The Insurance Bureau of Canada continues to lament the condition of the auto insurance market in Ontario. Speaking this week, the IBC’s CEO says a report released two weeks ago is “probably the best description we have to date of what is wrong” with auto insurance in the province.
IBC CEO Don Forgeron has been critical of the auto insurance system in Ontario before. He says the Fair Benefits Fairly Delivered: A Review of the Auto Insurance System in Ontario, released April 11, makes for worrying reading. He referenced the report as part of this opening speech at IBC’s annual Financial Affairs Symposium.
The report has been well covered and was written by David Marshall.
Marshall became the advisor or auto insurance and pensions in February 2016. provide advice and recommendations to governing and regulatory bodies in an effort to reduce auto insurance costs in Ontario, while the role also involves him overseeing the roll out of the Ontario Retirement Pension Plan (ORPP). He worked as a direct advisor to Ontario finance minister Charles Sousa.
“Paraphrased, the system is not about making people well,” Forgeron said of the Marshall report. “It’s about making stakeholders wealthy and that’s what’s wrong with the system. There are perverse incentives built into the system that creates a focus not where it ought to be. It’s probably the best description we have had to date of what’s wrong with the system.”
Speaking to attendees, Forgeron presented a slide that listed more than 25 changes that the government in Ontario has made to auto insurance laws. He said that tweaks are not working and “what we need is to wipe the slate clean and start over.”
In his report, Marshall advised the province against exploring a public insurance model like other Canadian provinces.
The Statutory Accident Benefits Schedule was “never intended the auto insurance system to be a cash jackpot,” he wrote. “Many insurance companies, however, are not incented to see their role as providing medical care to clients. Rather, they are incented to close their liability with as little cash cost as possible and hence they introduce the practice of negotiating cash settlements with claimants in lieu of medical treatment, future wage and other future benefits under the SABS.”
The solution to this problem “lies in focusing on timely, appropriate medical care, not cash settlements,” Marshall suggested. “Where the programs of care don’t apply, or don’t work, a roster of hospital-based independent examination centres should be established by the regulator to provide diagnoses and future treatment plans. Insurers must provide the treatments prescribed in the programs of care or those that are stipulated by the independent examination centre without dispute. The advice given by the independent examination centres should be taken as mandatory in accident benefits and tort disputes and courts should afford those opinions a zone of deference in tort cases.”