to be the subject of ongoing disputes between insurers and claimants due to the significant difference in available benefits the designation entails.
Housekeeping and caregiving expenses
Housekeeping and caregiving benefits, which insurers see as widely abused by claimants under the current system, will be moved out of basic coverage, and become available only as optional benefits.
These expenses are already restricted to reflect "actual economic losses," but has not deterred arbitrators and judges from awarding them in appropriate circumstances.
Income replacement benefits
The reforms will require the quantum of income replacement benefits to be calculated as 70 percent of gross income, rather than the current 80 percent of net income, to bring the benefit in line with most disability policies.
The government rejected the recommendation of the superintendent to have the maximum basic benefit increased to $500 weekly from the existing $400, which has been in place since 1990. Optional coverage paying up to $1,000 weekly will continue to be available.
The reforms also propose capping the amount payable for accounting reports, which are sometimes needed under the current system to calculate the amount of the benefit payable to self-employed persons. While no cap amount was specified, changing the basis of calculation from net to gross income should eliminate the need for such reports in many cases.
Attendant care and assessment costs
The limit for attendant care benefits will be reduced from $72,000 to $36,000 for non-catastrophic injuries. The reforms do not, however, indicate whether the $3,000 monthly maximum and two-year limit currently applicable to this benefit will continue.
The reforms also propose that this benefit only be payable on the basis of expenses actually incurred. Such a change would constitute a major shift from current judicial and arbitral decisions, which award the benefit based on the obligatory determination within Form 1 calculations.
It is also proposed that the cost of assessments be capped at $2,000. Rebuttal examinations and reports, which frequently were of minimal significance, are being abolished, which will reduce costs.
Optional reduction of tort deductibles
An unusual proposal will allow policyholders to purchase as an optional benefit a lower tort deductible of $20,000 on non-pecuniary damages and $10,000 on Family Law Act claims. It is unclear how such a claim can be advanced without adding to the complexity of tort proceedings, as presumably plaintiffs will be compelled to add their own insurer to the tort litigation, who might not otherwise be involved, simply to assert a claim for amounts falling within the jurisdiction of small claims court.
The government intends to have these changes in effect by the summer of 2010.
Further details clarifying the proposed changes to the Statutory Accident Benefits Schedule and Insurance Act are required before the impact of the reforms will be understood. As with previous reforms, they will then become the subject of judicial and arbitral interpretation and, no doubt, unintended consequences.
is a partner at Flaherty, Dow, Elliott & McCarthy in Toronto, practising in the area of insurance and personal injury litigation. He has extensive experience before the courts and arbitrators on accident benefit and personal injury matters.