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Ontario’s Car Insurance System Set to Change (Again)

Ontario’s private auto insurance regime is set to change again and today the Ontario government released their proposals on the types of reforms which may be implemented eventually.

See the Ontario government’s press release today. The 41 reforms are detailed in two information circulars accompanying the press release: “reforns” and “new options”.

Ontario’s current regime, commonly referred to as the Bill 198 regime, came into effect on October 1, 2003. As outlined in our April/09 blog, the extensive review process included recommendations from various stakeholders and resulted in FSCO’s recommended last Spring.

Regarding these proposals, the idea appears to offer less basic coverage to consumers, which then would allow insurers to hold their insurance premiums rates to 2003 levels.

Consumers may not recognize the significant reduction to basic coverage being proposed. These changes come in the face of the industry’s longstanding position that the current system of Accident Benefits for basic coverage (just like prior systems) is too expensive to maintain without premium increases.

For example, the changes to basic Accident Benefits coverage may include:

• reducing med / rehab coverage to $50,000 (from $100,000) but also including the costs of medical assessments within your coverage limits;

– in an ongoing adjustment of the current “PAF” system, people with “minor injuries” in car accident will be provided $3,500 in treatment and medical assessments, in an attempt to cap minor claims;

– medical assessments would be capped at $2,000 per assessment and IE’s (Insurer Examinations) would also be capped at $2,000;

– the rebuttal report system (paying usually $750 – $900 per report) will be eliminated;

• eliminating housekeeping benefits (currently $100/week for the first two years);

• eliminating caregiver benefits (currently about $250/week, with various provisos);

• reducing the attendant care coverage to $36,000 (currently $72,000 available); also proposed changes to the resolution of disputes over entitlement to attendant care coverage;

• revising calculation of Income Replacement Benefits from being 80% of net income to 70% of gross income, maintaining the cap of $400/week for basic coverage;

• allowing consumers to buy additional insurance coverage in order to reduce their Bill 198 “pain and suffering” deductible to $20,000 (currently $30,000) and to reduce the Family Law Act deductible to $10,000 (currently $15,000); the Bill 198 threshold wording would remain the same; and

• anticipated amendments to the “catastrophic impairment” definition and application process.
The housekeeping elimination will mean less Accident Benefits for each consumer (i.e. $10,000 less in potential benefits).

The caregiver benefits elimination means that homemakers and/or people caring for others (i.e. children and/or the infirm) will suffer a significant loss of benefits. If you work, then you may qualify for IRB (income replacement benefits). But if you do not work prior to being in a car accident, after these changes are implemented, you will not receive benefits to assist in paying others to look after those who are dependent on you.

It is unlikely that consumers will understand enough or be prepared to pay extra for a reduction in their pain and suffering deductible.

As these are proposals at this time, various details are unavailable at this time. One important issue will be the interplay between the AB and tort system for these affected AB benefits and whether claimants can seek recovery of same in their tort claims.

As background, readers may wish to review our Feb/09 blog, our March/09 blog and our June/09 blog on the issue of the Bill 198 threshold and the pain and suffering deductible of $30,000.
Gregory Chang
Toronto Insurance Litigation Lawyer