Ontario Fair Auto Insurance Plan: 5 Ways it Will Harm Accident Victims

The Government of Ontario announced the Ontario Fair Auto Insurance Plan in December 2017 based on recommendations from the Marshall Report. The plan outlines ways to “improve the stability and long-term health of the auto insurance system in Ontario,” particularly with the creation of a Serious Fraud Office that will detect, prevent, and prosecute auto insurance fraud.

The Insurance Bureau of Canada says auto insurance fraud is one of the main contributors of high insurance costs, but at Preszler Law Firm, we haven’t seen any evidence of that claim.

Among the changes, the Financial Services Regulatory Authority also will have more authority to make rules, which is empowering a government body to touch benefits. Like the rest of the Ontario Fair Auto Insurance Plan, this will only negatively affect victims of personal injury.

“None of this is about providing more access to justice or access to benefits,” says Jeffrey A. Preszler B.A., LL.B., a partner at Preszler Law Firm. “This is about cutting benefits and creating a new system to do so…the goal is to ultimately allow insurance companies to pay out less in order to allegedly help bring down automobile rates. Which has never happened and won’t happen.”

Simply put, the Ontario Fair Auto Insurance Plan is a disaster. Here’s why.

1. The government claims it has taken steps since 2013 to lower insurance rates for Ontario’s 10 million drivers — but it really hasn’t.

The auto insurance rate reforms touted by our government in recent years include a mandatory discount for use of winter tires, clarifying towing and storage costs after an accident, and allegedly helping to resolve disputes about accident benefits faster.

The Ministry of Finance claims average auto insurance rates are 6.6% lower than they were five  years ago, after a promise to cut rates by 15%, and “understands that rates are still too high for many people.” But we know that lower insurance rates is just big talk because it’s an easy way to show the populace that government is doing something for us.

The insurance industry is driving most of the change the government is attempting to put in place. Insurance companies said they’d reduce rates years ago, over stipulations the government needed to meet, but then came back wanting more. The sad reality is that our government is gullible enough to believe the insurance industry and frankly does not care about the victims because they represent a small percentage of the population.

The truth is, the insurance industry has no intention of cutting rates. History tells us that there are no consequences to them if they don’t. Why cut rates if you can just go back to the government and say, “sorry, we couldn’t make those cuts we promised … we now need more concessions to make the cuts we previously agreed upon.”

The shocking part is the liberal government accepts this at the expense of victims.

2. Independent examination centres are a joke.

The government claims the creation of independent examination centres will allow for assessment of more serious injuries and reduce diagnosis disputes through developing standards for assessors. This harkens back to when Ontario had Designated Assessment Centres (DACs), which were a complete failure — and now we’re going back to that system.

People with the most common injuries in motor vehicle accidents also should have “timely and appropriate treatment” focused on best practices, according to the Plan. This is where standardized treatment plans come in, in addition to independent examination centres. The government will begin to develop standardized treatment later this spring, expecting to change “the emphasis from cash payouts to ensuring appropriate care for victims.”

How would our hospital-based assessments ever work when our hospitals are already completely overrun, and it takes months to schedule a surgery or see a specialist? How will this work in the peripheral areas outside of major population centres? How will this actually benefit the victims?

Our other concern is that the government wants to give deference — make these assessment decisions binding — with no right to appeal. You’re putting your faith in what they consider independent doctors, but we know how independent doctors have helped accident victims before.

They haven’t.

Just take a look at this recent The Globe and Mail investigation, in which local doctors are raking in $240 million per year collectively to write up reports for accident victims and auto insurance companies — without ever seeing the victim to properly assess his or her injuries.

3. Changes to contingency fees will reduce accident victims’ ability to get help.

The Law Society of Upper Canada has approved changes that include introducing a mandatory standard contingency fee agreement, creating a consumer rights guide, requiring lawyers and paralegals to publicly disclose maximum contingency fee percentages charged by practice area, and requiring lawyers and paralegals to report their contingency fee practices annually.

The current law is not clear, so we think updating the mandatory standard is great. The Law Society also has objected to caps, which they should.

People seem to forget that lawyers and contingency fees would never be needed if insurance companies treated people fairly. When insurance companies refuse to settle claims and treat people poorly, people are forced to hire lawyers. Without contingency fees, people could never afford representation.

4. An independent panel will only continue to be fueled by voices in the insurance industry.

Finally, the Plan intends to amend the Insurance Act to give rule-making authority to the Financial Services Regulatory Authority of Ontario to respond to insurance market trends. The Plan also will establish a panel of up to five industry experts to provide the government with reform guidance.

This is a problem because the government just changes the law by regulation; they don’t actually put things to a vote. It’s yet another opportunity for insurance companies to take advantage of the liberal government wanting to buy more votes. Experts will continue to be pro-insurance industry and part of their lobby group.

5. Auto insurance rates are not the problem — the insurance industry is.

We realize this may be a bold statement, but the bottom line is that the Ontario Fair Auto Insurance Plan only benefits the insurance industry. The reason we pay for auto insurance is for protection if we’re injured. For many of us living in Ontario, and particularly Toronto, our electric bills and even our garbage bills cost more than our car insurance.

“Car insurance affects 10 million drivers — who cares about the thousands of people a year that are seriously injured? Those people aren’t making up all the votes,” says Jeff Preszler. “At the end of the day, insurance rates don’t go down, they go up, in spite of all these changes. And our government permits it.”

It’s clear to us that the only winner here is not the victim, not the lawyers, but the insurance industry. We urge the Government of Ontario to start a new plan with the correct assumptions and data, and take another look at some of the studies that have actually be done to improve the accident benefit system and access to justice.

Don’t listen to the insurance industry. Listen to the thousands of accident victims who need our help. Unfortunately, it is too late. The insurance industry has already won and the government, who is supposed to help the victim, has been the enabler. It is a sad state of affairs in Ontario.

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