Two steps forward,
three steps back
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The Ontario government has proposed that mandatory car accident benefits be reduced once again – but reducing these benefits may have unintended consequences, warns Thomson Rogers’
Stephen Birman
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THE ONTARIO government recently laid out proposed changes to the auto system – but to what end and to whose benefit, asks Stephen Birman, partner at Thomson Rogers.
“Any savings on car insurance premiums are highly doubtful and reduced benefits will likely be paid for through government programs, judicial-related costs, and further backlogs in the courts,” Birman warns. “We should ask ourselves who will benefit when evaluating any changes.”
Thomson Rogers is a highly respected civil litigation firm, serving clients throughout Ontario. Since opening its doors in Toronto in 1935, Thomson Rogers’ lawyers have earned a reputation for taking on the most complex and challenging litigation matters and delivering results. The firm maintains a robust litigation practice across multiple practice areas, including plaintiff personal injury claims, such as disputes related to catastrophic accidents, medical malpractice, product liability, class actions, and family and municipal law.
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How covid-19 Affected Non-Profits
Moderate negative impact
38%
Significant negative impact
28%
Little negative impact
12%
Moderate positive impact
0.5%
“One would think the last thing you’d want to do is implement a proposal that’s going to further logjam the court system”
Stephen Birman,
Thomson Rogers
The proposed auto reforms were outlined in the recently released government budget. The most significant is a reduction of mandatory accident benefits to include only medical, rehabilitation, and attendant care benefits. This would involve the removal of the mandatory Income Replacement Benefit (IRB) and potentially other benefits from the Statutory Accident Benefits Schedule (SABS), including expenses for housekeeping, funeral costs, and visitor expenses while one is in hospital recovering.
The potential elimination of the IRB, as well as the Non-Earner Benefit and Caregiver Benefit where available, is unfavourable to car accident victims. Although modest – the IRB has remained at $400/week since 1996, a figure that should really be adjusted upwards for inflation to over $700/week in today’s dollars – Birman notes that the IRB provides a minimal level of support to those injured and unable to work with no access to benefits to replace their income.
The government announcement states that this proposed change will help ensure drivers can make informed decisions, suggesting that the benefits may be purchased separately on an auto policy. However, Birman calls this “somewhat disingenuous because it’s well known most people don’t buy optional benefits.”
“That’s why the schedule is there in the first place – it’s protective. As a society, we’ve decided that a minimum level of benefits is required for car accident victims and, up to
The removal of the IRB could also have unintended and problematic consequences, he warns, including a potential influx of claims in the already-overburdened courts. Receiving the IRB means victims are unable to also sue for income losses up to the amount of the IRB received. However, if the IRB is stripped, many Ontario motorists who are injured in car accidents and are unable to work will only be able to seek compensation for their income loss through lawsuits. The court system is already disproportionately overwhelmed by personal injury-related cases, specifically those involving car
accident victims, and “one would think the last thing you’d
“The [claims] that are more infrequent but create the most challenge to resolve are of course sexual abuse,” Davis says. “We were one of the first carriers to offer an affirmative sexual abuse policy back in the late ’80s – so we actually said, ‘This is what we will cover’ and didn’t go silent on it.”
In the face of market upheaval, insurers are promoting their offerings or planning new products. At AmTrust, Sree says, the focus has been on “cross-selling to provide more broad-based coverage and providing enhanced coverage for our insureds.”
Meanwhile, Convelo is developing a few new tech-driven programs, which will be available over the next six months or so. Smith says the company is “highly focused on technology to deliver top-of-the-market products to our broker partners in an efficient, easy-to-use platform. We are using this technology not only to automate systems and make the buying process easier, but also to improve in risk selection and lower claims costs.”
NIA has responded to the pandemic by rolling out a new communicable disease form on the liability side. “That’s something that really nobody else has done,” Davis says. “But we saw that we have nonprofits who have to continue housing the homeless; they have to continue to work.”
The coverage form delivers $250,000 of defense inside the limits. “It’s trying to be the coverage that nonprofits need without offering limits that might become opportunistic with some plaintiff attorneys,” Davis says.
“Going forward, I’d like to see the government look at these types of proposals more holistically and with widespread consultation from the industry”
STEPHEN BIRMAN,
THOMSON ROGERS
This reduction in premiums never came to fruition, Birman notes, and very quickly all stakeholders recognized the cut to medical and rehabilitation benefits for the most seriously injured victims needed to be reversed. A return to the $2 million limit was proposed in the 2019 budget, but five years later that change hasn't been made.
