Insurance industry stakeholders are weighing in on Ontario’s proposed auto insurance reforms.
Brokers and carriers praised the step towards change in the province’s troubled auto insurance market. However, some concerns remain over the effectiveness of opt-out coverage for consumers.
The Insurance Brokers Association of Ontario (IBAO) applauded the Ontario government for addressing several challenges in its latest budget.
The IBAO said that “the current state of Ontario auto insurance is a growing concern for consumers across this province.”
“IBAO is pleased to hear that the Ford government continues to commit to engaging with industry experts and key stakeholders to ensure the final execution of the announced reforms will focus on protecting Ontario consumers,” it continued.
According to the budget tabled earlier this week, mandatory auto insurance accident benefit coverage will continue to apply to medical, rehabilitation and attendant care benefits, but all other benefits will be optional.
The Insurance Bureau of Canada (IBC) has welcomed the reforms as a “good first step” in giving Ontario drivers more control over their auto insurance coverage.
“We have long advocated for much-needed reforms that provide consumers with more choice and options when purchasing auto insurance,” said Amanda Dean, vice president of Ontario and Atlantic at IBC, in a statement.
“We commend the government on the actions announced today and look forward to working with the province and other stakeholders to implement these reforms.”
The IBC also acknowledged the Ontario government’s efforts towards combatting auto theft, which has “reached a crisis level.” The province has pledged a further $49 million investment over three years to support programs that combat auto theft and destabilize organized crime networks.
“This funding is a meaningful and positive step towards better protecting Ontarians and their families,” Dean said.
Separately, Aviva Canada has said it welcomes the reforms and applauds the Ontario government’s leadership “for being the first province in Canada to take a consumer-oriented approach.”
Brokers will play a crucial role in guiding consumers through the complexities of the new system. They may face increased responsibilities in explaining the differences between various coverage options to consumers.
At least one broker has aired concerns about the effectiveness of opt-out coverage for consumers.
“Choice is a wonderful and dangerous thing at the same time,” said Adam Mitchell, CEO of Mitch Insurance.
“One of our brokers came up with a great line: insurance is a buy-now, benefits-later product, and if you can’t afford the premium now, you likely can’t afford to go without the benefit later. I thought it was succinct to say that it’s a bit of a zero-sum game.”
Mitchell recognized that implementing these reforms involves complex operational work. He said direct insurance providers are also expected to share more responsibility in ensuring consumers understand their choices and the risks involved. This includes clearer communication about coverage limitations and potential claim issues.
“It’s an incredibly complex file,” Mitchell said. “This is a political third rail that no-one wanted to touch, so kudos to them for attempting it. But they need to proceed with extreme caution and a lot of consultation.”
Dario Battista, incoming president of the IBAO, agreed that while the reforms could introduce more complexity, they also highlight the invaluable advice that brokers can offer.
“It will add more complexity to what we do,” Battista told Insurance Business. “But it emphasizes the importance of what we do every day, [which is] to give advice to customers.
“Insurance brokers find the best policies for consumers from the many insurance companies operating in Ontario. From this vantage point, as consumer advocates, our caution to stakeholders continues to be to ensure a minimum threshold of coverage is required to return Ontarians to good standing while avoiding complicating the auto insurance product beyond what’s necessary.”
Consumer group FAIR Association has lauded the “cost relief for some Ontario drivers” and “some improvement in the delivery of care for claimants.”
But it said the budget’s “biggest miss” was failing to live up to the 2019 promise to increase catastrophic coverage from $1 million for medical care and rehabilitation to $2 million.
“This has left the most injured claimants with inadequate coverage, and we had hoped to see that change,” the FAIR Association said.
“There is no increase to the Unfair and Deceptive Acts and Practices (UDAP) Administrative Monetary Penalty (AMP) that would enable FSRA to hold insurers and their associates to account in a meaningful way for unacceptable behaviour.
“This is a big miss, and consumers will continue to be at risk during the claims process because accountability needs teeth, and FSRA could have used more clout.”
1/5
— FAIR Association (@FAIRAssociation) March 26, 2024
Key elements from the 2024 Budget today:https://t.co/YuG5jJHH36
The government will be proposing to make auto insurance pay for medical and rehabilitation benefits following an auto accident before extended health care plans do. 👏👏👏👏👏👏👏👏👏👏
More work ahead for Ontario government, insurance industry
The IBC and IBAO acknowledged that the government and stakeholders have more work ahead and pledged to cooperate on industry solutions.
“Ontario’s property and casualty insurers look forward to exploring further opportunities to provide consumers with greater choice in the future,” said IBC’s Dean.
“The government is engaging the industry, and they’re engaging brokers to find solutions to make auto insurance more affordable for consumers,” Battista said. “It’s a positive sign that they’re looking to work with the industry towards sustainable solutions.”
FAIR Association also expressed hope for more discussions with the government and FSRA to improve the system and improve care for claimants.
“We feel that many of the issues we care about were heard by this government and though there is a long way to go, it is a brighter path for many people today as we look toward implementing this new direction,” the FAIR statement said.
For Mitchell and other brokers, however, only time will tell if Ontario’s efforts will improve the auto insurance market.
“It seems to be moving in the spirit of a good direction,” he said. “But it’s almost like saying you’re going to go north.”
What are your thoughts on Ontario’s auto insurance reforms? Please share your comments below.
