In the inaugural issue of THP we chronicled the first review of Part VI of the Insurance Act and summarized Finance Minister Duncan’s proposed changes to the Act that pertained to personal injury benefits. In that issue we contended that the changes could be subdivided into four buckets:

  1. Benefit reductions
  2. Benefit delisting
  3. Claims cost control
  4. Cost shifting

The rumblings of reform seem to be triggered by crises. Witness Ontario’s pension and workers’ compensation reforms of the mid-80s and mid-90s, respectively. The statutory device of the five-year review was introduced to bring some predictability and order to the auto insurance review process. It is a cruel irony that the first such review should have occurred during a firestorm of controversy surrounding medical/rehabilitation benefit costs and practices.

“….the first piece of advice for professionals who perform services for motor vehicle injury claimants is that if they have never done a strategic plan, or at least an assessment of risks, threats and opportunities, they should do one now."

We promised readers an update in this issue. Soon after our magazine’s distribution early in March, the Financial Services Commission of Ontario announced a number of new regulations and issued rate filing instructions to insurers to reflect the changes. These included pricing of an option to reduce the tort deductible to $20,000 from $30,000 and an option to purchase specified accident benefits that are being de-listed from the previous Statutory Accident Benefits Schedule. The rate filing deadline was April 15. The expectation is that the premium component for accident benefits will come down significantly owing to lower actuarial assumptions. On February 24 a number of regulations were made under the Insurance Act, all to be effective on September 1, 2010. Six of the regulations pertain in whole or in part to the personal injury benefits prescribed by the Act. They are:

  1. Regulation 34/10: Statutory Accident Benefits Schedule
  2. Regulation 35/10: Transitional rules for accidents occurring before September 1, 2010
  3. Regulation 36/10: Option to reduce tort deductible; at-fault rating restrictions
  4. Regulations 37/10: Unfair or deceptive acts or practices
  5. Regulation 38/10: Disputes between insurers
  6. Regulation 39/10: Definition of health care claims

In the lead-up to the latest reforms, none of the main stakeholders – claimants, insurers, providers or the regulator – was satisfied with the status quo. Claimants who made submissions to the review process complained about unfairness, complexity and inequity, while insurers cited the escalating cost of medical/rehabilitation benefits, particularly the spiralling frequency of assessments and the lack of provider accountability. Providers voiced concerns about complexity, lack of accountability with respect to missed deadlines, adjudication inequity, and waste. Through their industry group, OTLA, lawyers representing claimants in tort actions or facilitating their accident benefits claims took aim at fraud, abuse, complexity and the tort threshold.

Readers have by now seen a number of commentaries, analyses and reviews both during the protracted review process and since the release of the new regulations. Many of the personal injury law firms have published useful reviews, and some have done exquisite analyses, which in addition to their public relations value are also an important public service. The “Bulletins” section of the FSCO website is also useful: www.fsco.gov.on.ca/english/pubs/bulletins.The changes to the regulations are far-reaching and extensive, so the focus here has been less on the specifics of the changes than on their implications. To readers who consider themselves expert strategists, the start of the review over a year ago should have sent them a strong signal to dust off their business plans and the assumptions underlying them. Indeed, the first piece of advice for professionals who perform services for motor vehicle injury claimants is that if they have never done a strategic plan, or at least an assessment of risks, threats and opportunities, they should do one now. Their survival may depend on it.

Ontario’s system is sometimes called “no-fault,” but it is actually a no-fault/tort system and one that is often in a state of disequilibrium at that. Indeed, when it comes to auto insurance, reform and re-reform have been driven by the swings of the pendulum: cost escalation on the one hand and cries of insufficient protection on the other. Given that costs appear to have been the main driver behind the latest reforms, it could also be referred to as a cost-driven system, which helps to explain how a province of 13.5 million people can support almost 200 auto insurers. There have been so many changes to Ontario’s personal injury benefits regime during the past twenty years, including the introduction of an elaborate claims system (HCAI) for some of its prescribed forms, that provider and insurer alike could be forgiven for hoping that stability will reign for at least the next five years.