“It’s unfortunate that the benefits victims of car accidents require continue to be reduced,” Birman says, adding that he sees firsthand how important these benefits are to victims who rely on them to get through the crucial periods in the weeks and months after an accident. He also notes that optional benefits aren’t top of mind for people who haven’t been in accidents, and “as much as you would like people to purchase optional benefits, often it’s only when one is actually in this horrendous position that they realize what they need, and that’s why it's important we continue to maintain minimal levels of support for everybody in Ontario.”
attention to because we consider our data to be very important and not to be compromised,” she says. “We’re also going to be challenged as the nonprofit sector continues to grow. We see that the [commercial] insurance industry has generally been inconsistent in its willingness to provide the sort of coverage that nonprofits need and at the price that they can afford. So, I think our challenge is going to be to be there for the groups of nonprofits that will lead us to take up the coverage when others might fail them.”
To that end, NIA has made a concerted effort to reach out to brokers to help them determine the right coverage for their nonprofit clients.
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Return to $2M CAT limits noticebly absent
Return to $2M CAT limits noticeably absent
The proposed changes
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Published May 06, 2024
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The proposed changes
It's not all bad news, however, as Birman points to the proposed adjustment to the priority of benefits, where SABS would be accessed before extended healthcare benefits, as positive. The auto insurance companies would pay for healthcare costs as first priority following an accident, which he calls a reasoned proposal.
“Subject to auto insurers approving coverage, it will reduce the interplay between the benefits that often results in delay and red tape for victims and their healthcare providers,” Birman adds. “It’s also helpful because it will reduce some of the extensive paperwork for victims who have been in an accident, and anything that does that is a good thing.”
Also long overdue is a proposed reform to the Attendant Care Hourly Rate Guideline. This guideline sets the maximum hourly rate to calculate attendant care benefits under the SABs, and the rates set out are as low as $14/hour – below minimum wage and therefore a significant barrier for accident victims to hire personal support workers. The government has requested that the Financial Services Regulatory Authority of Ontario (FSRA) review and update the guidelines based on their findings.
“The guideline has been completely unrealistic for many years, as it hasn’t been providing the required compensation for personal support workers,” Birman says, adding an adjustment to reflect actual market rates is long overdue and implementing this change “shouldn’t be prolonged or controversial.”
“Hopefully it doesn’t take long to correct. It’s a welcome change that should have been addressed yesterday.”
“Going forward, I’d like to see the government look at these types of proposals more holistically and with widespread consultation from the industry”
Stephen Birman,
Thomson Rogers
A return of the catastrophic impairment benefit (CAT) limits to a mandatory $2 million for the most seriously injured car accident victims was noticeably absent in the budget. Reserved for those who suffer the most severe injuries, such as to the brain and spinal cord, the limit was halved to $1 million – a grossly insufficient amount – in 2016, in an effort to reduce car insurance premiums.
Catastrophic Impairment Benefit limits
2015
2019
2024
2016
Non-Earner Benefit and
Caregiver Benefit Limit
where it is
(since '96)
0
$100
$200
$300
$400
$500
now, that’s included this modest sum for income replacement. To remove it is putting victims in a bad predicament where they will have no support or turn to other sources for income support and that might cost taxpayers more.”
As always, reduced auto insurance premiums appear to be the motivation for these clawbacks, but in the past when similar changes were implemented, they have not led to the promised decrease in premiums.
“It will remove an obligation from insurance companies, but again, I ask, to what end?” Birman says. “These are critical benefits that accident victims have historically had access to, and there’s no compelling reason to remove them from the mandatory coverage.”
want to do is implement a proposal that’s going to further logjam the court system,” Birman says.
As it stands, nothing is firm or final, and it remains to be seen how this plays out. While some of these changes would move the auto system in the right direction, the suggestion to remove more benefits that accident victims rely on overshadows the small gains and moves the entire mandatory accident benefits scheme backwards. For Birman, a change to how the government approaches these issues could make all the difference for accident victims.
“Going forward, I’d like to see the government look at these types of proposals more holistically and with widespread consultation from the industry,” he says. “There certainly are
changes that need to be made. This is an imperfect system and there are lots of ways for it to be improved, but it requires input from all stakeholders to achieve that.”
$600
$700
where it
should be
suggested budget
proposed
budget
0
$250k
$500k
$1M
$1.5M
$2M
Catastrophic Impairment Benefit limits
2015
2019
2024
2016
proposed
budget
$500
$1M
$1.5M
$2M
$2.5M
$2M
$2M
$1M
$1M
As it stands, nothing is firm or final, and it remains to be seen how this plays out. While some of these changes would move the auto system in the right direction, the suggestion to remove more benefits that accident victims rely on overshadows the small gains and moves the entire mandatory accident benefits scheme backwards. For Birman, a change to how the government approaches these issues could make all the difference for accident victims.
“Going forward, I’d like to see the government look at these types of proposals more holistically and with widespread consultation from the industry,” he says. “There certainly are
changes that need to be made. This is an imperfect system and there are lots of ways for it to be improved, but it requires input from all stakeholders to achieve that.”
The proposed changes