Liberals finally offer insurance solution
Ontario car insurance prices will drop starting next year, Finance Minister Charles Sousa promised Tuesday. Really, he means it this time.
The plan includes set-piece treatment plans for common injuries that should reduce fights over what insurance companies pay out, independent medical assessments to replace duelling doctors’ opinions and making it harder for injured people’s lawyers to pocket big contingency fees after securing settlements.
“We’ve introduced a number of important changes over the years that resulted in lower insurance costs for Ontario drivers, but they don’t go far enough,” Sousa said in announcing what the Liberals are calling their “Fair Auto Insurance Plan.”
In 2013 and again before the 2014 election, the Liberals promised to cut car insurance rates by 15 per cent by the end of summer 2015. They got about halfway there by the deadline, primarily by capping payouts for minor injuries and letting drivers buy less coverage, which is probably not what most people thought they meant when they made the promise.
Premier Kathleen Wynne recast the 15-per-cent cut as a “stretch goal,” something they’d liked to have done, but that was always iffy. It was actually just a broken promise made in a desperate time.
After the government missed its deadline, it hired David Marshall, who’d spent six years heading the Workplace Safety and Insurance Board, to tell them what was wrong with the system, which he did clearly and forcefully last April after about a year and a half of work.
The gist is the government makes you buy insurance from private providers if you’re going to have a car, the system has gotten wildly complex as insurance companies fight a small number of very expensive fraudsters, and now everybody’s lawyered up. So Ontario has the highest car insurance rates in the nation.
“This hybrid structure, a government-mandated service delivered by private industry, brings with it inherent challenges that have not been well understood and have contributed to undermining the intent of the government,” Marshall found.
About 60,000 Ontarians make injury claims on car insurance policies each year, his report said, and most of them just want compensation for real costs and suffering. But there’s an obvious incentive to game the system and some will. Likewise, insurance companies are in the business of minimizing their payouts. They’re especially keen on not being ripped off, but if they also end up refusing legitimate claims that’s not a terrible outcome for them. About a third of each year’s claims are the subject of formal disputes.
“This level of breakage is a signal that there is something seriously wrong with how claims are being handled,” Marshall wrote.
What has resulted is an arms race. Insurance companies make their claims processes complicated, with the help of lawyers, to catch fraudsters. Injured people hire other lawyers to help them. Both sides seek affirmation from outside doctors. Money only comes into the system from drivers’ insurance premiums, which support a vast bureaucracy of expensive professionals who benefit more from fighting than from resolving claims quickly.
In the meantime, some people with real injuries don’t get proper followup because nobody’s willing to pay for it.
“The goals of all the principal stakeholders are not well aligned. As a result, the government’s goal, to provide affordable and efficient care for those injured in automobile accidents, is being undermined by the way the structure of the system is exploited,” Marshall wrote.
Many car-crash injuries are things like whiplash, sprains and back strains, which are relatively easy to treat if they’re handled properly and quickly. Marshall advised setting up standard assessment tools that lead to standard treatments, so that people get better rather than becoming debilitated and seeking cash compensation. The government’s doing that with the first standard to be set by spring.
They’ll have third-party doctors assessing more serious injuries. Preventing them from routinely erring one way or the other when there are hundreds of thousands of dollars on the line will be tricky, but a system that isn’t set up to be adversarial from the beginning should be an improvement.
The Liberal plan also would restrict the only-pay-if-we-win fees some injury lawyers charge (which gives them an incentive to keep fighting for bigger money) and seeks to get ahead of a Progressive Conservative promise to ban insurance companies from discriminating on your premiums based on where you live by pledging a commission to review all the factors that go into setting those premiums.
Actual changes will begin to kick in shortly before the election due in June, in which the major parties are competing to see how many toonies they can stuff into your drawers. It’s not a bad set of fixes at all. It’s just very late from a government that started talking about this problem almost five years ago.