insurance attorney mesothelioma : April 2015

Thursday, April 30, 2015

How Much Have Ontario No-Fault Accident Benefits Been Eroding?

The recently announced auto insurance reforms included in the 2015 Ontario Budget will again reduce accident benefits as part of the government's efforts to reduce premiums in Ontario. The government insists that benefits available are still generous. I decided to compare the accident benefits available prior to the OMPP (Schedule C) under tort and the OMPP accident benefits with the new proposed limits announced in the Budget. I used the Bank of Canada inflation calculator to convert past benefits into 2015 dollars.

The Schedule C accident benefits existed under the tort system prior to the introduction of no-fault. Compensation was quite limited. Income replacement benefits were available for 104 weeks, caregiver benefits for 12 weeks and medical benefits for 4 years. The benefits aren't quite analogous but when converted into 2015 dollars, it tells an interesting story. Keep in mind there was no second tier of benefits under Schedule C for catastrophic injuries. Those not at-fault would need to start an action to access additional compensation.

The table below shows that the Schedule C benefits are not that far off from the benefit levels announced in the Budget. Not only are benefits being cut but inflation has also eroded them.

	pre-OMPP	pre-OMPP	2015 Budget
	(1989 $)	(2015 $)
IRB	$140.00/week	$240.24/week	$400.00/week
caregivers	$70.00/week	$120.12/week	N/A*
non-earners	N/A	N/A	$185.00/week
medical/rehab	$25,000.00	$42,900.82	$65,000.00
medical/rehab (cat)	$25,000.00	$42,990.82	$1,000,000.00
attendant care	N/A	N/A	N/A**

* caregiver benefit currently only available for catastrophic injuries
** attendant care included in medical/rehabilitation cap

The indexed OMPP numbers are also revealing. The table below shows that the accident benefits proposed in the recent provincial budget are, in some cases, less generous than the OMPP accident benefits even before adjusting for inflation. Even those with catastrophic injuries are likely better off under the OMPP even though there was no higher tier of accident benefits available. The OMPP provided all claimants with up to $1 million in combined medical, rehabilitation and attendant care benefits. In 2015 dollars that works out to approximately $1.6 million in benefits.

	OMPP	OMPP	2015 Budget
	(1990 $)	(2015 $)
IRB	$600.00/week	$977.81/week	$400.00/week
caregivers	$250.00/week	$407.42/week	N/A*
non-earners	$185.00/week	$301.49/week	$185.00/week
medical/rehab	$500,000.00	$814,838.71	$65,000.00
med/rehab (cat)	$500,000.00	$814,838.71	$1,000,000.00
attendant care	$500,000.00	$814,838.71	N/A**

* caregiver benefit currently only available for catastrophic injuries
** attendant care included in medical/rehabilitation cap

Friday, April 24, 2015

More Benefit Cuts Coming for Ontario Auto Insurance Consumers

It seems the road to more affordable auto insurance once again winds its way through further benefit cuts. Those aren't the only changes proposed in the 2015 Ontario Budget but it remains an ongoing piece of controlling the cost of Ontario premiums. Many of the changes announced by Finance Minister Charles Sousa on April 23rd lack any details so how they would be applied or implemented is very much in the air.

Mandatory medical, rehabilitation and attendant care benefit coverage has again been lowered. The combined coverage will be $65,000. The combined mandatory coverage had been $172,000 since 1996. In 2010 it was reduced to $86,000. For catastrophic injuries, the combined coverage has been $2 million since 1996. The coverage will now be $1,000,000. With exception of children and catastrophic injuries, medical and rehabilitation benefits will only be able to be claims for a period of five years instead of ten. Optional coverage will continue to be available but few consumers purchase and many brokers and insurers discourage consumers from purchasing them.

Subsections 15 (h) and 16 (l) of the SABS are basket clauses to cover medical and rehabilitation goods and services not specifically listed in the schedule. The government proposes to change the entitlement test for these to clauses from "reasonable and necessary" to "essential". Yet a new term and complexity is to be introduced to the SABS and be subject to years of disputes.

The Superintendent of Financial Services recommended changes to the SABS definition of catastrophic impairment in a report back in 2010. The recommended changes have been a contentious issue and the government has indicated an intention to make changes in the past few budgets. This commitment has again been announced as part of the 2015 Ontario Budget.

Finally, the non-earner benefit is to be restricted. The benefit was introduced in 1990 with the OMPP, the first no-fault system in Ontario. Since that time, entitlement has been gradually been restricted. The proposed change will limit entitlement to two years.

Some of the cost savings introduced by reducing standard SABS coverage will shift to the tort just as it did following the 2010 reforms. However, the government is also looking to introduce cost savings on the tort side. Changes will be made to the compensation available through a court action. The non-pecuniary deductible (for pain and suffering) was increased in 2003 and has not been changed since then. It will be increased to reflect inflation since 2003 and indexed in the future. Also adjusted will be the monetary thresholds beyond which the tort deductible does not apply (e.g., the $100,000 threshold at which the deductible no longer applies). Finally, judges will be able to take int account the effect of the tort deductible when determining a party's entitlement to costs in an action.

