The Ontario Trial Lawyers Association is pleased to provide input to the 2014 Ontario Pre-Budget Consultation process.
The Ontario Trial Lawyers Association (OTLA) was formed in 1991 by lawyers acting for plaintiffs. Our purpose is to promote access to justice for all Ontarians, preserve and improve the civil justice system, and advocate for the rights of those who have suffered injury and losses as the result of wrongdoing by others, while at the same time advocating aggressively for safety initiatives.
Our mandate is to fearlessly champion, through the pursuit of the highest standards of advocacy, the cause of those who have suffered injury or injustice. Our commitment to the advancement of the civil justice system is unwavering.
Our organization has over 1,500 members who are dedicated to the representation of wrongly injured plaintiffs across the province and country. OTLA is comprised of lawyers, law clerks, articling students and law students. OTLA frequently comments on legislative matters, and has appeared on numerous occasions as an intervener before the Court of Appeal for Ontario and the Supreme Court of Canada.
OTLA welcomes the opportunity to comment on financial services policy and, in particular, the regulation of auto insurance in Ontario.
In addition to various policy initiatives included in the budget last year— namely, licensing of health clinics, and “transforming” the auto insurance dispute resolution system, the government announced that it would be introducing for the first time:
“A transparency and accountability mechanism in the form of an independent annual report by outside experts on the impact of auto insurance reforms introduced to date on both costs and premiums. The report will review industry costs and changes to premiums paid by Ontario drivers and make recommendations as to further actions that may be required to meet the government’s reduction targets.” p. 286 The Budget Papers, 2013 Ontario Budget
This initiative is a first for Ontario and likely unprecedented anywhere across Canada. OTLA has welcomed this initiative and applauded the Minister and the government for bringing it forward to help ensure greater accountability and transparency in auto insurance data. In committee appearances and in correspondence to the Minister, we have affirmed that this initiative will help bring clarity to a public policy area that has been clouded in secrecy and obfuscation for too long, largely because of the influence and control of the insurance industry. The government should ensure that any future policy review is predicated on sound analysis and respected data.
Unfortunately, nearly a year after it was first announced, this initiative has not yet been completed. OTLA has learned from the Ministry of Finance that a competitive process is underway to retain independent experts and that the review will begin in the coming months.
We submit to the members of the Standing Committee that this review is critical and long overdue. Auto insurance is a mandatory financial service. The legislature and the public at large should have access to annual reports on the performance of our auto insurance system, including the premiums we pay, the coverage we receive and the profit the industry makes.
Clearly, there is little agreement among various stakeholders in the auto insurance system with regard to auto insurance data. On the one hand, the insurance industry continues to bemoan chronic low return on equity and mounting claims costs. On the other, our association, in conjunction with independent actuarial services, begs to differ. We note that the auto insurance sector in Ontario has achieved record profits in the last few years, largely at the expense of auto accident victims and the premium-paying public.
In September 2013, OTLA presented these findings to all MPPs in a “Report Card on Ontario Auto Insurance.” Other stakeholders and analysts point to similar data trends on the industry’s profitability.
Of course, there should be very little debate about financial and claims data. While there may be legitimate questions raised about various assumptions that underpin the calculations, these questions should not have a significant impact on the overall data picture. Simply put, there should not be multiple answers to the questions about industry costs and profits. We do note that when the insurance industry association appeared before the legislative committee in the spring, its own hand-picked experts could not agree on the basic question of industry profits.
Bill Andrus, a former insurance industry insider, was quoted at the insurance hearings on September 30, 2013:
“A problem arises when data becomes the subject of debate and conjecture. Let me stress that while everybody is entitled to their own opinion, they’re not entitled to their own facts. Data in the insurance industry is no different: There’s only one set of numbers, and they must be reported accurately and free of interference from any stakeholder or group.”
We echo those sentiments and submit that an accountability and transparency mechanism vetted by truly independent authorities is the preferred route to review the data used to drive policy decisions.
Fortunately, the government already has a wealth of information to draw upon for this initiative: there is established and respected data from the General Insurance Statistical Agency (GISA), the Office of the Superintendent of Financial Institutions (OSFI), and the insurance industry’s Health Claims for Auto Insurance (HCAI) data. HCAI was first envisioned by the insurance industry more than a decade ago because, at the time, insurers wanted to “track where the money [was] going.” That goal is even more important today as it was more than 10 years ago. It is imperative that HCAI data — particularly in highly disputed cases such as catastrophic injuries — be a part of the reporting process. The recent publication of HCAI data by the Insurance Bureau of Canada, while preliminary, provides a further indication of the long-established trend toward significantly lower claims for the treatment of injuries.
We are at a critical juncture in the evolution of auto insurance policy in Ontario.
It has been more than three years since the last round of changes took effect in September 2010. At the time, the non-catastrophic coverage limit for Accident Benefits was reduced from $100,000 to $50,000 and, most significantly, a so-called “Minor Injury Guideline” was introduced, limiting coverage for some 80 per cent of accident victims to just $3,500.
Contrary to what the Insurance Bureau of Canada has stated, claims costs are down overall from 2009. Some costs, for treating injuries for example, have been dramatically reduced. Premiums are up over the same period of time. Last year, the average premium was in excess of $1500 compared to $1298 five years previously according to GISA data.
We submit that this trend is unmistakable. When prices are increased and costs reduced, the result is increased profitability.
We have no issue with the profit-motive of any private enterprise. Insurer shareholders naturally seek a respectable return on their investments. What is not reasonable is that profits in the auto insurance sector are now financed on the reduced care and treatment that injured accident victims receive and on the higher premiums that all Ontario drivers pay.
While there is a 15 per cent premium reduction underway to address the affordability of insurance, the reality is that the premium reductions announced by the government are merely “targets” to be achieved over two years without any guarantee that premiums will actually drop.
Sadly, there has been no progress in the way that accident victims are treated in Ontario. Coverage is not being restored or expanded in any meaningful way. In fact, coverage continues to be eroded. Recent regulatory changes announced by the government have overturned key judicial decisions on the Minor Injury Guideline over the last three and a half years. These decisions seem to be predicated on the belief that further claims cost savings are required, in addition to the considerable savings already realized over the past three years, to meet the premium reduction targets set by the government. Yet, neither the industry nor government has provided any hard data to prove that these changes are justified — even from the limited perspective of meeting the premium reduction targets. Further, the government’s decision to restrict coverage with respect to attendant care was made unilaterally without any consultations with sector stakeholders. We contend that far from providing further claims cost reductions, these recent changes are more likely to result in greater costs for the industry.
Another factor that makes an “independent, annual report” on the “impact of auto insurance reforms to date” even more critical is launch of a new Three-Year Auto Insurance Review by the Financial Services Commission of Ontario. It makes little sense to embark upon and conclude a detailed policy review of auto insurance without baseline data and clear analysis evaluating the impact of the last round.
There are ongoing policy review initiatives that could further erode auto insurance coverage. For example, the Minor Injury Treatment Protocol Project, which is not scheduled to conclude until later this year, will almost certainly have serious ramifications on the way that injured accident victims receive treatment. The Auto Insurance Dispute Resolution Services Review, which is about to conclude with recommendations, also brings the possibility that victims of auto accidents will be negatively impacted further by policy change.