Putting The Consumer First

Like children caught between feuding parents, Ontario drivers can be made to feel like pawns caught between towering competing industries, each of whom insists it has the drivers’ best interests at heart.

With a government review of auto insurance currently underway in Ontario, there seems to be a lot of discussion surrounding what insurers, lawyers or medical providers ‘hope to get’ rather than what consumers really need.

As insurers, we routinely put the consumer front and centre. It’s in our best interest to do so. With more than 200 companies competing for business, no insurer can afford to have a reputation for poor service.

For that very same reason, IBC has consistently put the interests of consumers first and foremost throughout the current Bill 198 review process. The province’s insurance regulator, the Financial Services Commission of Ontario (FSCO), has just concluded its statutory, five-year review of the province’s auto insurance product; it has issued a report to the finance minister including 39 suggested recommendations for reform. Whether developing recommendations for FSCO, studying its report and making suggested possible improvements or speaking directly to the finance minister and other government officials, IBC is steadfast in presenting solutions that benefit consumers.

So, what do consumers really need? In a nutshell, Ontarians need an affordable, available and stable auto insurance product. Their current product is highly regulated and under extreme duress. Growth in injury claim payouts has outstripped growth in premiums. This is not just a fact to which insurance companies can attest; it is a reality that FSCO acknowledges in its report. Unless the product is fundamentally reformed, affordable, available and stable auto insurance will continue to elude Ontarians.

The prospect of rising auto insurance premiums pleases no one, including insurers and ordinary Ontarians who already pay 25% more for their auto insurance than drivers in any other province. One reason why Ontarians pay so much more is that their benefit package is the most generous in North America.

CRISIS CYCLE CONTINUES

Despite generous benefits and more involved treatment, no evidence shows people injured in auto collisions in Ontario are getting any better or faster than those injured elsewhere. Currently the average no-fault injury claim in Ontario is close to $38,000. By contrast, comparable claims average $11,700 in New Brunswick and $3,000 in Alberta. Clearly, something is out of sync in Ontario.

Sadly, we have witnessed this sequence of events before. Soaring claims costs place the system in crisis. The system is closely examined. Interested parties present their arguments. The product is tweaked, but not fundamentally reformed. Cost pressures rebuild and, a few years later, another crisis emerges.

This year’s auto insurance review will likely result in changes to the product once again. This would mark the fifth time in 20 years that the product has been renovated, but not rebuilt. Previous efforts have not produced long-term stability or affordability; only by truly placing consumers’ interests first, can this recurring pattern be halted. That’s why IBC has been tireless in its efforts to convince decision-makers that a problem for consumers exists and that it desperately needs to be fixed.

It may sound trite, but it is true auto insurance benefits can be as generous as Ontarians would like them to be — but not without a corresponding cost. If higher tort settlements are allowed, that means richer contingency fees for lawyers and therefore increased claims costs for insurers. If extravagant medical and rehabilitation benefits are allowed, that, too, means higher related claims costs for insurers. And as we know, claims costs are the main factor determining insurance premiums.

Currently far too much of every premium dollar is spent on health assessment fees, legal fees and other service fees. IBC believes this money is better spent directly helping accident victims recover from their injuries and return to their normal daily lives.

Auto insurance is a product with costs attached to it. The higher the costs, the more expensive the final product. As a result, expenses need to be controlled, not merely shuffled around. Costs need to be controlled so that consumers can enjoy a stable, affordable and available auto insurance product indefinitely.

Despite the complexity of Ontario’s auto insurance legislation, it really is that simple.

The challenge, then, is to develop a robust, competitively priced product that helps accident victims get the care they need while keeping premiums reasonable for all drivers. IBC’s recommendations to government do just that.

In its submission to FSCO, IBC provides for a level of rehabilitation support that is competitive with the levels prescribed in other provinces. For the most seriously injured, the current limit of Cdn$1 million for medical rehabilitation services would remain unchanged.

Taken in total, IBC’s recommendations outline with specificity how long-term affordability and stability in Ontario’s auto insurance system can be achieved. All that is required is meaningful action by government and an awareness to resist the quick fix. Anything less than meaningful reform will doom consumers to an auto insurance market that features instability and volatility.

Ontario families are currently facing profound economic uncertainty. Although the government of Ontario can’t solve all of the province’s economic woes, it can control the factors that determine how much its citizens will end up paying for auto insurance.

This year’s auto insurance review presents the government with a golden opportunity to return stability to the auto insurance system and give Ontario families a break when it comes to their auto insurance premiums. As insurance providers, we know this what Ontario consumers need. And it’s what they deserve.