Insurers will be expected to provide some additional cost savings for consumers. The maximum interest rate that can be charged on premiums paid on a monthly basis is to be reduced from three percent to 1.3 percent. All insurers will be required to offer a discount for the use of winter tires. The budget announcement does not stipulate the amount of the discount but some insurers already offer such a discount and it is typically in the three to five percent range.

The most appealing change for consumers is a commitment to prohibit premium increases for minor at-fault accidents that meet certain criteria. Those criteria have not been identified but I would expect the circumstance to be quite limited. For example, it would not included any accidents where an injury was reported. The question to be asked is where will those costs migrate to? If insurers cannot increase premiums to drivers with minor accidents, will those costs shift to drivers with more serious accidents or all drivers which would include those with no accidents?

Finally, the standard deductible for comprehensive coverage will increase from $300 to $500. A meaningless change based on past experience. A number of years ago the government increased the standard deductible for direct compensation property damage (DCPD) coverage from $0 to $300. However, brokers and agents continued to recommend the $0 deductible to consumers. The opportunity to reduce premiums by accepting a higher deductible has always existed but many consumers do not take advantage of it.

There is a small obscure reference on page 103 to support regulatory and tax environment can help innovation thrive. This partly is aimed at transportation network companies such as Uber. To help emerging sectors thrive, the government commits to working with firms and industries to help them comply with existing obligations and to consulting on an ongoing basis to ensure those obligations reflect a changing economy.

The government continues to tinker with the Ontario auto insurance product, which has been the order of the day since the OMPP was introduced on June 22, 1990. In the May 2015 issue of Canadian Underwriter, I will look back at the past 25 years and discuss what has gone wrong. Please look out for it.

Wednesday, April 22, 2015

Ridesharing Bill Proceeds Through Ontario Legislature

Bill 53, Protecting Passenger Safety Act, 2015 received second reading this past week and has been referred to the Standing Committee on Social Policy.

The bill was introduced to address transportation network companies such as Uber and Lyft which have been operating in Toronto since 2012. The bill was introduced by Liberal John Fraser and considered a private member's bill which rarely get passed. However, there is broad support for the bill and the Conservatives introduced a similar private bill (Bill 51) in December.

Bill 53 if passed would amends the Highway Traffic Act with respect to the offences related to picking up a passenger for the purpose of transporting him or her for compensation without a required licence, permit or authorization in section 39.1 of the Act. The licence or permit may fall under the Public Vehicles Act, an airport authority, the Department of Transport Act (Canada) or a municipal by-law. The bill does not address insurance requirements.

The fine for these offences is increased to a maximum of $30,000. A person who picks up a passenger for the purpose of transporting him or her for compensation without a required licence, permit or authorization also receives three demerit points.

If a police officer believes on reasonable and probable grounds that a person has committed this offence after having been convicted of the same offence within the preceding five years, the officer shall suspend the driver’s licence and impound his or her motor vehicle for 30 days.

Tuesday, April 21, 2015

Insurance News - Tuesday, April 21, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, April 21, 2015:

Sunday, April 19, 2015

Ontario Rates Continue to Decrease Slowly

Just in advance of the Ontario Budget announcements which are expected to include new auto insurance changes, FSCO has released the rate filing approvals for the first quarter of 2015.

A total of 39 insurers submitted filings which represents 73.48 percent f the market based on premium volume. Approved rates decreased on average by 0.95 percent when applied across the total market.

In the fourth quarter of 2014, approved rates decreased by 0.54 percent on average. Rate changes since 2013 now total 7.05 percent. The government rate reduction strategy calls for a 15 percent reduction by August of this year.

Monday, April 13, 2015

Insurance News - Monday, April 13, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, April 13, 2015:

Saturday, April 11, 2015

Who Is Profiting Most From Ontario Auto Insurance?

If you are involved in the auto insurance sector, yesterday was an interesting day. The Ontario Trial Lawyers Association released a study conducted on their behalf by two York University professors suggested that insurance companies make too much money. The Insurance Bureau of Canada countered with accusations that trial lawyers make too much money. Who do you believe?

A lot of people have profited from Ontario's auto insurance system over the past 25 years. Few insurance companies have exited the Ontario market in that period of time so profits must be good. In addition, there is no shortage of lawyers working in the system both on the accident benefits side and in tort. There are rehabilitation clinics dying for more referrals. Tow trucks drive around our highways ready to pounce on someone after a collision. Yet everyone complains. Drivers in this province continue to pay high premiums. They are the true victims in the system.

On June 22, 2015 it will be 25 years since the introduction of the Ontario Motorist Protection Plan or OMPP, the first no-fault auto insurance plan in Ontario. It has been a rocky road. In the May 2015 issue of Canadian Underwriter, I will look back at those 25 years and discuss what has gone wrong. Please look out for it.