Theatre of the Absurd

We witnessed something akin to Theatre of the Absurd in April long-awaited revamp of Ontario’s auto insurance product.

At roughly the same time executives at the Insurance Bureau of Canada (IBC) were urging the provincial government to complete unfinished portions of the 2010 auto insurance reforms, politicians at Queen’s Park were establishing a new, select committee that will effectively beat a dead horse.

Remarkably, the broad mandate of the new select committee is to hold public hearings and propose recommendations on aspects of Ontario’s auto insurance system that have already been exhaustively reviewed — including a new catastrophic impairment definition (already on the government’s priority list), the adequacy of the $3,500 cap on minor injuries (already part of a government study on claims costs) and the impact of auto insurance fraud (the mandate of a government task force that has already released an interim report).

Most people in the Canadian property and casualty insurance business, especially those outside Ontario, probably wish the province would simply move forward with reforming its auto insurance product and be done with it. Whether inside or outside Ontario borders, though, everyone keeps talking about it, perhaps because this line of business represents a quarter of all P&C premium collected in Canada. So it’s important to get it right.

That said, there has been too much talking about the product already.

It has now been three years since the Financial Services Commission of Ontario (FSCO), which regulates the accident benefits portion of the auto product, first submitted its report to Ontario finance minister Dwight Duncan summarizing its mandatory five-year review of the product. Some would argue that this five-year review took seven years, because FICO was quite deliberate and thorough in all of the public consultations leading up to this report.

On the basis of the report, the government proposed far-reaching reforms to the product, including introduction of a $3,500 cap on minor injuries, reducing mandatory medical rehabilitation benefits from $100,000 to $50,000 and converting mandatory benefits like housekeeping and caregiving benefits to optional benefits.

It remains to be seen whether or not the entire reform package will actually reduce insurers’ accident benefits claims costs. Soaring costs are the main reason why insurers were taking a loss on the auto insurance product in the first place. These losses resulted in premium increases, causing the government to reform the product.

The government’s 2010 reforms aren’t finished yet. Pending initiatives include — stop me if you have heard this one before — a new definition of catastrophic impairment, a new anti-auto insurance fraud task force, a closed claims study of insurers’ med-rehab costs and a new minor injury treatment protocol, among other projects.

Why, then, is the government establishing a new select committee to review these same topics? At the very minimum, the mandate of the select committee should be much more focused. It should zero in on aspects of auto insurance that haven’t already been discussed and reviewed ad nauseum.

The inevitable retread isn’t doing anyone in the public any favours. The time for discussing many of these items on the select committee’s agenda is over. The time to get moving and act on them is now.